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This is the case of Monique White who comes to me from Chicago, Illinois seeking debt relief. This white did a Chapter 7 back in 2012 but the case was dismissed so she never received a discharge. She owns no real estate, she’s not a homeowner and she is currently living in a monthly rental situation on a property that is currently in foreclosure. She has a 2006 Chevy HHR which is financed by Black Hawk Financial. She is up to date on that payment and she wants to remain current on it.
In terms of personal property, she has no checking account and no savings account. She has household goods worth approximately $1000 and she has minor clothing. She does have life insurance which is a death benefit only and when she passes, someone will receive the death benefit. She is also receiving a tax refund which is typically between $6000 and $7000 per year.
Ms. White is single with a dependent child age 14. She has been working the last seven months as a representative for EN Services which is a company that handles industrial products. She is paid once a week and her monthly income is approximately 13 $89 per month.
In terms of monthly expenses, she pays $550 in rent. Her cellular phone bill is $50; her cable television bill is $80 per month. She spends $300 in food, $65 in clothing, $55 in laundry and $35 in medical bills. She has $250 expended per month for gas and transportation, $50 for recreation and $88 for auto insurance. Childcare costs are $100 and her auto payment is $356.
When you take a look at her income minus her expenses, she has no money available to repay her debt. In the last three years, she has earned approximately $18,000-$20,000 per year and a little bit of child support for her son but it is spotty at best. She has had a couple prior addresses in the last three years, one in Chicago and one in Forest Park, Illinois. There are no co-debtors. She does owe $15,000 for student loans and she has no tax debt. The main culprit that’s hurting her is a Pay Day loan for $3000, an old lease debt for $4000, parking tickets which are not eliminated in a Chapter 7 bankruptcy to the tune of $3000 and credit card debt of $300.
Based on what I am seeing, I would recommend a Chapter 7 fresh start. Eliminate the debt that can be eliminated and work out payment plans for the debt that cannot be eliminated such as parking tickets. So for Ms. White, Chapter 7 would be my recommendation.
This is the case of Tamika Davis who hails from Chicago, Illinois. She is into talk about debt relief either a Chapter 7 or a Chapter 13 bankruptcy preferably. She has never filed a bankruptcy case before. She is not a homeowner. She does have a landlord and she is on a month to month lease. She has a Buick that she co-owns with her boyfriend but she is not really sure if she’s on the title so she’s going to get back to me with that information.
In terms of personal property, she has a checking account at Chase Bank. She has minor household goods worth approximately $1000 and minor clothing worth approximately $500. She does expect to receive a tax refund of approximately $3500 per year. And she does not have the ability to sue anybody for personal injury or workers compensation.
She is a single mother and she has a minor child who is 10 years old. She is currently working at Harris and Harris as a customer service rep and she has been doing that for the past two years, earning approximately $28,000 per year. In addition to her income, she also receives Social Security income for her son at the rate of $412 per month. So her gross monthly income from all sources is approximately $1912.
When we looked at her expenses, she pays $650 for rent. Her electric and gas is $75 per month. Her cellular phone bill is $200 per month. Cable television is $160 per month. Food is $400 per month. She spends $40 per month in clothing. Laundry and dry cleaning amounts to $60 per month. She spent about $125 a month on recreation and she has childcare expense of $117 per month.
In the past three years, she has averaged between $28,000-$25,000 per year and she is also receives approximately $4700 during the last three years for Social Security for her son. She did have a prior address that she lived two years ago in Chicago as well. There is one co-debtor on her vehicle and also there are some parking tickets that might be tied to that vehicle. She does not owe any student loans and she does not have any income tax debt.
In terms of debt, it is credit card debts of approximately $600, medical debt of approximately $4000 and a judgment of $5000. She also has past-due utility bills of $2500 and a personal loan of $1500.
Based on what I am hearing and what I see, I would recommend Ms. Davis file a Chapter 7 fresh start. Keep the property that she has, eliminate the debt and get back on her feet.
This is the case of Felicia Meachum who comes to us from Oak Park, Illinois for a bankruptcy consultation. Felicia has never filed for bankruptcy before. She is not a homeowner and she is currently renting from Fox Partners LLC. She has a 2006 Pontiac G6 financed by B-Rider and she owes approximately $14,000 on the vehicle and it’s worth $15,000 so she has a little bit of equity in the vehicle. The monthly payment is $360 per month and she is current.
