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I ran across an interesting lottery story with an interesting bankruptcy twist. This story took place in Syracuse, New York where a down and out maintenance worker named Robert Miles bought a scratch off lottery ticket in a quick mart in 2006.Addicted to drugs at the time, Mr. Miles took his ticket to the proprietors of the Green Ale Market to find out if he had won. The owners of the Market responded that yes, he had won $5,000. In reality, the winning ticket was worth $5 million. The store owners gave him $4,000, keeping $1,000 of the “winnings” for themselves as a fee(!). The store owners then waited six years to submit the winning $5 million ticket.Officials at the state lottery office launched an investigation because they were suspicious that the purported winner had waited six years to come forward and that the winner owned the store where the ticket was sold.When he read about the store owners’ stroke of luck, Mr. Miles – now sober – came forward to say he had been ripped off. The store owners ended up in jail and Mr. Miles was awarded his deserved $5 million.The news story also reports that in 2008, Mr. Miles filed bankruptcy, “knowing that he should have been a millionaire five times over.”This got me thinking about the bankruptcy implications of this story.First, I am assuming that when Mr. Miles has or will forthwith notify his bankruptcy attorney and Chapter 7 trustee about this newly discovered asset. The trustee will file a motion to reopen the Chapter 7 case and will ask Mr. Miles to write the trustee a check sufficient to repay all creditors whose claims were discharged in his bankruptcy.Second, it would be interesting to know if Mr. Miles included the disputed lottery win as an asset on Schedule B of his bankruptcy case. The story is silent about Mr. Miles’ actions between 2006 and 2012 but it appears that Mr. Miles figured out prior to filing bankruptcy that he had been ripped off.If he did not include this disputed asset on Schedule B, it is possible that his discharge will be revoked, or, less likely that he could be investigated for bankruptcy fraud 1 My guess is that the disputed lottery winnings were very speculative in 2008 and that the United States trustee will not try to make trouble for this very lucky winner, but that possibility certainly exists.We can draw several lessons from Mr. Miles’ unusual tale. First, make sure to include in your bankruptcy petition every asset you own, even those that are in dispute and unlikely to pan out. Second, if you did not include a speculative asset in your initial filing, reveal that asset as soon as you learn that it may be collectible 2.I am happy that justice prevailed for Mr. Miles and I hope that he puts his trust in honest advisers this time.
- The penalties for failing to include an asset can be severe. For example, a debtor’s failure to list a lawsuit where he is the plaintiff may preclude that debtor from pursuing damages post bankruptcy. ↩
- This would involve filing a motion to reopen your case for the purpose of amending Schedule B to add an asset. ↩
The post Another Lottery Story with a Bankruptcy Angle appeared first on theBKBlog.
You most certainly can stop bill collectors from calling you once you hire an attorney to handle your debt situation. Under the Fair Debt Collection Practices Act, creditors are prohibited from contacting you once they are made aware of the fact that you have representation. If creditors violate this Act, they can be sued in+ Read MoreThe post Can I stop bill collectors from calling me? appeared first on David M. Siegel.
Most of our bankruptcy clients are understandably concerned with how their debts are going to be reflected on their credit reports after discharge. After you obtain a discharge of your debts, certain facts about your discharged debts may continue to appear on your credit report.
The Fair Credit Reporting Act requires consumer reporting agencies to maintain an accurate record of your credit information. Creditors who report your information to the consumer reporting agencies are legally obligated to be truthful and accurate. The FCRA dictates the kind of information that they can report, and the length of time that the data can appear on your credit report. If they do not report accurate or truthful credit information about you, you can dispute that information or take other action if you are harmed by their violations.
Your bankruptcy information can be reported for up to ten years. While it may seem like negative information, the reporting of your bankruptcy discharge is at worst a mixed bag.
After all, a bankruptcy discharge can “clean up” debts that used to show up on your credit report as delinquent. This is so because discharged debts can no longer be reported as being unpaid or in a past due status. Moreover, each reported debt should be reflected as having a zero balance or shown as discharged or included in bankruptcy. A debt cannot be listed as currently owed, active, delinquent, charged off or having a balance due. When your discharged debts are reported inaccurately your credit rating could unnecessarily suffer.
