Stittleburg Law Offices LLC

Can Bankruptcy Really help?

attybern — Thu, 17 May 2012 14:33:18 +0000

Many times, debtors aren’t sure whether filing bankruptcy will really help their situation or hurt them. The word bankruptcy has a tinge of negativity to it. History shows that the word comes from the Latin terms bancus (a bench or table), and ruptus (broken). Additionally, Italians have been known to use the word “bancarupta”which means bench broken or bank broken quite often when a banker/tradesman could not make good on his debts. So it is understandable when people try to find other ways to fix their financial problems other than going bankrupt. Many will use up all of their retirement savings just to avoid bankruptcy. Many do not understand that bankruptcy does provide protection. Protection from unscrupulous creditors and a way to protect a debtor’s assets. Spiritually, Deuteronomy, Chapter 15, Verses 1-2 says, “1 At the end of every seven years thou shalt make a release. 2 And this is the manner of the release: Every creditor that lendeth ought unto his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the LORD’S release.”
Bankruptcy is financially non-discriminate. It provides relief for those who, through no fault of their own, have fallen on hard financial times as well as those who have abused their financial advantages. There are, of course, exceptions where people have either broken or abused the rules. Bankruptcy provides a way to clear out the financial baggage that many carry and release the stress that builds from that baggage. Stress, one of major causes of health related problems, can break relationships and friendships, as well as a person’s fortitude. Relief from that stress can help a debtor regain his will to move forward – to recover.
Bankruptcy is not something that should be taken lightly. It does carry some liabilities but none that cannot be overcome. Recovery from a bankruptcy filing generally takes about 2 years. Notions that bankruptcy can ruin a person’s credit forever are groundless. Many have filed, found the relief that they so desperately needed and have moved on to a more financially stable life. Just ask the roughly1.5 million who filed last year.

Blog

attybern — Thu, 12 Jan 2012 18:15:23 +0000

Here you will find the results of some of my legal research on various issues clients have come to me with regarding their bankruptcy. Some of this is rather technical, more lawyer talk than conversational, but it is all part … Continue reading →

Old Car Allowance – Atlanta Bankruptcy Lawyers

attybern — Mon, 07 Nov 2011 19:55:28 +0000

I was conducting some research on expenses allowed and not allowed with regard to the Chapter 7 means testing provision of the U.S. Bankruptcy code and found some interesting information. In a case out of the Southern District of Florida, In re Koch, 408 B.R. 539 (Bankr. S.D.Fla. 2009), which is a precursor case to Ransom v. FIA Card Services, the court held in part that ownership expenses on vehicles that have no lease or loan payment obligation associated with it will not be allowed. With regard to this issue, it was argued before the United States Supreme Court in Ransom v. FIA Card Serv. 131 S.Ct 716 (2011) and was basically put to rest. The court held the same as the court in the 2009 Koch case that without any debts associated with a vehicle, i.e. the vehicle is owned free and clear, ownership expenses pursuant to the IRS standards are not allowed to be taken in a Chapter 7 means test calculation.
There is, however, a $200 old car allowance that can be used for vehicles that are more than six (6) model years old or have more than 75,000 miles on them. However, according to a bankruptcy attorney in the Southern District of California, a Chapter 13 Trustee has been challenging the use of this allowance. This allowance has generally been conceded by trustees but for some unknown reason, this trustee is trying to disallow it in Chapter 13 cases. In the article blog written by Raymond Schimmel, the California bankruptcy attorney, this $200 allowance has been allowed by the Executive Office of the United States Trustee (“EOUST”) even though it is not specifically covered by any language in the U.S. Bankruptcy Code. Rather, the EOUST referred to the Internal Revenue Manual wherein it states in I.R.M. 5.8.5.20.3 (10-22-2010) under Transportation Expenses, item numbered 5, “In situations where the taxpayer has a vehicle that is currently over six (6) years old or has reported mileage of 75,000 miles or more, an additional monthly operating expense of $200 will generally be allowed per vehicle.” Although this language in the IRS Manual is not legally binding, it has generally been accepted as an expense and I see no reason that the EOUST would change there position on this matter in the future. Therefore, if you have an older car that fits this category, I would take the deduction as it may just help you qualify for Chapter 7.

Child Support – Atlanta Divorce Attorneys or Lawyers

attybern — Fri, 07 Oct 2011 18:26:11 +0000

If a person files for bankruptcy, what happens when he or she has an obligation to pay child support? The short answer is not much. Child support, which is termed a Domestic Support Obligation in bankruptcy, is non-dischargeable. A divorced parent cannot eliminate such debt in a bankruptcy case and the person filing must continue to pay the child support regardless. In fact, a Chapter 7 or Chapter 13 Trustee is required to send notification to the support recipient to advise them of what rights they have when a case has been filed. So even if John Doe filed and did not advise his ex-wife that he filed, she is going to find out anyway. If a person files a Chapter 13 bankruptcy case, then he or she may be able to include in the Chapter 13 Plan their child support arrearages, but must continue paying all future payments on time. The good news for those receiving such payments, any Domestic Support Obligations are first in the line to be paid once the case has been confirmed by the court.

