In general telling your creditors you are filing for bankruptcy should help you.  Once you have retained an attorney you can tell your creditors that you have done so and that they need to contact your attorney regarding any debt you may own.  The Fair Debt Collections Practices Act FDCPA prohibits third party collectors from contacting you regarding any debt once you have retained an attorney.  This can relieve a lot of stress and hassle if you are drowning in debt and being harassed continuously by creditors.

When wouldn’t I tell?

Until you actually file for bankruptcy a creditor can legally continue to collect on the debt that you owe.  This means a creditor, upon learning of your intention to file bankruptcy, could file a complaint for damages for failure to pay your debt or could initiate a replevin action to repossess a vehicle or a foreclosure action to take your home.  It is best to ask your bankruptcy lawyer when and if you should tell creditor’s of your intent to file for bankruptcy.

The easiest way to protect your identity from being stolen is to continuously monitor your credit and protect important information such as account numbers, creditor information, and your social security number.  Many credit monitoring companies offer low monthly fees to pull your credit at any time and most of those companies email alerts to you when you have a new inquiry on your credit or a new account has been opened or attempted to be opened.  If you don’t want to pay a monthly fee to pull your credit report monthly or more frequently, pay $20-$30 per quarter to pull your credit report.  $80-$100 per year to monitor your credit will potentially save you thousands of dollars should your identity be stolen.

Also, don’t forget to do the obvious-protect your personal information.  Yes, there are individuals that still dig through your trash and find sensitive information.  Shred your bank statements and credit card statements.  And only order products or services online from secured sites. 

What should you do if your identity is stolen?

If your identity is stolen-and ideally you are made aware of it relatively quickly because of frequent monitoring of your credit-you should immediately file a police report with your local police department, call all three credit bureau’s and place a minimum 90 day alert on your credit, and finally if you are really ambitious, which you should be-call every potential creditor you can think of to inquire as to whether someone has opened or attempted to open an account and if so tell them it is fraudulent and request it to be closed.  At a minimum call the creditors that you are aware someone has opened fraudulent accounts with and request that those accounts be  closed and flagged as fraudulent.

What are some consequences of your identity being stolen?

The most serious consequence of your identity being stolen is that you will have thousands of dollars of debt in your name to repay that you can’t afford to pay and you will need to file either Chapter 7 or Chapter 13 bankruptcy.  Should you have to file bankruptcy, you probably haven’t been diligent enough to mark your debt has fraudulent and have it removed.  Even if you have the fraudulent accounts removed as fraud if you do not move quickly enough to have those accounts removed your credit score could take a hit.

If you find yourself in a position that you need to file Chapter 7 or Chapter 13 bankruptcy due to identity theft, contact Columbus bankruptcy lawyers, Dailey Law Offices today for a free consultation to discuss your options.

A debtor can strip (or remove) a second mortgage when the property’s current value doesn’t cover any amount of the second mortgage.

How to strip a second mortgage

First the debtor must have the property appraised and provide the appraisal to the court to show proof of the value of the home.  Preferably the appraisal should be recent and the individual who performed the appraisal should be willing to testify in court.

Whether or not you are liable for your spouse’s debt depends on whether or not you reside in a “community property state.”  In states that follow community property rules, debt that is incurred by one spouse during the marriage is owed by both spouses.  Likewise, the income of one spouse accumulated during a marriage is considered the income of both spouses in a community property state.  In a community property state a creditor can go after the assets of both spouses to pay for the debt that one spouse incurred.  In a state that follows common law rules a creditor can only go after joint assets to pay a debt that one spouse incurred if that debt was incurred for a family necessity.  The following states follow community property rules:  Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

Filing Bankruptcy in a Community Property State

In a community property state if only one spouse files for bankruptcy all of the community debt of the spouses will be discharged.  In a common law state only the debt incurred in the name of the spouse alone that is filing for bankruptcy will be discharged.  For example, if one spouse files a Chapter 7 bankruptcy and both spouse’s name are on the mortgage to their home, the non-filing spouse is still liable on the mortgage even if the filing spouse’s Chapter 7 bankruptcy is discharged.  So if payments fall behind once the bankruptcy is discharged the bank can foreclose on the house and hold the non-filing spouse liable on the debt.