In my next post, I will discuss the steps for cleaning up your credit record in the event that debts are inaccurately reported after bankruptcy.
The original post is titled How Your Debts Should Be Reported on Your Credit Report After Bankruptcy , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
The Center for American Progress (CAP) released a report that suggests Congress should reclassify how student loan debt is discharged in bankruptcy. The report encourages Congress to review laws for both private and federal loans and how they could be handled in bankruptcy. Currently, student loan debt is almost impossible to discharge and it has [...]
Bringing you the most up-to-date news, tips and blogs throughout the web. Here’s your Bankruptcy Update for August 29, 2013 San Bernardino, California, gets bankruptcy protection China’s Debt-Laden Steel Industry On The Brink Of Bankruptcy My Employer is Filing for Bankruptcy-What do I Need to Know?
Out of the 70 percent of Americans who file for bankruptcy, over 60 percent of them file due to debt from medical bills. Many consumers continue to struggle in paying medical bills and it continues to be the leading cause of bankruptcy. A recent report looks at how ethnic groups such as Latinos face ongoing [...]
Insider PaymentsYou got a large chunk of money and paid the loan from your Mom or other family member and now are ready to file bankruptcy. Or you have a high balance in bank accounts prior to filing a bankruptcy so you are going to take the money out and pay back a loan to a family member right? Wrong. There is a section of the bankruptcy petition where these sorts of payments must be specifically listed. You are going to disclose them on your petition but the money is already gone anyways so nothing the trustee can do about it right? Wrong again.The bankruptcy petition asks about these sorts of payments to insiders for the reason that they can do something about it. The section of the petition that is dedicated to these sorts of payments is known at the Statement of Financial Affairs. The Statement of Financial Affairs requires that you list any payments to family members or friends in the past year. In addition to listing that the payment was made, you must also list the name and address of the person the payments were made to, the amount(s) of the payment(s) and the date(s) of the payment(s).Why do you have to list this information? These payments are known as insider payments or preferential payments. The trustee can reverse any payments made to insiders. However, you can avoid the trustee from contact your family member and taking the money from them. You can settle with the trustee yourself sometime for a fraction of the amount paid to your family member. Sometimes the trustee will even allow you to pay the preferential payment amount to the trustee over several months in some sort of payment plan. What if you do not want the trustee to contact your family member but you need more than a few months to pay the money to the trustee? You can pay the amount to your unsecured creditors over the life of the bankruptcy through a Chapter 13.So what do they do with money when they collect it back from your family member or receive the money from you? The trustee notifies your creditors that asset with be recovered and given them a chance to file a proof of claim with the court. Once the deadline to file proof of claims has passed, the trustee disburses the money on a prorate basis to your creditors.
I am not eligible for Chapter 7 yet so I will file Chapter 13 and then convert when I am eligible for Chapter 7 discharge. Unfortunately no. Discharge eligibility is determined at the time a bankruptcy case is filed. At the time of the case is filed, using the date that the case was filed, it is determined whether the debtor or debtors is/are eligible to receive a bankruptcy discharge. Given that there are different time limits depending first on which chapter of bankruptcy you filed previously and depending second on which chapter of bankruptcy you are filing under now, a debtor may be eligible for discharge under one chapter of bankruptcy and not eligible for discharge under another chapter of bankruptcy. The most common reason that a debtor is not eligible for discharge is due to a previous discharge. This can almost always be overcome by the debtor waiting to file until the time limit has passed based on the chapter of bankruptcy they filed previously and the chapter of bankruptcy they are filing under now. The guidelines are as follows:If you filed a prior Chapter 7 and now want to file a Chapter 7, you must wait 8 years to file from the filing date of the first petition.If you filed a prior Chapter 13 and now want to file a Chapter 7, you must wait 6 years to file from the filing date of the first petition.If you filed a prior Chapter 7 and now want to file a Chapter 13, you must wait 4 years to file from the filing date of the first petition.If you filed a prior Chapter 13 and now want to file a Chapter 13, you must wait 2 years to file from the filing date of the first petition.So, you need to file again but have not reached the time limit to receive a discharge. Yes, you can still file a Chapter 13. You can be in a Chapter 13 bankruptcy without receiving a discharge. However, you cannot simply convert to a Chapter 7 when the time limit has passed because again, eligibility was determined on the day the case was filed. You are not out of luck. You can dismiss the Chapter and file a new separate Chapter 7. Because this is a whole new bankruptcy eligibility for discharge is then determined by the new filing date.