In terms of personal property, she has a checking and savings account at Chase Bank with very nominal balances. She has a security deposit with her landlord of $1250 per month and she has minor clothing and minor furniture. She does have a term life insurance with a death benefit only of approximately $250,000. She does receive child support at $150 every two weeks and the provider is current. She is divorced. She has a daughter who is 11 years old. She has been working for the last two years at Northwestern University and she earns approximately $40,000 per year. When you add in the child support on top of the $40,000 per year, she does have sufficient income to likely do a Chapter 13 bankruptcy.
In terms of debts, her rent is $1195 per month. Her telephone is $130 per month. Her cellular phone is $195 per month. She has food expense of $400 per month, laundry and cleaning of $20 every week and gas and tolls at $80 per month. Her auto insurance is $200 per month and her auto payment is $189 every two weeks. So income minus expenses is real close but I think she does have something available that would go towards the creditors each month.
In terms of income, she has made approximately $40,000 for the past three years. She did have a vehicle that was repossessed by Santander back in 2012 for a Land Rover. She has a safety deposit box with nothing in it other than papers and maybe a couple coins, but nothing of real value. And she had a prior address in the last couple years in Oak Park, Illinois. She did try a business that ended in 2010. That business has no assets. She is the only one on these debts. There are no co-debtors. She has student loans through Illinois Student Assistance to the tune of $40,000. And whatever IRS debt she owed at the time of the consultation she says she has now paid off. In terms of debt, she has credit card debt. She has an SBA loan. She has a gas bill, phone bill, cell phone bill and her vehicle.
So this is the case where if there is something available per month, I’m going to recommend a Chapter 13 bankruptcy. So Felicia Meachum, we are going to go through your income and your expensive in great detail and provided you have a little bit available per month to repay your creditors, I’m going to recommend a Chapter 13.
Those filing personal bankruptcy in California in 2013 can now protect a little more of their assets in a Chapter 7 bankruptcy, and potentially pay a little less into a Chapter 13 plan. That’s because the California bankruptcy exemptions have been increased modestly as of January 1, 2013. I’m not complaining as this is the first increase in the amounts debtors can keep in a Chapter 7 bankruptcy in California since April 2010. And anyone needing to file bankruptcy in California should be grateful to Assembly Member Bob Wieckowski for introducing the bill, AB 929, that raised the bankruptcy exemptions. Unfortunately, the California Bankers Association and the National Association of Bankruptcy Trustees (go figure) opposed the passage of AB 929 and were able to prevent the bill’s originally proposed increase in the homestead exemption. The homestead exemptions that had been contained in the bill would have raised the amount of equity that a single debtor could protect in bankruptcy to $150,000 from the current $75,000. Married debtors under the age of 65 could have protected up to $250,000 of equity instead of the current cap of $100,000, and those over 65 could have protected up to $350,000 (up from $175,000).
Although the homestead exemption increases above were ultimately removed from the bill, the new law does increase the income threshold for bankruptcy debtors aged 55 or older in order to be eligible for the $175,000 homestead exemption. That is, those 55 or older and single with incomes of under $25,000 gross annual income can now qualify for the higher homestead exemption usually reserved for those 65 or older. Joint debtors over 55 with income of up to $35,000 can also qualify for the higher homestead exemption in bankruptcy. Additionally, the new law requires that beginning in April 2013 and every three years thereafter, the California Judicial Council will have to submit to the California legislature proposed adjustments to the homestead exemption based upon changes to the annual California Consumer Price Index, so incremental increases to the homestead exemption will be on the horizon for California bankruptcy debtors.
Apart from these changes to the 704 homestead exemptions, the real help for those filing personal bankruptcy in California comes in increases to the 703 “wildcard” exemptions. These saw some fairly significant increases in the amounts Chapter 7 bankruptcy debtors may protect in motor vehicles (up to $4,800 from $3,525) in household goods and personal effects (up to $600 per item from $550), in their tools used in business (up substantially to $7,175 from just $2,200). Additionally, the exemption for personal injury claims rose to $24,060 and the exclusion for pain, suffering, and actual pecuniary loss was removed. Finally, the combined “wildcard” exemption itself, was increased to $25,340 (up from $23,250).
