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Have you made the decision to file a Chapter 13 bankruptcy? If so, you should understand that Chapter 13 serves as a bankruptcy court approved and supervised payment plan. The court approved and supervised part is important because the bankruptcy court will protect you from creditor actions as long as you stay current with your plan. By contrast, non-court supervised payment plans offer no legal protection – even if you pay every month on time payment plans that are not Chapter 13 will not stop lawsuits, wage garnishments, bank levies, vehicle repossessions or foreclosures.Chapter 13 only works if you make regular payments to your Chapter 13 trustee. The trustee collects funds and mails out checks every months to your creditors 1. How much each creditor gets and when those payments start is set out in your Chapter 13 plan, which is submitted by your lawyer and, after some negotiation with the trustee and creditors about the terms, approved by the bankruptcy judge at your plan confirmation hearing.In the Northern District of Georgia, all Chapter 13 debtors must fund their plans through a payroll deduction. The only exceptions are for self-employed debtors or situations where you can prove that your employer will not cooperate with a payroll deduction.Obviously, when your employer receives an order from the bankruptcy judge to withhold some of your wages and mail to a Chapter 13 trustee, your bankruptcy filing will become known to your payroll supervisor and perhaps to others in management at your employer.Neither Susan Blum or I have been involved in any cases where one of our Chapter 13 clients lost his job or had other problems at work because of a payroll deduction. Still, we advise our clients to speak with their payroll office to let them know that a payroll deduction order is coming.By the way, it has also been our experience that your employer may need some time to include the payroll deduction into its payroll system. You must make direct payments to your trustee during this set-up time. You risk a dismissal of your case if you do not personally make your trustee payments immediately after your case is filed. The courts do not offer any grace period.Usually the confirmation hearing for your plan will be scheduled about two to three months after you file. During this probation period you have to show that you can afford to make your trustee payments as well as other payments required by your plan, like mortgage loan payments and child support. Your plan must be fully funded by confirmation.While payroll deductions do give notice to your employer that you have filed bankruptcy, they offer a clean and easy way to make payments. In our practice cases without payroll deductions rarely make it to discharge, whereas payroll deduction cases are more likely to succeed.In closing, let me quote my friend Russ DeMott, who is a bankruptcy lawyer in Charleston, S.C. Russ points out that “payroll orders are good! They help you learn to live on the budget you set up, and therefore make your Chapter 13 payments. In turn you’ll emerge from Chapter 13 having accomplished your financial goal.”If you have any questions about filing Chapter 13 in the Atlanta area, please call Susan or me at 770-393-4985 or contact us by email.
- In the Northern District of Georgia, there are three “standing trustees” that will be assigned to your case based on which judge is randomly assigned. Each standing trustee employs several assistant trustees who may work on your case. Here is a link to standing trustee Nancy Whaley’s site where she explains the trustees’ duties and responsibilities. ↩
The post Why Must my Chapter 13 Include an Employer Payroll Deduction? appeared first on theBKBlog.