Refund Anticipation LoansThese loans are some of the highest cost loans that exist. A borrower pays anywhere from 40% to 700% depending on the lender and loan amounts. While this seems like a great option when you are on a tight budget, it may be just the opposite. You are due $4,500 for tax refund. You want your money 4 weeks earlier that it would normally be received so you obtain a refund anticipation loan. You have just now handed over $1500 so that you can have $3,000 only a few weeks earlier! Doesn’t seem worth it to me at all.Luckily for those tempted by this bad financial option, the refund anticipation loans may no longer offered as there will be nobody to back the loans. The FDIC just ordered the underwriters who back these loans to stop backing these controversial loans. The FDIC’s argument is that the loans themselves are “unsafe and unsound.” The loans are now even more so unsafe and unsound because the IRS no longer provides bank it debt indicator. This debt indicator was a tool used by the loan providers used to determine whether a taxpayer, soon to be borrower, had outstanding tax liabilities that could be garnished from a tax refund which would result in the loan provider not being paid back the loan from the expected tax refund if it is not received.People who are in support of refund anticipation loans state that the one-time fees help deliver money quicker to those people who always live paycheck to paycheck. The refund anticipation loan supports argue that if these refund anticipation loans are not available to these people that live paycheck to paycheck that they would simply just seek the money from other sources with possibly even higher interest rates and fees.Refund anticipation loans however should become less necessary as IRS has started offering direct deposit options for tax refunds often within 7 to 14 days. The IRS’s program offering depositing refunds onto prepaid debit cards should also decrease consumers needs to refund anticipation loans. The ultimate decision as to whether you really need a refund anticipation loan may depend on your specific situation but it should be cautioned that you will have a significantly larger sum of money to help with your situation if you can simply wait a few more weeks. Couldn’t you wait a few more weeks in order to receive an extra $1,000+?
I do not have money so how do you expect me to pay you?The easy answer is that you may not be able to afford not to pay an attorney to file a bankruptcy for you. While it often seems odd to perspective clients that there are fees involved, it honestly may be cheaper than the alternatives. Sounds crazy right? Not so. Here are scenarios where not filing a bankruptcy will cost you more money than filing bankruptcy:
- You took out a payday loan for $500. Due to the high interest on these loans, you know owe them $250 bi-weekly for four pay periods for a total of $1000. If you provided your bank account information to them when the loan was received or if you provided postdated checks at the time the loan was received, they are going to take their money regardless of whether you go in to make the scheduled payments. In this scenario, over the next two months you will be paying them $1000. In some cases, this is likely enough to pay all or most of the fees involved in a bankruptcy.
- You have credit cards or medical bills piling up and you are struggling to stay current even on the minimum monthly payments for all of them. You are slowly getting farther and farther behind and the creditors are being to call inquiring about payments. You keep promising payments but are unable to follow through with making them. Eventually the debts are sent to collections and the phone begins to ring even more from collection agencies attempting to collect payment. If no payments are received or the requested amounts are not received they likely will file a lawsuit against you in state court. You will receive a summons to appear in court. If you appear you may be able to ask for a continuance to buy you some time and the next court day whether you appear you not you will likely receive a judgment. Once the creditor has obtained a judgment they can appear to the court for a garnishment or a bank levy. If they garnish your check they can take up to 25% of your paycheck every pay period until the debt is paid off while occasionally having to renew the garnishment and adding their attorneys fees to your balance owed. If the creditor puts a levy on your bank account there will be a returned date listed and on that return date any funds in the account will be sent to the creditor.
As listed above, having unpaid delinquent debt may actually cost you more money than the fees involved in a bankruptcy. If you are struggling to stay afloat contact a bankruptcy attorney today to discuss your options.
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