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When considering filing for bankruptcy there are a number of things to consider. Some of them will be related directly to paperwork, but many of the factors will be life decisions that might not seem related to your bankruptcy on its face. One such example is the decision to relocate to a different state. Moving within a state will not cause you any problems with filing, but if you are retaining an attorney you may want to see if that attorney will be able to handle your case after your relocation. If you are staying in the same general area it shouldn't be a problem, but if you are moving a considerable distance you might be outside of your attorney's practice area or even outside of where your attorney is licensed to practice. If you are considering filing for bankruptcy and may be moving out of a state there are a number of factors to consider. First, you must be a resident of a particular state on the day of filing to file in that state. So, if you retain an attorney in Missouri and then move to Kansas before your case is filed you will have to find other representation. Not only do you have to live in the state on the day of filing, but you must have lived in the state for the greater part of the 180 days leading up to bankruptcy. Basically, you must live in the state for 91 days or more prior to filing. If it is imperative that you file right away you may want to consider filing in your current home state prior to moving out of state. If you are considering filing for bankruptcy in a state that you have not lived in for at least two and a half years you will want to notify your attorney of this as soon as possible. This does not mean that you cannot file, it simply means that the exemptions you will use might be different that the state you live in. This is not a problem, and does not mean that you cannot file, it just means that your attorney may have to do a bit of research to determine what exemptions apply. Depending on the circumstances you may use the exemptions from a state of prior residence or federal exemptions. If you have not lived in the state for at least two and a half years your exemptions will be based on the preference of the state that you lived in for the greater part of the six months prior to the two years prior to filing for bankruptcy.If you have questions, or would like to set up a consultation, contact a St. Louis Bankruptcy Attorney Today.
An American tradition is to take the family to the beach for Memorial Day weekend, but if you or your spouse is about to file bankruptcy, do NOT charge this vacation on your credit card. Your credit card company will heavily scrutinize any charge made within 90 days of filing bankrupcy, so my typical advice is to not even use your credit cards within 90 days of filing; however, there is nothing inherently (or legally) wrong with living your life and supporting your BASIC needs on credit. The problem comes from section 523 of the bankrupcy code, which provides that any amount owed to a single creditor over $600 for a luxury good or service within 90 days of filing is presumed to be nondischargeable. Nondischargeable means that the debt will not be wiped out by your bankruptcy discharge. It does not matter whether you are filing Chapter 7 bankrupcy or Chapter 13 bankruptcy, the amount you charge for a luxury vacation (or almost any heavy travel) will be determined nondischargeable
What If I Pay OFf the Credit Card?
Many people may think they are in the clear by simply paying off the amount charged for the vacation, but this payment, since it is likely going to be more than $600, could be viewed as a preferential transfer by the trustee. If the trustee does attack this payment by suing your creditor for the amount received, the creditor can then sue you in bankruptcy court (called an adversary proceeding) for the amount taken by the trustee. Often this will not happen, as the amount that the trustee could recover for the “preferential transfer” is not worth the cost of litigating with the credit card holder you attempted to pay off.
My Advice
If you really have to take a vacation right before filing, then you would have had to save for it or have the non-filing spouse charge it on his or her credit card. While not my official advice, I understand some people do not want to give up a family tradition because one spouse has to file bankruptcy.
Many people turn to bankruptcy for help when they are in over their heads financially. Bankruptcy can take care of a number of debts, including unsecured creditors. However, there are some types of debts that are not dischargeable through either a Chapter 7 or Chapter 13 Bankruptcy. The list below is intended as guidance, not as an all-inclusive list. If you have specific questions you should contact your attorney. Some examples of non-dischargeable debts are as follows:1. Domestic support obligations. These may include any child support, alimony, or any other payment ordered by the court that related for family care and support. This can category would also include divorce and separation agreement settlements.2. Student loans are not generally dischargeable. However, in very extreme cases they may be dischargeable if there is an extreme hardship. Generally this will be limited to cases where the debtor is unable to work or pay the student loans for some reason out of the debtor's control. This must generally be a permanent issue, not a short term issue. For example, if the disability is short term and you will be able to return to work in a few months your loans will not be discharged.3. Debts owed to government agencies. This can include traffic tickets, fees associated with criminal charges, criminal restitution, and taxes. In some circumstances, where taxes were timely filed (or filed at least two years prior to filing the bankruptcy) and they are more than three tax years old, the debt may be dischargeable. 4. Debts related to personal injury or death caused while the debtor was under the influence of drugs or alcohol. However, fees, fines, and settlements from car accidents not caused while driving under the influence are generally dischargeable.5. Any debt related to fraud or misrepresentation, including embezzlement, larceny, or failure to perform certain fiduciary duties. Keep in mind that it can be considered fraud to not list a creditor on your bankruptcy petition and schedules. If the creditor does not get notice the debt may not be discharged. 6. Debts incurred very close to filing for bankruptcy, particularly for luxury goods or services. When anticipating filing for bankruptcy debtors should not make extravagant purchases to avoid any potential issues. If you are unsure about this you should speak with your attorney and explain your intentions and current situation.If you have questions, or would like to schedule a consultation, speak with a St. Louis Bankruptcy Attorney Today!
