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For those who missed it, our firm was featured in the Oakland Press last year. You can read the article by following the link here:
http://www.theoaklandpress.com/articles/2012/03/26/news/local_news/doc4f6bc6fed7012515634862.txt
Bringing you the most up-to-date news, tips and blogs throughout the web. Here’s your Bankruptcy Update for May 21, 2013 Sinbad, almost $11M in debt, files for bankruptcy Battery maker B456 Systems’ bankruptcy plan approved GM Bankruptcy Proceedings Delayed by Zombie Whistleblower Case
As many readers of our blog probably know, IRAs (Individual Retirement Accounts) are exempt under New York State Debtor and Creditor Law and the federal Bankruptcy Code. An exempt asset means that an individual can file for Chapter 7 bankruptcy and keep that asset after the bankruptcy filing. The reason for this exemption is twofold: (1) IRAs are deemed "spendthrift trusts" under New York State and federal law; and (2) the purpose of the law is to give debtors a "fresh start" with some assets, and especially to protect retirement monies for debtors.
As with many topics in bankruptcy, sometimes there is not necessarily a clear answer to an issue. While the law is clear with respect to IRAs (New York State law provides that IRAs of any value are exempt assets, with limited exceptions, and the Bankruptcy Code allows exemption of up to $1,245,475 in IRAs or Roth IRAs), what about inherited IRAs? An inherited IRA is an IRA that debtor inherits from a family member, generally a parent, and the distinction from a regular IRA is that the debtor's earnings were not used to fund the IRA, but instead the monies were rolled over from the IRA of a deceased family member, usually after the death of the family member.
Several Bankruptcy Trustees around the country have raised the issue of whether inherited IRAs should be deemed exempt in bankruptcy. In the Southern District of New York, in In re Cutignola, 450 B.R. 445 (Bankr. S.D.N.Y. 2011), the exempt IRA of a debtor who died post–petition passed to her co–debtor husband through her will. The Bankruptcy Trustee moved for turnover of the IRA to the bankruptcy estate, arguing that the IRA lost its exempt status when it was transferred to the husband. In its analysis, the Court looked at the language of Bankruptcy Code § 522 and concluded that if the funds are: (1) retirement funds; (2) in an account exempt from taxation; (3) and arrived in that account through a direct transfer, the funds remain exempt. Accordingly, the Bankruptcy Trustee's turnover motion was denied.
While the issue has not been definitively settled, this author's opinion is that in the Southern and Eastern Districts of New York, inherited IRAs are exempt.
The question of what assets are exempt in bankruptcy is very complex, depending on the asset, the jurisdiction and the type of bankruptcy relief sought. For more information, please contact Jim Shenwick.
There are exemptions available in Chapter 7 bankruptcy that may help protect your cash. Although the cash in question has to qualify as an exempt asset. It’s common for consumers to be afraid of filing in fear of losing cash assets. The good news is you may be able to retain your cash and other assets [...]
The Bankruptcy Code defines a bankruptcy petition preparer as “a person, other than an attorney for the debtor or an employee of such attorney under the direct supervision of such attorney, who prepares for compensation a document for filing.” The Justice Department uses the term “typing service” to describe bankruptcy petition preparers. This is because the limits on what a bankruptcy petition preparer can and cannot do are extreme.
Bankruptcy Petition Preparers are not attorneys and they are not qualified to give legal advice. They cannot advise you as to what chapter of bankruptcy will best serve your purposes. They cannot tell you what property to exempt or how to exempt it. They cannot help you avoid the perils of fraudulent transfers or preference payments. They cannot attend hearings with you or represent you in court. In affect, all that a bankruptcy petition preparer can do is read you the questions on the bankruptcy form and type your answers.
For this reason the Bankruptcy Court for the Eastern District of Michigan has set a firm $100.00 cap on the amount of money that a bankruptcy petition preparer can charge for their services. The Court understands the limited benefit that bankruptcy petition prepares provide and it also understand that a large percentage of cases that are filed through the use of bankruptcy petition preparers fail to successfully obtain a discharge.
The bottom line is that individuals who are seeking bankruptcy protection are vulnerable. Money is tight and they are looking for the most affordable help that they can find. They look to cut corners through the use of bankruptcy petition preparers or on-line form preparation software and manuals. However, the cost of a good bankruptcy attorney is generally far less than the cost of the damage that can be done through inadequate representation.
A bankruptcy attorney can help you avoid losing your home, car or other assets. A bankruptcy attorney can help avoid having the Trustee sue your family and friends for preferential payments or fraudulent transfers. A bankruptcy attorney can help you analyze your situation and determine which type of bankruptcy will best accomplish your goals. An experienced bankruptcy attorney is not only a reasonable expense, an experienced bankruptcy attorney is a necessary expense.
A study from the Fred Hutchinson Cancer Research Center in Seattle found that cancer patients are 2.5 times more likely to file bankruptcy than people without cancer. The study was published in the journal Health Affairs. The risk is even higher for younger cancer patients. This confirms what bankruptcy lawyers have known for a long time: many people don’t slide into bankruptcy, they are catapulted into bankruptcy or – put another way – debt has a way of kicking you when you are down.