Have you made the decision to file a Chapter 13 bankruptcy? If so, you should understand that Chapter 13 serves as a bankruptcy court approved and supervised payment plan. The court approved and supervised part is important because the bankruptcy court will protect you from creditor actions as long as you stay current with your plan. By contrast, non-court supervised payment plans offer no legal protection – even if you pay every month on time payment plans that are not Chapter 13 will not stop lawsuits, wage garnishments, bank levies, vehicle repossessions or foreclosures.Chapter 13 only works if you make regular payments to your Chapter 13 trustee. The trustee collects funds and mails out checks every months to your creditors 1. How much each creditor gets and when those payments start is set out in your Chapter 13 plan, which is submitted by your lawyer and, after some negotiation with the trustee and creditors about the terms, approved by the bankruptcy judge at your plan confirmation hearing.In the Northern District of Georgia, all Chapter 13 debtors must fund their plans through a payroll deduction. The only exceptions are for self-employed debtors or situations where you can prove that your employer will not cooperate with a payroll deduction.Obviously, when your employer receives an order from the bankruptcy judge to withhold some of your wages and mail to a Chapter 13 trustee, your bankruptcy filing will become known to your payroll supervisor and perhaps to others in management at your employer.Neither Susan Blum or I have been involved in any cases where one of our Chapter 13 clients lost his job or had other problems at work because of a payroll deduction. Still, we advise our clients to speak with their payroll office to let them know that a payroll deduction order is coming.By the way, it has also been our experience that your employer may need some time to include the payroll deduction into its payroll system. You must make direct payments to your trustee during this set-up time. You risk a dismissal of your case if you do not personally make your trustee payments immediately after your case is filed. The courts do not offer any grace period.Usually the confirmation hearing for your plan will be scheduled about two to three months after you file. During this probation period you have to show that you can afford to make your trustee payments as well as other payments required by your plan, like mortgage loan payments and child support. Your plan must be fully funded by confirmation.While payroll deductions do give notice to your employer that you have filed bankruptcy, they offer a clean and easy way to make payments. In our practice cases without payroll deductions rarely make it to discharge, whereas payroll deduction cases are more likely to succeed.In closing, let me quote my friend Russ DeMott, who is a bankruptcy lawyer in Charleston, S.C. Russ points out that “payroll orders are good! They help you learn to live on the budget you set up, and therefore make your Chapter 13 payments. In turn you’ll emerge from Chapter 13 having accomplished your financial goal.”If you have any questions about filing Chapter 13 in the Atlanta area, please call Susan or me at 770-393-4985 or contact us by email.
- In the Northern District of Georgia, there are three “standing trustees” that will be assigned to your case based on which judge is randomly assigned. Each standing trustee employs several assistant trustees who may work on your case. Here is a link to standing trustee Nancy Whaley’s site where she explains the trustees’ duties and responsibilities. ↩
The post Why Must my Chapter 13 Include an Employer Payroll Deduction? appeared first on theBKBlog.
By James B. Stewart
Anyone who wonders why law school applications are plunging and there’s
widespread malaise in many big law firms might consider the case of Gregory M.
Owens.
The silver-haired, distinguished-looking Mr. Owens would seem the
embodiment of a successful Wall Street lawyer. A graduate of Denison University
and Vanderbilt Law School, Mr. Owens moved to New York City and was named a
partner at the then old-line law firm of Dewey, Ballantine, Bushby, Palmer &
Wood, and after a merger, at Dewey & LeBoeuf.
Today, Mr. Owens, 55, is a partner at an even more eminent global law firm,
White & Case. A partnership there or any of the major firms collectively known as
“Big Law” was long regarded as the brass ring of the profession, a virtual
guarantee of lifelong prosperity and job security.
But on New Year’s Eve, Mr. Owens filed for personal bankruptcy.
According to his petition, he had $400 in his checking account and $400 in
savings. He lives in a rental apartment at 151st Street and Broadway. He owns
clothing he estimated was worth $900 and his only jewelry is a Concord watch,
which he described as “broken.”
Mr. Owens is an extreme but vivid illustration of the economic factors roiling
the legal profession, although his straits are in some ways unique to his personal
situation.
The bulk of his potential liabilities stem from claims related to the collapse of
Dewey & LeBoeuf, which filed for bankruptcy protection in 2012. Even stripping
those away, his financial circumstances seem dire. Legal fees from a divorce
depleted his savings and resulted in a settlement under which he pays his former
wife a steep $10,517 a month in alimony and support for their 11-year-old son.
But in other ways, Mr. Owens’s situation is all too emblematic of pressures
facing many partners at big law firms. After Dewey & LeBoeuf collapsed, Mr.
Owens seemingly landed on his feet as a partner at White & Case. But he was a full
equity partner at Dewey, Ballantine and Dewey & LeBoeuf. At White & Case, he
was demoted to nonequity or “service” partner — a practice now so widespread it
has a name, “de-equitization.”