Everyone who files a bankruptcy, Chapter 7, Chapter 11, Chapter 13 - consumer or business must attend a First Meeting of Creditors (341 Meeting). Although it is called a First Meeting of Creditors in most consumer filings rarely does a creditor make an appearance. What actually happens is the client, with his/her attorney appear and answer questions to the appropriate Trustee ( Chapter 7, 11, or 13) under oath. In El Paso, Texas both the Chapter 7 Trustee and the Chapter 13 Trustee set six(6) cases an hour which basically means that a debtor has approximately 6-7 minutes to answer questions. In consumer cases these meetings are brief and fairly routine.
These Meetings are held during the week, so often a person has to take time off from work, which may result in a loss of income and depending on where one lives in El Paso a significant drive (gas). In short, a First Meeting of Creditors can be disruptive to a person’s routine. What's more disruptive than attending a First Meeting of Creditors is to have to attend a second First Meeting of Creditors. During every Chapter 7 First Meeting of Creditors docket and every Chapter 13 First Meeting of Creditors docket there is at least one client who is told by the Trustee that he cannot go forward with the Meeting and the Meeting will have to be rescheduled for a later date. Why? A debtor failed to bring required documents with them and as a result the Trustee is prohibited from moving forward with the Meeting.
Missing documents that require a client and their attorney to make a second trip:
- You must bring a government issued picture identification card, and it must be the original. Usually it's a driver’s license. Other forms of picture identification include a passport or a military identification card;
- You must bring your social security card, and again it must be the original. If a debtor has lost their card it is a simply process to go by a Social Security Office and apply for one. You will receive an official letter from the Social Security Office that one has been requested and this letter will be sufficient to satisfy the requirements.
- In a Chapter 13 case, you must bring your most recent pay stub.
Consumer debtors are under a great deal of anxiety because of fear of the unknown and unnecessarily embarrassed as well. It's easy to forget the required documents. Write yourself a note, put it in your To Do List, anything that will remind you to take these few documents so you can avoid having to make a second appearance at the First Meeting of Creditors.
Offer in Compromise: Is it Too Good to Be True?
Late-night television ads often make false promises of being able to pay off back taxes with pennies on the dollar. What they were referring to is called a offer in compromise. The Internal Revenue Service rules allow taxpayers to pay less than is owed when it is clear that it is not feasible for the taxpayer to pay the full amount. All the details of the program are included in the IRS’s booklet offer-in-compromise.
IRS Rejects Most Offer in Compromise Proposals
Traditionally, most offer-in-compromise proposals were rejected by the IRS. Yesterday, the Internal Revenue Service announced a new program, an expansion of its “Fresh Start” program, that will make it easier to have an offer-in-compromise accepted.
New Rules Make Offer in Compromise Easier
In general, the IRS looks at a person’s ability to pay taking into account both their current assets and future earning ability. The main changes in the program reduce the length of time a taxpayer will have to devote their future income to funding the proposed offer. Instead of having to devote a full five years of future income to the calculation of the proposed offer a taxpayer may be able to use only one year of future income.
New Offer in Compromise Guidelines
Another significant change is how a person’s disposable income will be calculated. The IRS uses a schedule of personal expenses called National Standards to calculate what a person’s reasonable expenses are. Then, those expenses are deducted from a person’s income to derive at the amount the IRS feels should be devoted to paying the tax liability. These National Standards are considered by most to be overly strict. The announced change liberalizes the standards and hopefully will be more economically realistic for the taxpayer.
Offer in Compromise Help
If you are faced with an overwhelming tax bill making an offer-in-compromise is just one option. There are a number of tools and approaches that can be used to solve financial problems. Feel free to give us a call at 480-820-0800 to learn more about how we can help you deal with tax problems and money trouble.
