Articles Tagged with Bankruptcy Law

If you are in a bankruptcy chapter 13 case and are involved in a car accident, it is so important for you to follow the proper steps required by the Bankruptcy Court. It doesn’t matter if your vehicle was totaled or not, there are steps we must take to handle things properly.

Let the insurancwrecked-car-300x175e company know you are in a chapter 13 bankruptcy and tell them any settlement for the damage to the vehicle must be paid to the chapter 13 trustee.  Do not cash or deposit any settlement money or checks you receive. All money must be paid to the chapter 13 trustee.

If you hire an attorney to represent you for injuries you received in the accident, the attorney must be approved by the bankruptcy court. If you need a lawyer to represent you, call my office, I can refer you to an attorney.

The protection available to you when you file bankruptcy is immediate and automatic.  The moment you file, whether it is a Chapter 7 or a Chapter 13 bankruptcy case, the court places you under it’s protection. Both your income and property are completely sheltered from any creditor seeking to repossess, foreclose, garnish, or seize them. The court refers to this as “The Automatic Stay”.  Any and all collection attempts against your income or your property must stop.  If a lawsuit has been filed, it must cease. If a judgment has been issued and a subsequent Writ of Garnishment has gone out, it must cease.  If the repossession order has gone out, efforts must cease.  If the foreclosure date has been set, it must cease.  Also, creditors must stop calling you, sending you letters, calling your family, etc.  The Automatic Stay is known as “the protection that halts any and all creditor collection activity”.  For more reasons why you may not want to wait, click here.   Bankruptcy was created to protect you, your income, your family, and Continue reading

Cheap Lawyers are everywhere, but you may not be able to afford them.

You can see a lot of lawyers bragging about being the cheapest. Search on the web and you will see ads for “Cheap Bankruptcy Attorney,” “Low Fee Bankruptcy.”

We all know that quality and cheap don’t go together. If we buy cheap we know it will cost us more in the long run. You get what you pay for. This is no surprise. We expect it and make buying decisions knowing what will happen. When it comes to hiring a lawyer, hiring the cheapest is not the way to go. The risks are just too great.

credit score rangeCan you get credit after filing bankruptcy? Absolutely.  Will you have to wait for ten years to get a house or a car?  Absolutely not.

Credit card companies will pack your mailbox with offers of credit.  They want you back in the system using credit cards and carrying a large balance. It’s a temptation that few can resist. These cards and offers will be from lenders that will charge high interest rates.  The same goes for cars and trucks.  There are numerous companies that will be glad to give you credit.  For a while, the question will be about how much interest they will charge you for that credit, which will be high until you’ve regained your footing.

Now, you shouldn’t run out and start charging up credit bills again, but if you need a vehicle or furniture and appliances you will be able to get credit. National creditors see people who file bankruptcy as a good credit risk since all their debts were wiped out, they can’t file Chapter 7 again for eight years and they have money to spend.  Many Mississippi bankruptcy filers are able to reestablish their credit within one year of their bankruptcy discharge.

wedding ringsMississippi is not a community property state and in most cases, a husband and wife are not responsible for each other’s debts. There are some exceptions, but they usually would only come up in a divorce or action between the husband and wife, not in a situation between the husband or wife and a creditor. A bankruptcy filed by one spouse should not affect the credit of the other spouse because that spouse did not file bankruptcy. The spouse’s name and Social Security number would not be listed on the bankruptcy papers of the other.

If there are joint credit cards or other joint debts then the spouse that did not file would still owe the debts. Otherwise, if the debt is just in the name of the spouse filing for bankruptcy, creditors would not even know the other spouse exists.

Bankruptcy law allows a married couple to file together, but they are not required to do so. Either husband or wife can file by themselves, or not file, or even file two different types of bankruptcy at the same time. Your spouse may not need to file bankruptcy at all or one spouse may need to file a chapter 7 and the other may need to file a chapter 13. You are allowed to file a bankruptcy by yourself and wipe out the debts you can discharge. You have several options!