Perhaps the most significant increase above was the raised exemption amount for “tools of the trade” or tools used in a debtor’s business. As we have seen a large increase in small business owners filing personal bankruptcy in San Jose, the ability of such bankruptcy debtors to keep more of their tools and business implements will undoubtedly help more of the self-employed to get a fresh start from bankruptcy and continue working in their profession. After all, the whole point of our bankruptcy exemptions is to give the debtor the ability to start over, not from zero, but rather with a fair amount of assets with which he can hopefully build a new life free from debt.
Jordan E. Bublick, Miami and Palm Beach, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983
When I mention to clients that they will be required to appear at a 341 First Meeting of Creditors after we file their bankruptcy, most of them cringe and become nervous immediately. They imagine a Meeting where they are interrogated and questioned about every aspect of their case. 
In El Paso, the these meetings are nothing to be nervous about. I explain to my clients from inception that their 341 First Meeting of Creditors is in most cases quick and painless. In a normal Chapter 7 case you will be asked the same series of questions as every other debtor. If anything else is going to come up we will almost always know ahead of time. As your attorney, it is our job, to make this experience as simple and painless as possible. I always make an effort to explain to clients that the questions asked are straightforward and simple.
In Chapter 13 Creditors Meetings, the questioning may be more extensive but again they are straightforward questions and the Chapter 13 Trustee is not trying to trick you. All in all, your 341 First Meeting of Creditors should not be a torturous experience and your bankruptcy attorney should explain to you exactly what you should expect.
One last note, do not forget your SOCIAL SECURITY CARD and DRIVERS LICENSE!! Your meeting will not be held without it!!
In a few weeks taxpayers will begin filing their 2012 tax returns, and for those taxpayers who are also filing bankruptcy at the same time a large number of them will forfeit the refund to the Chapter 7 Trustee. For nearly 20 years I have witnessed the Chapter 7 Trustee seize tax refunds from unsuspecting debtors. This happens every year, over and over again. The sad part is, this should almost never happen.
Are tax refunds protected in bankruptcy?
Tax refunds and other financial assets are protected in Nebraska, but there is a limit as to how much. The laws that protect property in bankruptcy are called exemption laws, and there are two Nebraska exemption laws that protect tax refunds:
- "Wild Card" Exemption (Nebraska Statute 25-1552). This exemption law protects up to $2,500 per debtor of any type of personal property, including tax refunds. Married couples filing a joint tax return may thus protect up to $5,000.
- Earned Income Credit (Nebraska Statute 25-1556). This exemption protects whatever amount of the tax refund that comes from the federal and state earned income credit. There is no dollar limit to this exemption.
What happens if my tax refund exceeds the amount of exemptions?
If your tax refund exceeds the amount of available exemptions, then the Chapter 7 Trustee has the duty to claim the non-exempt portion of the tax refund and to pay that amount over to your creditors.
Losing a tax refund to the Chapter 7 Trustee should almost never happen, but it frequently occurs because the debtor's attorney fails to conduct a thorough interview of the debtor and fails to properly estimate the amount of the tax refund.
Estimating the amount of a tax refund is tricky since tax laws change every year and the deductions or credits a person may claim change as well. The practice rule here is that if you are not 100% sure of what the tax refund will be, delay filing the case until the tax return is prepared.
Don't pay back loans to relatives with the tax refund prior to filing bankruptcy!
Another nasty problem associated with tax refunds occurs when a person uses the refund to repay loans owed to family members and then files bankruptcy shortly thereafter. This is a big mistake. Because bankruptcy law is designed to ensure fair and equal treatment to creditors, any payment made to a family member or "insider" (such as a business partner) must be disclosed and the Chapter 7 Trustee may be able to reclaim the money to redistribute to all of your creditors on a pro rate basis.
Be prepared to tell the Trustee how you spent the tax refund.
If you received a large tax refund and then shortly thereafter file bankruptcy, the Trustee will ask you what you did with the money. Where did all that money go? A good bankruptcy attorney will anticipate this question and provide the answer within the bankruptcy papers (usually on the line where tax refunds are listed). If you received a $10,000 refund and then filed bankruptcy 3 days later, be prepared for a lot of questions at court about how you spent the money.
In my latest Bankruptcy Law Network post, I talk about a Chapter 13 debtor’s obligations after his case is filed. In this video I talk more specifically about a Chapter 13 filer’s obligation to make his on-going mortgage payments, on time, as they come due after filing.
Am I Required to Make Mortgage Payments After Filing Chapter 13? from Jonathan Ginsberg on Vimeo.The post Pay Your Mortgage After You File Chapter 13 if You Want to Keep Your House appeared first on theBKBlog.