If you are married and considering filing a bankruptcy singly rather than jointly with your spouse, contact Dailey Law Offices to discuss the pros and cons of filing bankruptcy singly vs. filing with your spouse.

The means test is a six months average of the Debtor’s and spouse’s income, if applicable, divided by six and then multiplied by twelve to compute a hypothetical income over a year.  That income will be used to determine whether there is a presumption of abuse when filing a Chapter 7.  The means test was enacted in the 2005 bankruptcy code with the intention that is would stop abuse of the bankruptcy process.

Can a Debtor still file a Chapter 7 if their median household income is exceeds the threshold for their state?

Potentially.  If the debtor’s income exceeds the threshold for their state then they must complete the second part of the means test to determine whether or not they may file a Chapter 7.   To pass the second part of the Chapter 7 means test, the debtor must- after deducting standard expenses and eligible expenses- have little or no disposable income.  However, if the Debtor has income greater than 25% of their non-priority unsecured claims in the case, or $6000 whichever is greater or $10000 they have to file a Chapter 13 bankruptcy.

The means test is not the end all be all method to determine whether or not you may file a Chapter 7 bankruptcy.  Contact Dailey Law Offices today for a free consultation to determine your filing eligibility.

A reaffirmation agreement is an agreement whereby a debtor filing Chapter 7 bankruptcy makes a new promise to pay a pre-petition debt.  Since all of a petitioner’s unsecured debt is discharged in a Chapter 7 and a petitioner may surrender secured debt in a Chapter 7 bankruptcy the only way to keep secured debt in a Chapter 7 bankruptcy is to sign a reaffirmation agreement.  If the petitioner fails to pay the debt after signing the reaffirmation agreement the petitioner remains personally liable on the secured debt despite the Chapter 7 bankruptcy discharge.

Why do creditors require petitioners to sign reaffirmation agreements?

Creditors require petitoners to sign reaffirmation agreements so that the debt will be paid in full despite the bankruptcy discharge.  Absent such an agreement, a debtor could simply stop making payments on the debt and leave the creditor helpless.

What sort of debt requires a reaffirmation agreement?

Reaffirmation agreements are most commonly required on vehicles and sometimes other secured personal property like appliances or computers purchased on credit.

Why don’t creditors require a reaffirmation agreement be signed in a Chapter 13 bankruptcy?

Petitioners are not required to sign a reaffirmation agreement in a Chapter 13 bankruptcy because the whole point of a Chapter 13 is to pay back 100% of secured debt-with some exceptions, and some percentage of unsecured debt.

Why do you need an attorney to file your bankruptcy petition?

Bankruptcy is a complex area of the law.  Bankruptcy law is comprised of a convoluted mix of federal and state laws, case law and local rule.  Each federal district court varies in its flexibility and willingness to accommodate those filing pro se.  I find that about 30% of the clients I represent attempted at some point to file their own bankruptcy petition and their case was dismissed due to insufficient information, not meeting deadlines, or failing to file appropriate accompanying paperwork, etc.  Most attorneys charge a flat rate fee and it is a competitive market, driving the fees to low rates so save yourself the time and hassle and the additional filing fee for having to refile the petition correctly and call a bankruptcy attorney.

Why a bankruptcy attorney and not a general practitioner attorney?

Again, bankruptcy law is a complicated area of the law.  An attorney who devotes a large portion of their time to bankruptcy law can quickly review your case and identify any issues or potential problems.  They will be able to address equity concerns and should know immediately which chapter of bankruptcy you qualify for based on your income and family size.   They are also familiar with the local court, its trustees, and what sort of information they demand.