What happens if I simply walk away from my mortgage in Georgia?

attybern — Thu, 25 Aug 2011 19:24:29 +0000

A potential client called me the other day and said, “I am upside down on my mortgage and simply cannot afford the house any longer, what would happen if I just walk away?” Obviously, I couldn’t advise him specifically because he was not my client, so I answered the question in a general fashion.

The reader should be aware that the answer herein does not provide any legal advice and should not be considered as such by the reader.

When a party defaults on his mortgage, the mortgage company will usually contact the owner to try to find out why payments have not been made. If the default continues, the mortgage company will refer the case out to their attorney for foreclosure. Should the property be foreclosed upon and there appears to be a deficiency, the mortgage company does have the option to certify the deficiency in state court and upon receiving an order accordingly, can then attempt to collect on that deficiency from the prior homeowner.

The other way to address this type of issue is to look at filing a bankruptcy case. Bankruptcy may be a way to eliminate any possibility of the mortgage company pursuing you.

Are those taxes dischargable? – Bankruptcy Attorneys in Atlanta

attybern — Wed, 13 Jul 2011 19:47:23 +0000

So you think your tax debt has been extinguished by a bankruptcy filing? Perhaps. With regard to the IRS, provided that all of the prerequisites have been completed and your debts are more than three years old, most likely the taxes are dischargable. However, in a recent case, a debtor had some old state tax debt and although more than three years had passed with regard to collection and discharge was assumed, the Georgia Department of Revenue stated that because the debtor failed to file an amended return within 180 days after the IRS changed the debtor’s net income, any taxes assessed based on that change of income were not discharged.

The Official Code of Georgia section 48-7-82, subsection (e)(1) provides, “When a taxpayer’s amount of net income for any year under this chapter as returned to the United States Department of the Treasury is changed or corrected by the commissioner of internal revenue or other officer of the United States of competent authority, the taxpayer, within 180 days after final determination of the changed or corrected net income, shall make a return to the commissioner of the changed or corrected income, and the commissioner shall make assessment or the taxpayer shall claim a refund based on the change or correction within one year from the date the return required by this paragraph is filed. If the taxpayer does not make the return reflecting the changed or corrected net income and the commissioner receives from the United States government or one of its agents a report reflecting the changed or corrected net income, the commissioner shall make assessment for taxes due based on the change or correction within five years from the date the report from the United States government or its agent is actually received.”

I highlighted the word shall in the law because that is what prevailed in the case of In Re: Jones, 158 B.R. 535 (Bankr. N.D. Ga. 1993). Judge Bihary, the chief bankruptcy judge of the Northern District of Georgia, held in the Jones case that because the debtor, despite his assumption that an amended return was not necessary, did not file the amended return, the state’s tax assessment based on the change of income reported by the IRS, was not dischargable. It would therefore be wise to make sure that all the necessary returns have been filed when they need to be filed if a debtor wants taxes to be discharged in a bankruptcy filing.

Annuities and bankruptcy filings in Georgia

attybern — Mon, 20 Jun 2011 19:09:05 +0000

Annuities and bankruptcy

When a bankruptcy case is filed, one of the questions asked is how does the debtor earn his or her income? When you have a younger, working age debtor, that answer most likely will be that he or she has a job. However, when dealing with older, retired debtors, they may not earn income but receive income from investments. One way might be an annuity that provides a certain amount of funds every month. The question then is whether this annuity income may be claimed as exempt from the bankruptcy case. In Georgia, for example, an annuity can be claimed as exempt under O.C.G.A. Section 44-13-100(a)(2)(E), provided that certain factors are present with regard to that annuity.

After reviewing a couple of situations involving annuities and bankruptcy, I discovered that if a debtor is drawing monthly distributions from an annuity, those distributions may be claimed as exempt provided that the annuity was created prior to the filing of the bankruptcy case and those funds are being used to replace what was considered income. Additionally, support for exemption will also be evident if the annuity was funded by the debtor through his or her savings. Where a trustee may challenge the exemption of an annuity is when a debtor created that annuity with funds he or she has inherited within approximately 1 to 1-1/2 years prior.

If you are one of these types of debtors who is living on the distributions from an annuity and may be facing the possibility of filing bankruptcy, then it would be wise to seek legal advice from a bankruptcy attorney to see if the annuity will in fact be exempt.

What are credit card companies allowed to do when attempting to collect on your delinquent account in Georgia?

attybern — Mon, 25 Apr 2011 16:35:50 +0000

Consumers need to know that protection against unscrupulous collection practices is in place through the Fair Debt Collection Practices Act (FDCPA). The Act covers any collection activity related to a credit card, personal loan, auto loan, medical bill and even your mortgage. A creditor cannot, for example, contact a debtor about a debt owed during inconvenient times, i.e. before 8:00am and after 9:00pm. Creditors are not allowed to contact other people about a person’s debt but may inquire about their location. If a creditor does make contact with the debtor, the creditor must send the debtor a validation of the debt owed. This validation must include the name of the original creditor which includes a procedure if the debtor does not believe the debt is valid. The debtor can also send a letter to the collector advising them to stop contacting you which they must do, however, should the creditor send the debtor a validation letter, then they may begin contact again. Additionally, if the debtor is represented by an attorney, the creditor must contact the attorney and not the debtor for any questions.