Original article: Offer in Compromise: Is the IRS Ready to Give You a Break?©2013 Arizona Bankruptcy Lawyer. All Rights Reserved.The post Offer in Compromise: Is the IRS Ready to Give You a Break? appeared first on Arizona Bankruptcy Lawyer.
You file bankruptcy and surrender your home through the bankruptcy. You do not have to worry about the house anymore right? Wrong! The bankruptcy takes care of your legal liability for the DEBT on the house. It does not remove your name from the deed of the property, meaning you are still the owner until the bank forecloses.Steps to Take When Surrendering a Property Through Bankruptcy:1. Purchase hazard insurance to cover any problems that arise while the house is vacant. A regular home owner's policy does not cover damage that occurs when the house is vacant.2. Winterize the home (if applicable): draining water from the pipes and/or leaving the heat on so the pipes do not freeze or burst.3. Maintain yard (if applicable): cut grass and trim as necessary to avoid citations from the city/county.Failure to do so can result in penalties and fines: Failing to have insurance or winterize the house will not affect the bankruptcy, HOWEVER:
- If the house is vandalized and/or the pipes burst the city/county will come after the owner of the house to fix the problems.
- The bankruptcy only takes care of the loan on the house, not the deed. It is the debtor's property until a sale occurs to transfer ownership.
- Fines or repair bills that arise after the filing of the bankruptcy are not part of the debts that are discharged.
Example: Debtor files bankruptcy and surrenders the real estate and moves out. The house is vandalized and the mortgage company delays foreclosure. The debtor did not keep insurance on the house. The debtor now is not liable on the loan, but also cannot sell the house in the present condition, especially since the lien is against the property. The debtor is being told to board up the windows, pay fines, etc. Problem: Debtor cannot force the mortgage company to foreclose if it does not want to. The debtor is then stuck with the property including cutting the grass in the summer and winterizing it in the winter.
If I file bankruptcy today will my paycheck still be garnished tomorrow?The short answer is yes. However, there are several things to keep in mind:If you are being garnished, you are likely filing bankruptcy to stop that garnishment. Filing bankruptcy will stop the garnishment. Creditors are not allowed to collect from you while you are in the bankruptcy. However, given that payroll is likely done several days before you are actually paid, the garnishment may continue 1-2 paychecks after the bankruptcy is filed. It is not as simple as filing and the garnishment stopping. Here is what has to happen:
- You file bankruptcy (making sure you list the creditor that is garnishing as well as the attorney for that creditor so that they can receive notice).
- After filing, have your attorney contact the creditor’s attorney and give them notice of the bankruptcy and request a release of garnishment. The creditor’s attorney then has to process this request and then send notice of the release of garnishment to both your attorney and to your employment to stop the garnishment.
- Once your payroll department receives the garnishment they release the garnishment and stop deducting from your paychecks.
This can happen in 1 day or in 1-2 weeks depending on how quickly the creditor and the payroll department move. However, if you are garnished AFTER the filing of the bankruptcy any money taken will be returned to you but again the time that this takes can range from a few days to a few weeks based on the creditors attorney and your payroll department depending on who has the money when the notice if received.To avoid all of the above, file the bankruptcy because you even receive a garnishment, a judgment or a summons. If you are in debt and cannot afford to pay your way out of debt, consult a bankruptcy attorney.
Affairs of the Checkbook: a Growing Problem…
When the word “infidelity” comes to mind, most people think of an extramarital affair, of a husband, wife or significant other cheating by sneaking around with another lover. In fact, America is so obsessed with the concept that there is an entire industry called daytime TV devoted to different versions of the issue. However, despite the fact that affairs of the heart receive most of the attention, affairs of the checkbook can be equally damaging and are rising in number. Financial infidelity can be defined as one member of a couple, who have consolidated their finances, lying about expenditures, credit card accounts, bank accounts and even earnings. According to Forbes, one in three Americans who have combined their finances admitted lying to their spouses about money, and another one-third of these adults said they’d been deceived.
A Personal Story
Although I have not had to deal with financial infidelity personally, the topic does remind me of a well-known story from my hometown. I grew up in Bloomfield Hills Michigan, an affluent suburb of Detroit. One of the Dads who coached my little sister’s soccer team was a well-liked and well-respected auto executive who outwardly appeared to have everything going for him. Unfortunately, this man, who we’ll call Jim, developed a gambling problem. At the time, Windsor, Canada, which is across the river from Detroit, housed the area’s only available casinos. Jim started to visit the casinos rather than going to work and eventually began to rack up large debts. His work suffered and he was fired. Rather than tell his family what happened, Jim woke up every morning, put on a suit and pretended to be heading off to work. However, rather than going to the office, Jim dutifully visited the casinos. Rumor has it that he gambled away most of his families savings before going on a spree of bank robberies to fuel his gambling habit. When he was eventually caught, the community was shocked and saddened. Jim’s family was devastated and put in dire financial straits. While this example is admittedly extreme, it provides an important lesson. The financial decisions of your spouse deeply affect you.
