Showing posts with label Bankruptcy. Show all posts
Showing posts with label Bankruptcy. Show all posts

Friday, May 1, 2015

Making a Difference with Property & Debt Classifications


by Christopher S. Mulvaney





     Above is a chart to assist clients in visualizing the different ways property and debt may be held and what the differences result based upon these distinctions.  Property in Washington state may be held by the marital community or by each spouse separately, or a combination of the two.  Single people may hold property as joint tenants with right of survivorship or otherwise jointly own assets, but there is no presumption of community property that applies no matter how property is titled as there is with community property.

In a Trust or Not in a Trust

    Property may be held in a Community Property Revocable Living Trust or a Separate Property Revocable Living Trust.  Doing so makes the property a non-probate asset, meaning that a Personal Representative does not need to be appointed by the Court to transfer the property; the Successor Trustee may do so.  Holding property in a Separate Trust as a married person with a prenuptial or postnuptial agreement clearly identifies the property as separate and sets out the limits of contributions to separate property while married.  The purpose of doing so is to rebut the presumption of community property clearly and in writing to protect against the other spouse's claims as well as the separate creditors of the other spouse.

Burdened by a Lien or Not

    Property itself has potential liability for debts either in addition to or instead of the potential personal liability of the individual(s) owning the property.  This liability is referred to as a security interest, the right to repossess or foreclose for default on payments.  Personal bankruptcy discharges personal liability, but does not affect liens except under limited circumstances in Chapter 13 (See Lien Stripping & Cramdown entries in this Blog).  That is why a creditor may take back a car or boat, but may not sue you for the deficiency if you have obtained a bankruptcy discharge.

Dischargeable versus Non-Dischargeable

    Knowing whether a debt may be discharged in bankruptcy is important in determining negotiating leverage and planning which debts to pay first.  Always pay non-dischargeable debt first.  For example, student loans are not dischargeable in bankruptcy.  So, paying credit card debt while not paying student loans when eligible for a Chapter 7 discharge makes no financial sense.

 


MULVANEY LAW OFFICES, PLLC
14205 SE 36th St Ste 100
Bellevue, WA 98006-1553
www.mulvaneylawoffices.com
Phone: 425-649-1190
Fax: 425-223-3197

chris@mulvaneylawoffices.com

Sunday, January 18, 2015

Income Based Student Loan Repayment




Below is a link to information about income based repayment programs for student loans that can set your required payment at zero and keep you out of default.  Payments for many people are more affordable under theses programs.

IBRinfo


Income-Based Repayment and Pay As You Earn are two ways to help keep monthly payments affordable based on your income and family size. Visit the Department of Education’s Repayment Estimator to find out what your payments might be.


Income-Based Repayment (IBR) is a way to make your federal student loan payments more manageable.  And if you're a teacher or work in government or at a nonprofit (501(c)(3)) organization, you might qualify for a new type of public service loan forgiveness (PSLF) after 10 years of eligible payments and employment.

 As of December 21, 2012, recent college graduates with federal student loans can apply to lower their monthly payments using the Pay As You Earn plan. This new repayment plan has a lower monthly payment cap than the more widely available Income-Based Repayment (IBR) plan. Pay As You Earn also provides forgiveness after 20 years of payments, rather than 25 years in IBR. President Obama recently proposed expanding Pay As You Earn to federal student loan borrowers who took out loans before October 2007 or those who stopped borrowing by October 2011. For more information about the expansion, read the White House fact sheet.

 Below is a web site with information about your student loans.
 https://studentloans.gov/myDirectLoan/index.action


14205 SE 36th St Ste 100
Bellevue, WA 98006-1553
www.mulvaneylawoffices.com
Phone: 425-649-1190
Fax: 425-223-3197

chris@mulvaneylawoffices.com
 

 




Friday, January 16, 2015

Credit Counseling

          

Credit Counseling Course

Online credit counseling is required prior to filing for bankruptcy.  Click the link below (or copy and paste) to create an account to do the credit counseling course: https://debtorcc.org/bankruptcy-credit-counseling-course.aspx  After you have created an account, you will be presented with 2 options; option 1 is to pay by credit card, and option 2 is to use attorney code mulvaney425cc for MULVANEY LAW OFFICES, PLLC to ensure that the $10 course fee is billed to me, and that I receive your certificate by email.  After your complete the course, you will receive the following message with which to comply before you get your certificate: "By law, to get your certificate you must call 1 (800) 610-3920 (press option 7) during business hours of Monday – Friday 9am to 9pm EST and speak with a counselor. YOU WILL NOT GET YOUR CERTIFICATE UNTIL YOU COMPLETE THIS STEP". 

