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If you file personal bankruptcy, it can take a significant toll on any business ownership in your name, depending on how the business was legally organized and the type of bankruptcy petition filed with the court. Under United States bankruptcy code, there are two types of filings for individuals; they are indicated by “Chapter” numbers, […]
The post Personal Bankruptcy and Business Ownership: What You Need to Know appeared first on Allmand Law Firm PLLC.
There are things I haven’t told you about the world after you get out of debt.
That nobody else has told you is at once a source of vindication and shame. I’m not the only one who’s left out the tidbits, so that’s good – but someone should have clued you in.
Rather than let it drag on even longer, I thought I’d give you a quick rundown. This way you’ll never again be able to point your finger at me and claim I was somehow untruthful.
- You won’t be better looking. When you get out of debt, the years won’t fall off you like fairy snowflakes. You won’t be taller, nor will people swoon as you approach (unless they are already doing so). That said, once you’re out of debt you will probably be able to afford a haircut. You won’t be paying back those overdue debts anymore either, so you can start saving up to replace those threadbare jeans and worn-out shoes.
- You won’t be in better shape. Your belly won’t shrink, your butt won’t grow (or shrink), and those six-pack abs will remain out of reach. But without continually juggling overdue bills, you may have money left over to eat healthy food rather than cheap, unhealthy packaged meals.
- You won’t be healthier. If you’ve got high cholesterol, diabetes, ingrown toenails, cavities or any other health issues then I’ve got terrible news for you. Once you’re out of debt, those problems aren’t going away. You will, however, be better able to afford critical medication, dental care, and doctor visits.
- You won’t get smarter. Sorry, but your intelligence is limited by genetics and history. Don’t expect to solve a Rubik’s Cube unless you were able to do it before (don’t be sad – I can’t solve it either). You will, however, be able to afford books for school and pleasure. Taking a trip to the movie theater (for a documentary, of course) will be easier as well.
- You won’t have more fun in bed. You will, however, be better able to afford to replace those old pillows and mattress with something that won’t leave you with an achy neck in the morning.
- You won’t be a better parent or spouse. Your child will still act up at the worst possible times, and your spouse will not magically remember to handle their part of the household chores. You will, however, be better rested and less stressed because you won’t be worried about how you’re going to pay all the bills.
But one thing is for sure …
Once your debts are behind you, you’ll be able to focus more on yourself as well as your loved ones and your future. What you do with that freedom is up to you.
Who wouldn’t want to win a student loan lawsuit?
If you’re being on your student loans, you’re at constant risk of being sued.
And if you’re sued, you stand an excellent chance of losing the case. But not for the reason you think.
Why Most People Lose When Sued For A Student Loan
Law firms that sue for past due student loans do so in the hopes that you won’t file a response to the case. If that happens, the law firm will be able to get a default judgment against you and seize a portion of your wages, freeze your bank accounts, and put a lien on your property.
You’d think with consequences like that, most people would fight. But you’d be wrong.
In fact, more than 90% of people sued for student loans do absolutely nothing. So rather than being forced to prove the case, lawyers for the student loan companies win without doing more than filing some boilerplate documents with the court.
Here’s What To Do Instead
Rather than putting the court papers to the side, do these two things:
- read the court papers with a calendar handy; and
- file a response within the time specified by law.
Here’s Why You Need The Calendar. Under California law, you’ve got 30 days (including weekends and court holidays) to file an answer to the student loan lawsuit. If the court papers were given to someone else in your household or your place of work, and another copy was mailed to you, you have 40 days from the date of the mailing to file your response.
Other state have different rules on your time to file a response. In New York, for example, you’ve got 30 days to file an answer to the lawsuit if the court papers were given to someone else in your household or at your job, and 20 days from the date of filing of the affidavit of service if you got the papers personally.
A word of caution: don’t try to dodge the process server or pretend you didn’t get served properly. There’s no requirement that you get served with any formality, or that the court papers be mailed by certified mail, or that it look at all like it does in the movies or on TV.
When you get the lawsuit papers, consider yourself served. If you think service was somehow flawed, bring it up in the context of your response.