Under the FDCPA, creditors cannot harass, oppress, or abuse the debtor or any third parties. They cannot use threats of violence or harm. They cannot publish list of names of those who refuse to pay or use obscene or profane language. They are not permitted to use the phone repeatedly to annoy someone. Debt collectors cannot lie to obtain information about a debt, they cannot falsely claim a crime has been committed, or misrepresent the amount of money owed. Debt collectors cannot tell you that you will go to jail for not paying a debt or threaten to garnish wages without a court order. A debt collector can only garnish wages or bank accounts after they have obtained an Order which has been signed by a State Court judge. If a creditor is successful in getting a garnishment order from a state court, that creditor cannot garnish the following: Social Security Benefits; Supplemental Security Income (SSI) Benefits; Veterans’ Benefits; Civil Service and Federal Retirement and Disability Benefits; Service Members’ Pay; Military Annuities and Survivors’ Benefits; Student Assistance; Railroad Retirement Benefits; Merchant Seamen Wages; Longshoremen’s and Harbor Workers’ Death and Disability Benefits; Foreign Service Retirement and Disability Benefits; Compensation for Injury, Death, or Detention of Employees of U.S. Contractors Outside of the U.S.; or Federal Emergency Management Agency Federal Disaster Assistance. However, should a debt be related to delinquency of taxes, alimony, child support or student loans, then garnishment is allowed.

If a debtor believes that a creditor or collection agency has violated the rules of the FDCPA, he or she can sue the creditor in state or federal court within one year of the date of the violation. A debtor can and should report violations to his or her state Attorney General’s office (www.naag.org) and the Federal Trade Commission (www.ftc.gov).

If I file a bankruptcy is my credit ruined forever?

attybern — Mon, 07 Feb 2011 18:34:39 +0000

If I file bankruptcy, is my credit ruined forever?

Short answer – no. The Fair Debt Reporting Act controls how your credit history is treated and reported. The maximum time any information regarding a debt stays on your report is 10 years.

The filing of a Chapter 7 case will be reported on your credit history and will stay there for 10 years. If you file a Chapter 13 case, that information stays for 7 years. If you have negative information such as late payments, that also stays for 7 years. Therefore, if you know that this negative information is already on your report, it is unlikely that the filing of a bankruptcy case will make matters worse.

You are probably wondering how the concept of creditworthiness is viewed by potential creditors. Well, first off, they know that if you get a discharge in a Chapter 7 case, you cannot file again for eight years. Who do you think is more creditworthy? A consumer who has discharged all his debts and is now basically debt free, or one who owes $50,000 in credit card debt, and barely stays afloat by borrowing from Peter to pay Paul?

If you have a steady job – a regular income – and few debts after bankruptcy, financial institutions would be foolish not to approve a mortgage or car loan.

What about Consumer Credit Counseling? – Credit Counseling Atlanta Georgia

attybern — Tue, 04 Jan 2011 18:10:14 +0000

What about Consumer Credit Counseling?

Over the past few years, a popular alternative to bankruptcy has surfaced. Consumer Credit Counseling Services (CCCS), a nonprofit organization financed by credit card companies and other consumer finance organizations, works with you to reduce some of your debt and create a plan to pay off the rest of your debt without the intervention of the Bankruptcy Courts. If your debt is not too overwhelming and you have sufficient income, CCCS may be able to create a payment plan that allows you to pay back your debts over time.

While CCCS is an excellent organization, they may not be able to help if you are behind with your car or house payment. Their concentration seems to be on the handling of your credit card. Please note that CCCS is an organization created by credit card companies and their mission is to assist you in paying back all of your credit card debt. CCCS counselors are not attorneys and they are not required to discuss with you bankruptcy or other options, although I have had some clients advise me that CCCS advised them that bankruptcy may be their only option.

CCCS is not the only “credit counseling service” out there. You may have seen advertisements in the phone book, on television ads, through unsolicited mail or even nailed to a telephone pole. Some of these services offer to clear your credit file or to get you a new credit file. Usually, these organizations are rip-offs and you should avoid them. A good rule to follow is “if it sounds too good to be true, it probably is.”

Finally, if you do attempt to get your financial life under control, realize that it will take a great deal of both discipline and money to pay off substantial credit card debt. Let’s say you have $10,000 in credit card debt and you want to pay it off in two years, in order to accomplish this goal, you will need to pay $520 per month. Or if you take three years, you will need $382 per month. If you reduce the amount you are paying per month to $200, then that $10,000 will take over ten years to pay off.

Many clients tell me that they attempted to reduce the interest rate they were paying on their credit card debt only to find themselves even farther in debt when they miss one payment under that new rate. Credit card companies are notorious in jacking up the interest rate to over 25% if you default on a payment. Always remember to read your credit card small print to see how your account will be handled if you do default.

Remember, interest rates at levels of 18% to 20% will increase your balances immensely. You can figure out how long it would take you to pay off your debt by using an on-line calculator located at the Motley Fool financial web site.