The certificate is valid for 180 days; if not used by then, the course must be repeated.  Another credit counseling certificate is required if your case is converted or if you dismiss and refile.  Pay particular attention to your budget because that information is useful in preparing your petition.  You must be logged into the online course for 90 minutes to receive a certificate.  

  If you do not obtain a credit counseling certificate, then your case will be dismissed and closed. It costs $500 to re-open your case to receive a discharge. The above information is provided as a courtesy to make obtaining the certificates easier for debtors; Debtors are ultimately responsible for making sure the credit counseling certificate is obtained on time.  Attached are instructions, disclosures, and materials for the course.

Credit_Counseling___Financial_Management_Instructions__Disclosures___Materials.pdf
291.0 KB



 14205 SE 36th St Ste 100
Bellevue, WA 98006-1553
www.mulvaneylawoffices.com
Phone: 425-649-1190
Fax: 425-223-3197

chris@mulvaneylawoffices.com
 

 

Rebuilding Credit



Clients tell me that they receive large volumes of offers of credit in the mail after filing bankruptcy. Be wary of these offers. Do not attempt to obtain credit prior to your discharge. After your discharge, you can rebuild your credit by obtaining a single credit card and having the payment deducted from your checking account in full every month. 

There are three ways to request a free annual credit report: 
(1)   By Phone: Call 1-877-322-8228
        You will go through a simple verification process over the phone.   
(3)   By Mail: Complete the attached form and mail it. 

Bankruptcy stays on your credit report for 10 years from the date of filing for chapter 7, and 7 years from date of discharge for chapter 13 or 10 years from the date of filing if no discharge is entered.  Zero balance accounts are removed after 7 years from date of last activity, so the accounts will be removed from your report before the chapter 7 bankruptcy itself is removed, but zero balance accounts in chapter 13 will remain on your credit report for up to 12 years (5 years of bankruptcy plus 7 years of no activity on the account).

Rebuilding credit in Chapter 13 is different than after a Chapter 7 discharge.  As long as you are in Chapter 13, you are not permitted to use credit without Court approval.  In Chapter 7, no Court approval is needed to use credit immediately after discharge which usually occurs less than 100 days after filing.  If you remain in Chapter 13 for 5 years, the rebuilding of your credit doesn't start until you get out of bankruptcy.  You need at least 24 months of good credit history following your bankruptcy discharge in order to apply successfully for a home loan.  So, Chapter 13 delays the purchase of a home for at least 7 years, unless that plan is paid in full and completed early.

Below are links to credit bureau online dispute web sites.
https://www.ai.equifax.com/CreditInvestigation/


     Under Washington law, credit bureaus must convey your dispute to the source of the information within five business days after receiving your request for investigation. If  credit bureaus determine that the request is frivolous or irrelevant as defined by the Fair Credit Reporting Act, credit bureaus will notify you within five business days of the reasons for the decision. The results of the investigation will be sent to you within five business days after the investigation is complete. If you request, credit bureaus will provide you with the company name, address and telephone number of any person contacted during the investigation. If you believe that a law regulating consumer credit reporting has been violated, you may file a complaint with the Washington State Attorney General's Office, Consumer Protection Division, 800 5th Ave. Suite 2000, Seattle, WA. 98104-3188, 1 800 551 4636.
 http://www.atg.wa.gov/FileAComplaint.aspx.

DO NOT CALL & OPTING OUT OF MAIL SOLICITATIONS & CREDIT OFFERS

Below is the link to the National Do Not Call Registry where you can register your home and cell phone numbers to limit calls from telemarketers.  There is a separate email verification to click for each number you put into the registry.

https://www.donotcall.gov/register/reg.aspx

An opt-out link for pre-screened offers of credit and insurance is below:
https://www.optoutprescreen.com/opt_form.cgi

You can opt-out for 5 years electronically, or opt-out permanently by mail.

You can opt-out of catalog, magazine, and mail offers at the link below to the Direct Marketing Association.  You can use this service to opt-out deceased people as well.

https://www.dmachoice.org/register.php

The Direct Marketing Association (DMA) also has an email Preference Service for opting out of solicitations from DMA members at the link below.