Nonequity partners like Mr. Owens are not really partners, but employees,
since they do not share the risks and rewards of the firm’s practice. Service
partners typically have no clients they can claim as their own and depend on
rainmakers to feed them. In Mr. Owens’s case, his mentor and protector has long
been Morton A. Pierce, a noted mergers and acquisitions specialist and prodigious
rainmaker whom Mr. Owens followed from the former Reid & Priest to Dewey,
Ballantine to Dewey & LeBoeuf and then to White & Case.
“It’s sad to hear about this fellow, but he’s not alone in being in jeopardy,”
said Thomas S. Clay, an expert on law firm management and a principal at the
consulting firm Altman Weil, which advises many large law firms. “For the past 40
years, you could just be a partner in a firm, do good work, coast, keep your nose
clean, and you’d have a very nice career. That’s gone.”
Mr. Clay noted that there was a looming glut of service partners at major
firms. At the end of 2012, he said, 84 percent of the largest 200 law firms, as
ranked by the trade publication American Lawyer, had a class of nonequity or
service partners, 20 percent more than in 2000. And the number of nonequity
partners has swelled because firms have been reluctant to confront the reality that,
in many cases, “they’re not economically viable,” Mr. Clay said.
Scott A. Westfahl, professor of practice and director of executive education at
Harvard Law School, agreed that service partners faced mounting pressures.
“Service partners need a deep expertise that’s hard to find anywhere else,” he said.
“Even then, when demand changes, and your specialty is no longer hot, you’re in
trouble. There’s no job security.” He added that even full equity partners were
feeling similar pressures as clients demanded more accountability. “Partners are
being de-equitized,” he said, as Mr. Owens was. “That’s a trend.”
Mr. Owens specializes in financing and debt structuring in mergers and
acquisitions, a relatively narrow expertise where demand rises and falls with the
volume of merger and acquisition deals that his mentors generate. Former
colleagues (none of whom would speak for attribution) uniformly described him as
a highly competent lawyer in his specialty and, as several put it, “a lovely person”
who relishes spending time with his son. But he does not seem to be the kind of
alpha male — or female — who can generate revenue, bring in clients and are
generally prized by large law firms.
At Dewey & LeBoeuf, Mr. Owens’s name was perennially among a group of
partners who were not making enough revenue to cover their salaries and
overhead, according to two former partners at the firm. But each time, the
powerful Mr. Pierce, then the firm’s vice chairman, protected Mr. Owens, they
said.
“He was very good at what he knew,” a former Dewey & LeBoeuf partner said.
“But he wasn’t built to adapt. To make it as a law firm partner today, you have to
periodically reinvent yourself.”
As partners were leaving Dewey & LeBoeuf in droves as it neared bankruptcy
in 2012, Mr. Pierce went to White & Case. Mr. Owens followed, but this time as a
salaried lawyer, not an equity partner, even though he has the title of partner.
A spokesman for White & Case said Mr. Owens and Mr. Pierce had no
comment. Neither did the firm.
Mr. Owens has been well paid by most standards, but not compared with top
partners at major firms, who make in the millions. (Mr. Pierce was guaranteed $8
million a year at Dewey & LeBoeuf.) When Mr. Owens first became a partner at
Dewey, Ballantine, he made about $250,000, in line with other new partners. At
Dewey & LeBoeuf, his income peaked at over $500,000 during the flush years
before the financial crisis. In 2012, he made $351,000, and last year, while at
White & Case, he made $356,500. He listed his current monthly income as
$31,500, or $375,000 a year. And he has just over $1 million in retirement
accounts that are protected from creditors in bankruptcy.
How far does $375,000 a year go in New York City? Strip out estimated
income taxes ($7,500 a month), domestic support ($10,517), insurance ($2,311), a
mandatory contribution to his retirement plan ($5,900), and routine expenses for
rent ($2,460 a month) transportation ($550) and food ($650) and Mr. Owens
estimated that he was running a small monthly deficit of $52, according to his
bankruptcy petition. He has gone back to court to get some relief from his divorce
settlement, so far without any success.
In his petition, Mr. Owens said he didn’t expect things to get any better in
2014.
And they could get worse. The most recent deal on White & Case’s website in
which Mr. Owens played a role was the relatively modest $392 million acquisition
of the women’s clothing retailer Talbots by Sycamore Partners, in which Mr.