 

 

retirment optionsMany people believe they will lose their retirement money if they file for bankruptcy.  This is not true.  Many clients meet with me and state that they “cashed out their retirement and are ready to file bankruptcy.” This is not necessary.  Retirement accounts and pension plans are fully protected in bankruptcy.  There are federal and Mississippi laws that protect your retirement money when you file bankruptcy.  This includes accounts like 401(k), IRA, Roth IRA, SEP, 403(b), Keoghs, profit-sharing plans, and defined-benefit plans.  Any ERISA Qualified Retirement Account is protected.  In most cases, every penny you have in your retirement account is fully protected, regardless of the amount.  But traditional IRAs and Roth IRAs are only protected up to a total amount of about $1.2 million.

Even if your retirement account is not ERISA-qualified, it will still be protected in bankruptcy by both federal and state law.  Any retirement account that is exempt from taxation under the Internal Revenue Code is also fully protected by other federal laws.  Leave your retirement money alone.  Let it work for you over the long term and don’t worry about losing it if you need to file bankruptcy.

mort debt relief act expiredMississippi homeowners who suffer a foreclosure or who sell their home at a loss will not be able to use the Mortgage Forgiveness Debt Relief Act to exclude taxes on the “forgiven” or “canceled” debt from the loss.  The Act expired at the end of 2013.  Debt that is reduced by mortgage modifications also qualified for the relief.  Forgiven debt or canceled debt is any debt that is wiped away or written off.  Forgiven debt is considered taxable income by the IRS and you will now have to pay taxes on this money.

The Mortgage Forgiveness Debt Relief Act created an exception that allowed taxpayers to exclude this income.

Any debt modified or discharged in bankruptcy is not considered income and is not subject to payment of taxes.  Since the Mortgage Forgiveness Act has now expired, filing bankruptcy or using the Internal Revenue insolvency exception is the only way to get rid of this income and not be required to pay taxes on the forgiven debt.

If you are having trouble paying back your student loan debt, you may be relieved to hear that the Department of Education has created new rules that will give you more protection from debt collectors collecting on federal education loans.  These new regulations should make it easier for you to get your loans out of default.

These rules do not apply to private student loans, only to loans made or guaranteed by the federal government.  If you are in default you can”rehabilitate” loans by making nine “reasonable and affordable” on-time payments. This will allow you to get out of default and become eligible for further federal student aid or other repayment programs.

Some private debt collectors who were collecting on federal loans were failing to offer payments that borrowers could afford; instead offering payments based on a percentage of the borrower’s total debt.  Such payments meant increased commissions for the collection agencies, but were unworkable for borrowers.  Debt collectors were also demanding minimum monthly payments without telling people about the more affordable alternatives, even though the laws of federal student aid does not require those minimum payments.

I have been a member of NACBA (National Association of Consumer Bankruptcy Attorneys) for quite some time and was able to attend the 20th annual convention this year which was held in beautiful San Antonio, TX. I would strongly suggest that you bookmark the NACBA site as a resource for consumer bankruptcy matters.  Congress, their staff, the media, and the Judicial Branch all recognize NACBA as the lead voice in America regarding consumer bankruptcy law. The Association & it’s member attorneys put their expertise to work by frequently testifying before judicial and legislative bodies against any anti-debtor legislation introduced by an aggressive consumer credit industry. NACBA continues to play a significant role in forming the outcome of policy-related discussion and debates regarding consumer bankruptcy practices.  It truly lives up to it’s goal

To ensure that the voices of consumer debtors and their attorneys are heard in the halls of Congress, the Judiciary and other arenas affecting consumer debtors; and to help consumer bankruptcy attorneys represent their clients more effectively.

Bottom line, attending NACBA conventions provide a wealth of education and keep attorneys up to date on the latest in bankruptcy law – which is a must if you are going to provide the best protection for your clients. Multiple vendors also attend the conference, educating us on the latest available debt counseling programs and a host of other items designed to help consumers before, during, and after bankruptcy.  I’ll be blogging about some of the gems pulled from this conference a little later, so stay tuned! In the meantime, here are some pictures from the convention this past weekend…and yes – I’m the one in the toe shoes speaking with a good friend of mine, Mississippi NACBA State Chair, attorney Pat Sheehan.