File Your Response. A complaint filed by a student loan company is flimsy at best, and makes claims without any proof. By filing a timely response and forcing the law firm representing the student loan company to prove the case, you’re way ahead of the game.
For example, consider these points that the student loan company must prove (if you force them to do so):
- Does the company suing you have the legal right to collect from you?
- How did they calculate the amount they claim to be due?
- Is all their paperwork in order such that they can prove they own the debt?
- Has the time to sue you expired under the law?
Make the student loan company prove every single element of the case. You can do that only if you file a response to the lawsuit – if you don’t, they win automatically.
This isn’t to say that filing a response will be enough to win the student loan lawsuit, but it’s a vital step in the right direction.
By Lindsay Nass
After waiting almost six years, unsecured creditors of Lehman Brothers Holdings' Inc. will finally see an initial payment of $4.62 billion next month.
Trustee, James Giddens, filed a notice August 15th regarding the distribution of owned payment to Lehman's creditors. Former employees, pension funds, banks and investment firms are among the creditors who will see money starting September 10th.
The payment denotes roughly 17% of total unsecured claims against the brokerage, according to the Wall Street Journal.
Lehman Brothers Inc. filed for Chapter 11 bankruptcy protection on September 15, 2008. The firm's filing was the largest bankruptcy in US history and is generally credited as a major turning point in the 2008 financial collapse.
Upon filing, Lehman claimed $613 billion in total debt and $639 in total assets, as well as $150 billion in outstanding bond debt according to a 2008 article on MarketWatch. The firm listed over 10,000 creditors in the filing.
The upcoming September payment has been postponed until the brokerage's customers were fully reimbursed: $105 billion to 111,000 former customers, according to Reuters. The 1970 Securities Investor Protection Act put into law that customer claims are to be fully repaid before creditors.
"That such a distribution is even possible represents an extraordinary achievement that was far from certain when the liquidation began," Giddens said in a news release Friday.
Additional payments are likely in the future, Giddens stated. After the initial payment to creditors, Lehman will have paid over $110 billion; $20.4 billion in claims have been processed against the brokerage and $6.8 billion in claims are still unsettled, according to the Wall Street Journal.
On August 5th, Barclays Plc. was allowed to keep about $6 million of disputed assets after its speedy purchase of the bulk of Lehman -- money Giddens was attempting to recover.
Lehman was Wall Street's fourth largest investment bank before the 2008 Chapter 11 filing.
The post Lehman Brothers Inc. to Pay $4.6 Billion to Creditors appeared first on The Bankruptcy Blog.
Bankruptcy won’t wipe out a student loan without some additional work. Unless it’s not a student loan at all.
If you’re dealing with student loan debt, you probably already know that they are usually exempt from discharge in a bankruptcy case. In fact, getting your student loans wiped out in bankruptcy requires an additional determination by the judge.
But what if the loan you consider to be your student loan … isn’t one at all?
How Student Loans Are Treated In Bankruptcy
When you file for bankruptcy, certain debts will follow you after the case is over. Under the law, one of those categories of debts is what’s called and educational benefit – commonly known as student loans.
In fact, there are three categories of student loans that are exempt from discharge. They are:
- an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution;
- an obligation to repay funds received as an educational benefit, scholarship, or stipend; or
- any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual.
Governmental Units And Nonprofit Institutions. This one is simple: if we’re dealing with a federal or state loan, it’s not discharged in bankruptcy.
And if the program that issues the loan is funded in whole or in part by the government or a nonprofit institution, it’s not discharged in bankruptcy.
This also includes any overpayment of a benefit, such as a scholarship or grant that contains a provision requiring you to repay the funds if the entity disburses too much.
Educational Benefit, Scholarship, or Stipend. Let’s say you get a stipend as part of a graduate or undergraduate degree. If you don’t live up to your part of the bargain, usually by way of not performing academically or professionally. The terms of the stipend will usually include a provision that demands repayment of the monies paid or tuition forgone. That’s not discharged in bankruptcy.