In April 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act, or “BAPCPA” as we bankruptcy attorneys call it. On the day BAPCPA passed, I was interviewed by our San Jose CBS affiliate, KPIX, about the sweeping changes to bankruptcy law contained in BAPCPA. Among consumer bankruptcy lawyers everywhere, there was a good deal of handwringing over what the new bankruptcy law would mean for the typical honest debtor needing a fresh start from Chapter 7 bankruptcy.
Sure, BAPCPA introduced the Means Test, thereby supplanting the insight and good judgment of local bankruptcy judges with standardized living expenses gleaned from the IRS, as to whether a Chapter 7 debtor could afford to make payments on her debts. And, yes, it required debtors to reaffirm their car loans, thus waiving part of their discharge. Perhaps most annoyingly, BAPCPA introduced the fairly inane requirement that all individuals filing personal bankruptcy complete credit counseling and debtor “education” courses in order to receive a discharge. But in the end, the sky didn’t fall, and once we bankruptcy attorneys all became familiar with the new requirements, and once the media hype died down, everyone realized that the powerful debt relief afforded by Chapter 7 bankruptcy remained the best option for many families drowning in debt.
Why am I rehashing this eight-year-old news now in 2013? Because one of the consequences of BAPCPA’s passage in 2005 was that Chapter 7 bankruptcy filings increased enormously between the passage of the act in April and the day it went into effect in October 2005. The hype surrounding BAPCPA led the public at large to believe that no one would ever qualify for bankruptcy relief again, or that it would become oppressively difficult to file. So it seemed nearly everyone with a bit too much credit card debt at the time filed Chapter 7 in the months leading up to October 15, 2005.
Of course, those folks who filed Chapter 7 in 2005 had no idea that just three years later, we would have a financial meltdown and that the Great Recession would thereafter scourge our economy for the ensuing four years. 2005 bankruptcy filers did not know then that in a few short years massive unemployment and a foreclosure crisis would put them in greater peril than they had been in 2005 with credit card debt.
Sadly, those who did receive a bankruptcy discharge in 2005 have been unable to seek bankruptcy relief under Chapter 7 again because BAPCPA also lengthened the number of years to eight that one must wait to obtain a successive Chapter 7 discharge. Sure, one may have filed Chapter 13 in as few as four years after that 2005 case was filed, but if you are unemployed with no source of income other than unemployment, it’s awfully difficult to show income sufficient for a feasible Chapter 13 plan. I’ve fielded dozens of calls from individuals who filed Chapter 7 back then, but who, through no fault of their own have lost jobs, incurred astronomical medical bills, lost their homes, and have been sued in the intervening years. Unfortunately, I’ve had to tell them, they could not file Chapter 7 again until 2013. If they couldn’t feasibly make Chapter 13 payments, they were just going to have to hang tough until then.
The good news for those who now have judgments against them for medical bills, credit card debt, car repossessions, and equity lines from foreclosed homes, but who couldn’t file Chapter 7 because they filed in 2005, this year you may file again. If you’re eligible for Chapter 7 because your necessary living expenses exceed your monthly income, and if you filed back in 2005, then count forward from the filing date of your last petition. You can file another Chapter 7 petition eight years from that date.
We’re consumer bankruptcy attorneys in San Jose, California. If you live in the Bay Area and have more debt than you can handle, give us a call for a free consultation.
A very hot topic in South is the "short sale". This usually involves a sale to another person with your mortgage company agreeing to satisfy its mortgage with a payment of less than the full amount due. A variation on the short sale is the "short refinance." In a short refinance, a person tries to refinance his mortgage with a new mortgage for less than the full amount owed on his existing mortgage with the existing mortgage company agreeing to take less than a full payoff.
Chapter 13 bankruptcy reorganization may offer some people results similar to a short refinance. If the value of your home has fallen dramatically, like most real estate has in South Florida, you may be able to wipe out or "avoid" your second mortgage. For example, if you owe $400,000 on your first mortgage and $100,000 on your second mortgage and your home has fallen in value to $399,000, you may wipe out or avoid your second mortgage as there it is wholly unsecured. That is, there is no value or equity to "secure" it.
If your foreclosure involves real estate that is not your principal residence, you may be able in Chapter 13 bankruptcy to reduce even your first mortgage down to the value of your home in addition to wiping out your second mortgage. You may also be able to lower your mortgage interest rate.Jordan E. Bublick, Miami and Palm Beach, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983
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