Owens (working with Mr. Pierce) represented Talbots. That deal was announced in
May 2012. The White & Case spokesman did not provide any examples of more
recent deals.
“In almost any other context, $375,000 would be a lot of money,” said
William Henderson, a professor at the Indiana University School of Law and a
director of the Center on the Global Legal Profession. “But anyone who doesn’t
have clients is in a precarious position. For the last 40 years, all firms had to do
was answer the phone from clients and lease more office space. That run is over.
The forest has been depleted, as we say, and firms are competing for market share.
Law firms are in a period of consolidation and, initially, it’s going to take place at
the service partner level. There’s too much capacity.” He added that law firm
associates and summer associates had also suffered significant cuts, which has
culled the ranks of future partners.
All this “has had a huge effect on law school enrollment,” Professor
Henderson said.
Mr. Clay, the consultant, said many firms had been slow to confront the
reality that successful service partners were probably going to need to work more
hours than rainmakers, not fewer, to justify their mid- to high-six-figure salaries.
Many of them “seem to have felt they had a sinecure,” Mr. Clay said. “They’re well
paid, didn’t have to work too hard, they had a nice office, prestige. It’s a nice life.
That’s O.K., except it’s not the kind of professional life that will do much for a firm.
These nonequity positions were never meant to be a safe place to rest and not
work as hard as everyone else.”
And these lawyers may have to give up the pretense that they’re law firm
partners. In his bankruptcy petition, Mr. Owens describes himself as a “contract
attorney,” which has the virtue of candor.
“From a prestige standpoint, being called a partner is something that’s very
important to people,” Mr. Westfahl observed. “Lawyers tend to be very
competitive, and like all people, titles and status matter. But to the outside world,
where people think all partners are equal, it’s deceptive. And inside the firm,
everyone knows the real pecking order. When people see that partners are treated
disparately, it causes unnecessary dissonance and personal frustration.”
Copyright 2014 The New York Times Company. All rights reserved.
In Washington, the court imposed filing fee for a Chapter 7 bankruptcy is $306. Chapter 7 Bankruptcy filers have the option of paying this filing fee after their cases are filed. Our office prepares the required application for you so that you can get your case filed quickly and pay the filing fee later. If you do choose this option, the Washington Bankruptcy Court will impose an installment payment schedule that will enable you to pay off your filing fee in the 12 weeks after your case is filed.
It is important to remember a couple things. First, while the court is happy to accept payments, it is not going to work with you when it comes to their timing. Your case will likely be dismissed within moments if it does not arrive on time. It is critically important that the payments be made on time. Second, the court is not going to take a credit card or debit payment over the phone, the payment must be received by the due date. The repercussions for not making the payment on time are severe. Your case will be dismissed and can only be reopened if the entire filing fee is paid in full plus the reopen fee of $260. If you can pay off the filing fee early, do so.
If you can pay off the Washington Chapter 7 filing fees prior to filing by all means do so. If you do want to pay them in installments that’s fine too, just keep in mind that the court is not a flexible creditor. You will receive an order in the mail shortly after your case is filed spelling out the forms of allowable payments, the due dates and the payment address. Be on the look out for it(unfortunately while it comes in a very official looking envelope, it is flimsy enough to get caught up in your junk mail). Save it and if you lose it, call us immediately so that we can get the information to you.
When it comes to Chapter 13 Bankruptcy cases, the court filing fee is $281. The installment arrangement is available. The court requires that $100 be paid up front and the remainder will simply be paid through your Chapter 13 Plan. Please feel free to contact me any time via email or phone if you have any questions at all about the Washington Bankruptcy Filing Fees.
The original post is titled Washington Bankruptcy Filing Fee Installment Plans , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
Telling the bankruptcy court that you’re surrendering property in a Chapter 7 bankruptcy doesn’t mean it’s not yours anymore.
When you file for Chapter 7 bankruptcy, you complete a document titled “Statement of Intention.” That document outlines for the court what you intend to do with the property that’s secured by debts.