So, too, if you’re the beneficiary of a scholarship that requires you to perform in some fashion – either by maintaining a certain grade point average, playing on a team, or graduating with a certain course of study.
Qualified Education Loan. This is the biggie, folks. Let’s say you got a loan to go to college. It’s a private loan, taken from a bank and not clearly stated to bean educational loan. If the IRS doesn’t consider it as a qualified education loan, you’re home free.
The IRS Definition Of A Qualified Education Loan
Under Section 221 of the Internal Revenue Code, a qualified education loan is any debt incurred by the taxpayer solely to pay qualified higher education expenses so long as that debt satisfies the following three criteria:
- the debt was incurred on behalf of the taxpayer, the taxpayer’s spouse, or any dependent of the taxpayer as of the time the indebtedness was incurred; AND
- the higher education expenses were incurred within a reasonable period of time before or after the indebtedness is incurred; AND
- the expenses are attributable to education furnished during a period during which the recipient was an eligible student.
The IRS specifically states that a debt owed to a person who is related to the taxpayer is not considered a qualified education loan. Nor is a loan taken against your pension or retirement plan considered a qualified education loan.
Guarantors And Cosigners Rejoice?
Notice that the IRS specifically states that the loan must be made on behalf of a taxpayer, taxpayer’s spouse, or a dependent of the taxpayer to be considered a qualified education loan.
Relatives and others who guarantee or cosign a loan for a student who is not a spouse or dependent may end up being able to jump through a loophole. That is, if the Note doesn’t specifically state that the loan is for educational purposes.
Not So Simple
Most student loans will fall neatly into one of the categories that keeps them from being automatically wiped out in bankruptcy. After all, private lenders are usually too smart to let their debts get wiped out.
But for some people, the loophole of getting a student loan discharged in bankruptcy may magically appear. The important thing to remember is to always review the loan papers with a keen eye.
A consumer facing a insurmountable financial burden many times pursue either a Chapter 7 or a Chapter 13 bankruptcy. A Chapter 7 bankruptcy provides a consumer relief in the form of what is known as a discharge from a good portion of his or her debts. On the other hand, relief in a Chapter 13... Read more »
The post I Just Received a Motion for Relief from Stay: What Do I Do? appeared first on AllmandLaw.
A consumer facing a insurmountable financial burden many times pursue either a Chapter 7 or a Chapter 13 bankruptcy. A Chapter 7 bankruptcy provides a consumer relief in the form of what is known as a discharge from a good portion of his or her debts. On the other hand, relief in a Chapter 13... Read more »
The post I Just Received a Motion for Relief from Stay: What Do I Do? appeared first on Allmand Law Firm PLLC.
A consumer facing a insurmountable financial burden many times pursue either a Chapter 7 or a Chapter 13 bankruptcy. A Chapter 7 bankruptcy provides a consumer relief in the form of what is known as a discharge from a good portion of his or her debts. On the other hand, relief in a Chapter 13 […]
The post I Just Received a Motion for Relief from Stay: What Do I Do? appeared first on Allmand Law Firm PLLC.
There is a right way and a wrong way to deal with debt. The right way requires courage to take action. This article provides an effective plan to determine whether filing bankruptcy is the right answer.
1. How Many Months to Become Debt Free?
The answer to this question is essential and requires work. We need to know household income and household expenses. The left over money is used to pay credit card and medical bills. Bankruptcy may be the solution if it will take too many months to become debt free.
To help figure out household budget, here is a link to free budget forms from Dave Ramsey. I am a huge fan of Dave Ramsey. He is a great source to help get out of financial trouble. He was forced to file bankruptcy and has since made a good living helping others deal with debt. I offer his financial management course to all my bankruptcy clients.
Now, we need to add up credit card and medical bills (unsecured debt). Having trouble figuring out these types of bills? These types of bills will be listed in a credit report. Get a free credit report from www.annualcreditreport.com. Ignore the offers to pay money for your credit score.
Finally, we have the numbers to determine how long it will take to pay off unsecured debt. Divide the total of all unsecured debt by the money left over from the monthly budget. The answer represents the number of months it will take to pay off bills. Will it take more than three years to become debt free? Tinker with the expenses that can be changed to see if you can become debt in a reasonable amount of time.