Bankruptcy is an emotionally draining process.  Let an experienced bankruptcy lawyer help you through the process, correctly, the first time.

What recourse does the government have to collect on defaulted student loans?

Seizing Tax Refunds

One action the government can take to collect on unpaid student loans is to use your tax refund to offset the amount due on your defaulted loans and they can continue to take your tax returns until the defaulted loans are paid in full. You can challenge a tax refund. To find out more information on valid reasons to challenge a tax refund visit www.studentloanborrowerassistance.org.

Garnishment

The government can also garnish up to 15% of your disposable income when you default on your student loans. Like in the instance of a seizure of your tax refund, you can also challenge a wage garnishment and you can find assistance on how to do so at www.studentloanborrowerassistance.org. You can also contact the holder of the loan and try to negotiate a repayment schedule.

Seizure of your Federal Benefits

Another action the government can take to collect on defaulted loans is to seize some of your federal benefits like Social Security retirement benefits and disability benefits. However, they can not take more than 15% of your total benefit. 

Lawsuits

Like any other creditor the federal government can file a lawsuit to collect on your unpaid student loans and there is no statute of limitations on filing. If you have been sued for nonpayment of student loans you should contact a lawyer immediately.

What can you do?

Besides the steps outlined above, you can also contact the Department of Education’s Ombudsman at 877-557-2575 or visit its website at www.fsahelp.ed.gov. You may also consider Bankruptcy. There are certain circumstances where federal student loans can be discharged in a Chapter 7 and you should contact Dailey Law Offices for a free consultation to determine whether or not your federal student loans may be qualified for discharge.

The three most common reasons that a debtor desires to reopen a bankruptcy case are as follows:

1)  Failure to file a pre-discharge credit counseling certificate;

2) Failure to list a creditor or an asset;

3)  Failure to take necessary steps to remove a judgment lien from real estate.

It is important to note that if the only reason a debtor is considering reopening a bankruptcy case is because a creditor wasn’t listed, it shouldn’t be reopened to add a creditor where the debt would have been eligible for discharge. Courts have consistently held that if a debt would have been eligible for discharge had it been listed there is no need to reopen the case to add the debt at a later date. The debtor’s attorney need only send a letter to the creditor with the case number for the bankruptcy.

How to Reopen a Bankruptcy Case

The debtor’s attorney will  file a motion to reopen the case without giving notice to the creditors or scheduling a hearing. In the motion the debtor’s attorney will specifically request whatever action caused them to file the motion to reopen the case be taken. For example, if the case needs to be reopened to avoid a judgment lien the motion should so state and a copy of the letter to avoid the judgment lien should be attached. The judge will then sign the order allowing the case to be reopened to act on the specific request and then enter a discharge. 

If you think you may need to reopen your bankruptcy case contact Dailey Law Offices today to speak with a Bankruptcy Lawyer.

A Chapter 13 Cramdown allows you to reduce the balance of a secured loan and pay a lower interest rate on that loan. Most often debtors use the cramdown on vehicles, but if all of the conditions apply it can be used on other secured loans.

How does a Chapter 13 Cramdown on vehicles work?

For a cramdown to be applicable the vehicle has to have been purchased 2 1/2 years prior to your bankruptcy filing. If you meet this prerequisite then a cramdown can save you money on your payments. Usually at some point your car note is no longer fully secured because of the rate of depreciation on a vehicle.  In a cramdown your note is only 100% secured by the value of the vehicle at the time you file the petition. So if you owe $10,000 on your car note and your car is only valued at $7,000 then you can reduce your loan balance to $7,000. You will most likely be paying a lower interest rate on the new loan balance also. The remainder of the loan, which in this example would be $3,000, would be paid back in the plan as an unsecured debt, which means you will only be paying a percentage of that amount back-whatever rate you are paying your other unsecured creditors. The new loan balance must be payed by the end of the repayment plan.

Call Dailey Law Offices today to find out if your vehicle is eligible for a cramdown.