Think mortgages and car loans.
You can indicate that you’re going to keep the property and pay the debt, keep the property and pay off the debt through the bankruptcy court, or surrender the property altogether.
The choice is yours. But just because you say something, doesn’t mean it’s set in stone.
Rather, this is a statement of your intention – what you want to do with the debt and the property. It doesn’t reflect what the lender can or will do.
You Still Own The Property Until It’s Transferred
In the case of a house, your statement that you’re giving it up in the bankruptcy means nothing more than you don’t want the house anymore.
It doesn’t mean that you have actually given it up.
To give up legal title to property, the lender needs to accept ownership.
Related:
- Redemption, Reaffirmation and Surrender: Your Options In Bankruptcy
- Can You Reaffirm A Mortgage After Bankruptcy?
Transfer Of Ownership Requires Legal Action
Though you’ve offered up the property to the lender as part of your bankruptcy, there’s still a legal process involved in taking it back.
In the case of real estate, the lender will usually continue with a foreclosure proceeding. Depending where you are, that could take some time to complete.
You’re free to offer up the property to the lender through a deed in lieu of foreclosure, short sale or other mechanism but it’s not necessary.
Related:
In fact, just leaving the lender up to its own devices will often give you more time to pack up the house and find a new place to live.
Your Financial Responsibilities To The Lender
Until the lender takes back the property, you don’t need to keep making payments.
Once the lender picks up the property or forecloses, you don’t need to make payments.
So long as you didn’t reaffirm the debt and the discharge comes through, you’re all set.
Your Other Financial Responsibilities
If there’s a homeowner’s association, you’ll need to pay your new HOA dues until such time as the property is legally transferred to the lender. The HOA fees that accrued up to the date of filing bankruptcy will be discharged in your bankruptcy case, but those that accrue once the case is filed are not going to be wiped out.
You’ll also need to pay your homeowner’s insurance and property taxes (unless the lender is paying them).
With respect to vehicles, remember state laws about keeping insurance in place.
Related:
Talk With Your Lawyer
Filing for bankruptcy involves keeping lots of balls in the air, and issues can get confusing.
Talking with your lawyer as the process unfolds will help you keep things clear, making the most of your bankruptcy.
Authors of a recent Student Loan Study have concluded that Congress should create new classifications for both federal and private student loans and make some of them dischargeable in bankruptcy.
Under current law, as any Washington or Oregon debtor can tell you , student loans are almost always impossible to discharge in bankruptcy.
The report calls for two student loan classifications. Loans would be either qualified or non-qualified. Qualified student loans would remain protected from bankruptcy discharge. No In order to receive this status. The loans would have to offer manageable repayment terms such as capped interest rates and would only be offered to students in college programs with proven records with respect to job placement.
Non-qualified student loans, loans with untenable repayment plans for students who enroll in inadequate education programs would be eligible for chapter 7 bankruptcy discharge after a certain waiting period.
The solution proposed in the report is long overdue. The percentage of students taking out student loans has risen exponentially in recent years. During a bad economy with a bleak employment picture and a decline in manufacturing jobs, more and more people in both Washington and Oregon have felt compelled to take loans in the hopes of finding job security. Because the employment picture has remained bleak post graduation, we now have more than seven million college loan borrowers in default. It seems that anything would be better than the current status quo.
If you are struggling with student loan obligations give our office at call or set up an appointment at any of our Oregon and Washington locations.
The original post is titled Hope for Student Loan Borrowers and Bankruptcy , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
I’m Northern Virginia bankruptcy lawyer Robert Weed. I want to talk to you about using Chapter 13 bankruptcy to stop foreclosure in Virginia. Before the housing crisis, Chapter 13 bankruptcy was the best way to stop foreclosure in Virginia. Today, a lot of the time, getting a loan modification is a better way to stop […]The post Stop foreclosure in Virginia with Chapter 13 Bankruptcy appeared first on Robert Weed.
You can often consolidate your federal student loans. Whether it’s a good idea, however, is a different matter entirely.