 14205 SE 36th St Ste 100
Bellevue, WA 98006-1553
www.mulvaneylawoffices.com
Phone: 425-649-1190
Fax: 425-223-3197

chris@mulvaneylawoffices.com
 

 

Financial Management



                             

Financial Management Course

Click the following link (or copy and paste) to create an account to do the financial management course, required after filing, but before the 341 meeting:  
  https://www.debtoredu.com/post-bankruptcy-course.aspx  mulvaney425edu is the attorney code for MULVANEY LAW OFFICES, PLLC to ensure that the $10 course fee is billed to me, and that I receive your certificate by email.  You must enter your bankruptcy case number in order to do the financial management course.  You must enter my email address - chris@mulvaneylawoffices.com - to ensure that your certificate is filed.

Please contact DebtorCC.org for any technical issues regarding the courses. Once the course is complete, DebtorCC.org will email you (and my office) a certificate of completion. I will file the certificate with the court on your behalf.  You must be logged in for 120 minutes to receive credit.

If you do not obtain a certificate for completing the financial management course, then your case will be closed without discharge. It costs $500 to re-open your case to receive a discharge. The above information is provided as a courtesy to make obtaining the certificates easier for debtors; Debtors are ultimately responsible for making sure the financial management certificate is obtained on time.  Attached are instructions, disclosures, and materials for the course.


Credit_Counseling___Financial_Management_Instructions__Disclosures___Materials.pdf
291.0 KB



 14205 SE 36th St Ste 100
Bellevue, WA 98006-1553
www.mulvaneylawoffices.com
Phone: 425-649-1190
Fax: 425-223-3197

chris@mulvaneylawoffices.com
 

 

Debtor's Rights

  

By far, the most common questions I receive concern Creditor's Rights (what Creditors can, and cannot do, and what Debtors can do about it).  It is only by understanding Creditor's Rights that Debtor's Rights may be understood. 

JUDGMENT PROOF

      Judgment Proof means that a Creditor cannot successfully sue you and obtain a Court Order stating that you owe a certain amount to a certain Creditor.  This Order is called a Judgment and entitles the Creditor to exercise five primary rights:

      (1)  writ of garnishment (taking 25% of your net pay for 60 days, then renewing the writ indefinitely, to collect up to the amount of the Judgment at 12% plus costs of collection),

      (2) writ of attachment (seizure of  bank accounts, property in your home, or any other property you own),

      (3)  liens on real property (above the amount of the homestead exemption in your primary residence only - otherwise the lien is not limited under the Washington State exemptions),

      (4)  service of a subpoena to appear at a Judgment Debtor exam, bring documents, and testify under oath about your financial affairs, and

      (5) reporting the Judgment to the credit bureaus, which will interfere with obtaining credit on acceptable terms for a house or vehicle.

      Judgment Proof status applies to debts in which the date of last activity on the account (typically a payment or promise to pay) is older than the 6-year statute of limitations.  If you have received a discharge in Chapter 7 or Chapter 13 bankruptcy, and the debt existed prior to filing and was dischargeable, then you have Judgment Proof status.  If you can prove that you paid the debt in full, you have Judgment Proof status.

      It is important to note that the 6-year Statute of Limitations barring entry of a Judgment, does not affect the right of Credit Bureaus to report negative credit information for 7-years or a Chapter 7 Discharge for 10 years.

COLLECTION PROOF

      Collection Proof status is more common.  Collection Proof means that a creditor can successfully sue you and obtain a Judgment, but that Judgment may not be currently collectible because the Debtor's income is exempt (Social Security, Social Security Disability, Pensions, Unemployment, and IRA or 401(k) mandatory distributions).  A Judgment is valid for 10 years, and may be renewed for another 10 years, so sometime over the 20-year period a Debtor may receive an inheritance or other windfall that makes the Judgment collectible.

      In addition to exempt income, Collection Proof status also requires the value of the Debtor's assets to be less than the available exemption amounts (Exemption amounts are the value of property Debtor's get to keep in Bankruptcy).  For example, under the Washington State Exemptions the homestead exemption is $125,000.  If a Debtor has more equity than that, then a Judgment may be collected against that Debtor.

      Collection Proof Status also applies to Debtors with below median income for their family size (not just exempt sources of income which are always below median amounts), with only exempt assets, who are eligible for Chapter 7 or Chapter 13 with no payment to unsecured creditors.