How a Financial Affair Can Lead to Bankruptcy
Other blogs and articles have covered the trust issues that are created by financial infidelity, so I won’t rehash them here. Instead, I want to delve into the ramifications that affairs of the checkbook can have on an innocent spouse. It is all too common in marriages for either the husband or wife to be solely responsible for managing finances. As a result, it’s not as difficult as you might imagine for one spouse to make expenditures that the other is unaware of. Similarly, large expenditures made over short period of time can fly under the radar. When joint credit is used, both parties to the loan are guarantors who are ultimately responsible for payment. If one spouse files for bankruptcy or cannot afford to make payments, the other will be solely liable. In situations where the breadwinner is the party sneaking around financially, poor decisions can wreak havoc on the more financially dependent party, especially in community property states. For example, if a wife who earns the majority of the household income spends lavishly on a joint credit card without telling her husband and the couple separates as a result, the husband will be on the hook for those purchases just as much as the wife. In community property states like California, the courts see the debts accrued over the course of the marriage as the responsibility of both parties. In the example above, the husband would have to take responsibility for his share of his ex-wife’s financial recklessness despite the fact that he earned far less money than his ex and did not spend the money himself. Situations like this often lead to one party being forced to pay the high cost associated with bankruptcy to get rid of the debt. In community property states, even if the wife were to have incurred the credit card bills on her own account, in her own name, the husband would still be liable for his portion. By contrast, in equitable distribution states, attorneys and a judge determine who owes what. In other words, in equitable distribution states, if your spouse racked up a lot of credit card debt in secret, you’re more likely to come out of your marriage not owing any of that money. Bankruptcy attorney can tell you where the story often ends: consumers who find themselves saddled with the debts of an ex-spouse are often forced to pay a bankruptcy lawyer to discharge the debt.
John O’Connor is a consumer class action attorney and founder of the National Bankruptcy Forum, a resource for consumers looking for information about bankruptcy.
Affairs of the Checkbook: a Growing Problem…
When the word “infidelity” comes to mind, most people think of an extramarital affair, of a husband, wife or significant other cheating by sneaking around with another lover. In fact, America is so obsessed with the concept that there is an entire industry called daytime TV devoted to different versions of the issue. However, despite the fact that affairs of the heart receive most of the attention, affairs of the checkbook can be equally damaging and are rising in number. Financial infidelity can be defined as one member of a couple, who have consolidated their finances, lying about expenditures, credit card accounts, bank accounts and even earnings. According to Forbes, one in three Americans who have combined their finances admitted lying to their spouses about money, and another one-third of these adults said they’d been deceived.
A Personal Story
Although I have not had to deal with financial infidelity personally, the topic does remind me of a well-known story from my hometown. I grew up in Bloomfield Hills Michigan, an affluent suburb of Detroit. One of the Dads who coached my little sister’s soccer team was a well-liked and well-respected auto executive who outwardly appeared to have everything going for him. Unfortunately, this man, who we’ll call Jim, developed a gambling problem. At the time, Windsor, Canada, which is across the river from Detroit, housed the area’s only available casinos. Jim started to visit the casinos rather than going to work and eventually began to rack up large debts. His work suffered and he was fired. Rather than tell his family what happened, Jim woke up every morning, put on a suit and pretended to be heading off to work. However, rather than going to the office, Jim dutifully visited the casinos. Rumor has it that he gambled away most of his families savings before going on a spree of bank robberies to fuel his gambling habit. When he was eventually caught, the community was shocked and saddened. Jim’s family was devastated and put in dire financial straits. While this example is admittedly extreme, it provides an important lesson. The financial decisions of your spouse deeply affect you.