2. Am I Being Forced to Take Action?
Are bills forcing you to take some action that will require an extreme financial consequence? Being sued by a creditor like Midland Funding? Are your wages being garnished by a creditor? Are you considering withdrawing money from a 401k to pay creditors?
3. Consult A Bankruptcy Attorney!If it is going to take too long to become debt free, or if you are being forced to take some action that will have a financial consequence, go talk to a professional.
I, like most Fresno personal bankruptcy attorneys, do not charge for the first consultation. If you contact an attorney that wants to charge right away, try someone else. Remember, your chief goal is to determine whether you should file bankruptcy. It's also important to feel comfortable with the attorney. Trust your instincts. There are a lot of attorneys that file Chapter 7 bankruptcies in Central California.
The first meeting can last anywhere from 30 minutes to 90 minutes. Make sure you are meeting with the attorney, and not a staff member. The attorney's goal should be to explain the bankruptcy process and determine whether bankruptcy is the best solution. If the attorney pushes you to filing bankruptcy without evaluating your income and bills you are probably meeting the attorney. If the attorney wants to pass you off onto one of his/her staff members, you might want to consider another office.
You should have all your questions answered. The attorney should have a broad understanding your personal finances. These topics include your assets, income, and expenses. At the end, you should feel more comfortable deciding whether you want to file bankruptcy. You should be quoted a price to file bankruptcy. I typically charge $1200. I often quote prices that are lower than $1200. Sometimes higher if your case requires more like you operate a business, have a lot of creditors, or if you make car payments. Each case is unique. The Eastern District of California Bankruptcy Court charges $335. There are two online bankruptcy classes can cost as low as $35.
It is helpful to bring copies of the following documents to your meeting:
1. Driver License
2. Social Security Card
3. Last two years of filed tax returns
4. Last six months income stubs. (Pay stubs, unemployment, disability, etc.)
5. Lawsuits, garnishments, foreclosures, abstract of judgments or tax liens.
6. Retirement statements (Your most recent 401k, PERS, STRS, and/or pension statements
7. Title certificates to all cars, trailers, Boats, etc.
8. Most recent invoice statements to vehicles and real property
9. Life insurance policies.
10. Credit report from www.annualcreditreport.com (the free report)
11. If you are required to pay child support or alimony, than provide Marriage Agreement and court order.
12. License of professionals, e.g. sales agent, truck driver, attorney.
Photo credit: Marco Bellucci: Flickr
When individuals are talking to their financial adviser about their future and their hope to retire, the financial adviser should have at least a basic understanding of the bankruptcy process. While Bankruptcy is an extreme measure that should not be taken lightly, it is also a powerful tool for those in debt to free themselves of their past mistakes and get on track for a bright future.
Often times I see individuals who have been seeing a financial adviser for years. He has advised them how much money they need to save for retirement. He has advised them when they should start saving and how much they should be putting away each month. He may even have helped them develop a plan to pay off their credit card debts over the course of the next decade. What I rarely see is a financial adviser who has taken the time to review the individuals case with a qualified bankruptcy attorney.
Advising a client to spend the next decade of his or her life repaying credit card debts is simply not sound financial advise. First, a decade is simply too long of a time to expect individuals to spend repaying old debts. Second, the money being used to repay those old debts, often with absurd amounts of interest, could be used to help advance the retirement goals of the client. Third, a decade is simply too long of a time to plan around “unforeseen circumstances.” Therefore, even if the client is able to pay off the debt, they may find themselves disabled, laid off, or changing careers. Meanwhile, they have no savings to fall back on because their financial adviser had them spend a full decade dealing with past mistakes.
It is important that individuals who have a large burden of debt, work with both a financial adviser AND a bankruptcy attorney to be sure that they have all of the options available to them to help them build a brighter future. If you are in need of financial advice, or if you are a financial adviser who would like to sit down with me to discuss this powerful financial planning tool, please call me at 248-629-6367.
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