      Therefore, it is important to note that a prior bankruptcy discharge may temporarily negate Collection Proof Status.  For example, a Chapter 7 discharge may only be entered after 8 full years have passed since the filing of a previous Chapter 7 in which a Discharge was entered; this period is reduced to 4 years if the second case is a Chapter 13 Bankruptcy.

______________________________________________________________________

Below is a letter that Debtor's with exempt income can use by simply attaching a copy of a letter from Social Security with the Debtor's name on it and mailing to creditors.


FDCPA_Letter_for_Collection_Proof_Debtor.pdf
371.7 KB


_______________________________________________________________________

VOLUNTARY PAYMENT

      By far the broadest category of debt status is Voluntary Payment status.  Voluntary Payment status simply means that the Debtor is choosing to pay.  This choice may be perfectly rational and reasonable under the circumstances or the choice may create needless suffering for Debtors.  The key is to have the awareness necessary to determine what type of choice you are making.

     The diagram below shows that 98% of all Chapter 7 cases filed in Washington State are no asset cases, meaning that Debtors keep everything they have and nothing is sold to pay creditors.  Less than 2% of Chapter 7 Debtors surrender any property to the Trustee.  All Judgment Proof and Collection Proof Debtors are also no asset Chapter 7 eligible (assuming no prior discharge), but they don't have to file to protect themselves from creditors.  Only a very small number of Chapter 13 filers repay 100% to unsecured creditors.  Most Debtors don't even repay at least 50% to unsecured creditors because they don't complete their Chapter 13 plans.
Historically, Chapter 7 is about 70% of all filings and Chapter 13 about 30%.


 
      Some Debtors are not aware of their rights (or chooses to waive them).  They may be willing to send a check to the Creditor (or someone purporting to be the creditor) even though the debt is much older than 6 years, even though the Debtor has only exempt income and assets, or even though the Debtor is eligible for a Chapter 7 Bankruptcy.  Debtors often continue to pay unsecured creditors in an exercise in futility, long after their debt-to-income ratio becomes higher than 50% (or 100% or even 200% or more), and any meaningful hope of repayment is long gone.

      A Collection Agency may call a Debtor and ask for voluntary payment even if the debt is much older than 6 years.  Debtors are not required to talk to Creditors on the phone, and they should not do so.  Debtors should never send money on the basis of a phone call alone.  Some debt collectors don't even own the debts they are trying to collect, they have stolen the account information.  If a Debtor pays such a debt collector, it will have no effect on the balance.

     Voluntary Payment status also includes Debtors who are making a rational choice to settle debts that they would have to pay in full, or at least pay a substantial percentage of the full amount, in Chapter 13 if they were unsuccessful in settling the debt.

     The vast majority of debts, including taxes, are paid voluntarily without any coercion by creditors. Most of time this makes sense for most people.  However, sometimes it doesn't.  My hope is that this information has assisted you in making the decision for yourself without undue pressure from Creditors.

_______________________________________________________________________

   

________________________________________________________________________

 Below is a summary of the Fair Debt Collection Practices Act, and some common violations:

fairdebt.pdf
73.7 KB


      *** Telling Debtors that a warrant has been issued for their arrest, and they will go to jail if they don't pay.  This is false. 

      *** Telling Debtors they have to pay the debts of their deceased family members.  This is false. 

      *** Telling Debtors that they have to send a post-dated check.  This is false.

      *** Telling Debtors that the creditor has the right to call their employer.  They don't if you tell them that your employer prohibits phone calls from debt collectors.

____________________________________________________________________

      Debtor's can complain about violations of the Fair Debt Collection Practices Act to the Federal Trade Commission and/or the Consumer Financial Protection Bureau and the Washington State Attorney General at the links below.

https://www.ftccomplaintassistant.gov/#crnt&panel1-1

http://www.consumerfinance.gov/complaint/

https://fortress.wa.gov/atg/formhandler/ago/ComplaintForm.aspx
____________________________________________________________________

      The best way to assert your rights as a Debtor, and protect yourself from abuse is to not speak to creditors by phone other than to ask them for a fax number so your lawyer (me), can fax a cease and desist letter.  Ask the creditor not to call back.  Hang up regardless of whether you get the fax number or not.


 14205 SE 36th St Ste 100
Bellevue, WA 98006-1553
www.mulvaneylawoffices.com
Phone: 425-649-1190
Fax: 425-223-3197

chris@mulvaneylawoffices.com