I’m a big fan of keeping my finances simple.
The more bills I get each month, the more likely it is that something’s going to fall through the cracks.
That’s why I like to pay my utility bills automatically through my checking account, and why I opt for paperless billing whenever possible.
When it comes to consolidating your federal student loans, however, the decision isn’t always so simple.
Can You Consolidate Your Federal Student Loans?
Though most federal student loans can be consolidated under the Direct Loan program (which is administered through the U.S. Department of Education), there are exceptions to the rule.
Some Loans Can’t Be Consolidated. You can’t consolidate private education loans with your federal loans. You also can’t consolidate a PLUS loan originally made to the parent of a dependent student.
Default May Be An Issue. In order to consolidate, you’ve got to have at least one Direct Loan or FFEL Program loan that is in a grace period or in repayment. If one of your loans is in default then you’ve got to either cure the default before consolidating or agree to repay the new Direct Consolidation Loan under either the Income-Based Repayment Plan, Pay As You Earn Repayment Plan, or the Income-Contingent Repayment Plan.
You Can Consolidate Only Once. Consolidation is usually a one-time process; you can’t ordinarily consolidate a loan that’s already gone through the system as you would with refinancing a mortgage or a car loan.
You can, however, consolidate an existing consolidation loan again by adding in an additional Direct Loan or FFEL Program loan in the consolidation.
For this reason I’ve heard of people going back to school for a semester and taking out a new Direct Loan for a single class so they could reconsolidate. That just doesn’t sound like a wise financial move – adding in debt simply so you can consolidate again. If you’re thinking about doing this, you may want to give me a buzz first so I can show you just how bad of an idea this is.
See also:
Is Consolidation A Good Idea?
Let’s say you can consolidate – now you need to figure out whether it’s a good idea for you.
Just because you can do something, after all, doesn’t necessarily mean you should.
In order to make your decision, consider these issues:
Your Interest Rate May Change. The interest rate on a Direct Consolidation Loan is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1%. If you’ve got one loan with an outrageously high rate, that’s going to bring up the average.
You May Enter Repayment Faster. Repayment on your new consolidated loan will begin within 60 days of the date of consolidation. If you’re currently in deferment or forbearance, that could hit you in pocket pretty quickly.
Your Payments May Rise. Remember that your interest rate will change once you consolidate; that means your payments may actually go up rather than down. Estimate your weighted average interest rate to determine your loan payments after consolidation.
The Federal Loans May Not Be Your Problem. If your private student loans or other debts are the ones dragging you down, then consolidating won’t really solve the problems. Take a look at the rest of your financial situation to make the smart move.
See also:
- How To Know If Your Student Loan Is Federal Or Private
- Federal Student Loan Standard Repayment Options
- Income-Based Repayment For Federal Student Loans
- Direct Loan Consolidation Payment Calculator
Tread Lightly To Avoid Problems Later
The student loan companies sell consolidation as a cure-all for your student loan problems. But as you can see, it’s not always so.
Spend some time getting the facts about how the process will impact your bottom line. If it makes sense, go for it.
And if not, take a pass.
Most income taxes cannot be discharged in bankruptcy, but some can. To find out whether yours can, your lawyer will need your tax account transcript. The IRS makes these available now on line. You can download yours here. Why do you need that? Your lawyer can use your account transcript to see if your taxes […]The post Before bankruptcy: Getting your tax account transcripts appeared first on Robert Weed.
The Statement of Current Monthly Income is used by judges to determine if your income level raises the question of abuse of the bankruptcy laws. Part of the responsibility of the judge in a bankruptcy case is to ensure that debtors do not abuse the bankruptcy laws and avoid paying debts by filing bankruptcy when they have the means to pay. Prior to 2005, this determination was made at the discretion of judges. After new bankruptcy laws were passed in 2005, judges are no longer able to use their discretion, but instead follow the formulas outlined in the law to determine if there is abuse. The Statement of Current Monthly Income provides this information to the judge.The post The Statement of Current Monthly Income and Your Bankruptcy Plan appeared first on Tucson Bankruptcy Attorney.
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