How a Financial Affair Can Lead to Bankruptcy
Other blogs and articles have covered the trust issues that are created by financial infidelity, so I won’t rehash them here. Instead, I want to delve into the ramifications that affairs of the checkbook can have on an innocent spouse. It is all too common in marriages for either the husband or wife to be solely responsible for managing finances. As a result, it’s not as difficult as you might imagine for one spouse to make expenditures that the other is unaware of. Similarly, large expenditures made over short period of time can fly under the radar. When joint credit is used, both parties to the loan are guarantors who are ultimately responsible for payment. If one spouse files for bankruptcy or cannot afford to make payments, the other will be solely liable. In situations where the breadwinner is the party sneaking around financially, poor decisions can wreak havoc on the more financially dependent party, especially in community property states. For example, if a wife who earns the majority of the household income spends lavishly on a joint credit card without telling her husband and the couple separates as a result, the husband will be on the hook for those purchases just as much as the wife. In community property states like California, the courts see the debts accrued over the course of the marriage as the responsibility of both parties. In the example above, the husband would have to take responsibility for his share of his ex-wife’s financial recklessness despite the fact that he earned far less money than his ex and did not spend the money himself. Situations like this often lead to one party being forced to pay the high cost associated with bankruptcy to get rid of the debt. In community property states, even if the wife were to have incurred the credit card bills on her own account, in her own name, the husband would still be liable for his portion. By contrast, in equitable distribution states, attorneys and a judge determine who owes what. In other words, in equitable distribution states, if your spouse racked up a lot of credit card debt in secret, you’re more likely to come out of your marriage not owing any of that money. Bankruptcy attorney can tell you where the story often ends: consumers who find themselves saddled with the debts of an ex-spouse are often forced to pay a bankruptcy lawyer to discharge the debt.
John O’Connor is a consumer class action attorney and founder of the National Bankruptcy Forum, a resource for consumers looking for information about bankruptcy.
I recently saw an online advertisement for chapter 7 bankruptcy services by an attorney offering to do the work for rock bottom pricing. The attorney’s website failed to clearly indicate specific office address locations and made no mention of any relevant bankruptcy experience or applicable bankruptcy credentials. Really the website failed to disclose much at all except the attorney’s rock bottom flat rate pricing for chapter 7 cases.
There is nothing wrong with offering rock bottom pricing. In most cases, this attorney’s services might be great. However, the attorney – via his website – was quick to infer that bankruptcy attorneys who charge more than rock bottom pricing for chapter 7 cases are just ripping people off. That could not be further from the truth.
I believe this attorney’s intentions are good. I believe the attorney really thinks almost all chapter 7 cases are easy to prepare and are devoid of any complexity. If this attorney does think that, I believe it is due to a lack of experience practicing bankruptcy law and not being more well read on the intricacies of bankruptcy law.
I would be very concerned for a potential client who went to such an attorney for a chapter 7 case with tax issues, non-exempt assets, retirement accounts, or even a case where the debtor’s income is subject to the means test. The result might not be pretty. For example, if an attorney offers to get rid of huge tax assessments for rock bottom pricing via ch7 bankruptcy, I would just tell you to be very cautious and use your logic in choosing the right bankruptcy attorney to handle your case because it takes time, skill, and effort.
In practice, I have personally helped debtors who were in trouble because they either filed pro per (without an attorney) or they retained the lowest priced attorney they could find for their chapter 7 case. Oftentimes, these attorneys screw up things that are very basic in nature. However, when you screw up such fundamental things within the bankruptcy process, oftentimes there is no recourse but dismissal. In other cases, it can lead to a loss of assets that could have been protected had the case been filed properly.
Remember not all cases are the same. Some chapter 7 cases are indeed considered simple cases by most capable practitioners. Other chapter 7 cases can be very complex. There are chapter 7 cases where no capable attorney would take the case without informing the client that the case is complex and problematic from the start just to clue in the potential client on what to expect. For those attorneys who usually offer rock bottom pricing, they are often only jumping in on the practice of bankruptcy law due to our sluggish economy, and it is far from clear what level of preparation they undertook before holding themselves out as bankruptcy practitioners.
There are many good and bad attorneys out there. Remember you more or less get one shot at your bankruptcy filing. Make sure to do it right the first time around. Ask about the attorney’s success rate and types of cases filed rather than just purely how many cases filed. An attorney may have filed thousands of cases yet has a poor track record, or never handled your type of case before and lacks the resources to do so. Unfortunately, some attorneys actually lie about their credentials and how long they have practiced law. What is important is that you make sure you ask questions about YOUR case and get an answer to those questions before filing. If you only get evasive answers or generalities about your case, your questions are not being answered so find a bankruptcy attorney out there who will actually answer them and choose that attorney to help you with your case. In the end, use common sense in choosing the right attorney to handle your chapter 7 case and don’t simply go with the lowest fee approach unless you know the attorney is competent to take on your case because I have honestly seen it backfire firsthand.
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