Cancer is an extreme example of how a sudden and unexpected life event can rocket someone into bankruptcy. The study’s authors highlighted a few of the reasons that cancer correlates to an increased risk of bankruptcy filing: 1) cancer is extremely expensive, even with health insurance; 2) cancer treatment leads to income disruption or job loss; 3) support networks are unable to take up the slack; and 4) existing debt becomes unmanageable. These factors, however, are just as present with any sudden and unexpected life event, not just cancer.
Debt problems have a way of kicking you when you’re down. Most of us – bankruptcy lawyers included – have personal debt, whether it’s student loans, mortgages, car loans, or credit cards. The bottom line is that debt is a necessary part of everyday economic existence. What none of us want to admit is that it doesn’t take much for your economic existence to be knocked off balance. You can be the most responsible credit card user out there and have a modest mortgage, but if you lose your income for six months, you are almost certainly going to start missing payments.
Once you start missing payments, you will begin to spiral deeper into debt. It’s simple. You have a mortgage, you have to pay your utilities, you have to buy food, and you go through an income disruption. If you don’t pay your mortgage, your home will go into foreclosure. If you don’t pay your utilities, the lights will be shut off. You have to buy food. Even at that minimal level of existence, it is easy to spiral into debt if you lose your income for even a few months.
Most of my clients have been financially responsible their whole lives. It just takes a few months of financial disruption like lost income or unexpectedly large medical bills for them to spiral into debt and end up in bankruptcy. The bottom line is that any kind of disruption whether it is extreme and life threatening like cancer, a layoff, a furlough at work, or anything that radically increases your expenses or radically decreases your income can put the most responsible person into bankruptcy.
You do not have to hire an attorney to file for bankruptcy; however, I would strongly recommend that you do so. You do have the ability to fill out forms online or from an office supply company, go down to the clerk’s office and attempt to handle a Chapter 7 or Chapter 13 bankruptcy case+ Read MoreThe post Do I have to hire an attorney to file for bankruptcy? appeared first on David M. Siegel.
We’re continuing down the road, helping you file for bankruptcy.
You can do it yourself.
You can hire a petition preparer.
Or you can hire a lawyer.
No matter which option you choose, it’s your responsibility for making sure your bankruptcy case is handled properly. After all, this is your future and your life we’re talking about.
And it all begins with the Petition.
The Bankruptcy Petition – Deceptively Simple
When you look at the bankruptcy petition, you see a three-page form filled with check boxes and blanks.
On the first page, you’ll need to complete the following information:
- Your name
- Your spouse’s name
- The last 4 digits of your Social Security number (don’t have a Social Security number?)
- Your residential address
- Your mailing address
- The county in which you live
This is all pretty easy, and chances are that you can breeze through it quickly and without too much trouble.
From there, the questions get more complex. For example.
- Which type of bankruptcy are you filing? You can choose Chapter 7, 9, 11, 12 or 13
- Which type of debtor are you? Pick one – individual, corporation, partnership or other
- What is the nature of your business?
- Are your debts primarily consumer debts, or are they non-consumer in nature?
- Will funds be available to creditors?
Drawing down to the second page, you’ve got to answer some more questions:
- Have you filed for bankruptcy within the past 8 years?
- Are there any pending bankruptcy cases involving a spouse or partner?
- Do you own or possess anything that could be a threat to public safety?
- Is venue proper?
- Does your landlord have a judgment of eviction against you?
Your Answers Have Consequences
We’ve outlined a number of questions, all of which are pretty easy.
The problem is that each one of these questions comes with baggage.
Prior bankruptcy cases within the past 8 years affect your current case.
Judgments by landlords create obligations you need to fulfill.
Your bankruptcy petition is merely the gateway to the rest of the proceeding. It’s one thing to answer the questions and check the boxes. Knowing what to do with those answers is another thing entirely.
How to File Bankruptcy: The Bankruptcy Petition was originally published on Consumer Help Central. If you're seeing this message on another site, it has been stolen and is being used without permission. That's illegal, a violation of copyright, and just plain awful.
If you’re seeking a solution to help manage tax debt then Chapter 13 bankruptcy may be something to consider. It often depends on the type of debt in question, along with other financial obligations of the debtor. You may even gain an advantage using Chapter 13 to handle the debt that you may not gain [...]
Debtors across both Oregon and Washington who are being harassed by student loan lenders and hope to eliminate these debts through Chapter 7 Bankruptcy must navigate their way through a pretty nasty test. Bankruptcy courts in both Oregon and Washington rely on the three-part Brunner test to asses whether a student loan is dischargeable in bankruptcy based on a claim of undue hardship. This test is based on a thirty-year old U.S. Court of Appeals decision (Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 [2d Cir. 1987])
Under the Brunner test, an Oregon or Washington debtor must demonstrate:
1. The debtor cannot maintain, based on current income and expenses, a minimal standard of living for the debtor and dependents if forced to pay off student loans;
2. Additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
3. The debtor has made good faith efforts to repay the loans.
Since the Brunner decision, undue hardship has become the only criterion for discharge of student loans in bankruptcy, and court interpretations of the three prongs have become increasingly restrictive. Some courts interpret a minimal standard of living as the federal poverty level. For a household of one, income from whatever source derived would have to be at or below $11,490 per year and for a household of two, $15,110 per year. It would be extremely difficult to meet this standard if you receive any form of assistance from friends or family or receive anything in the way of government assistance.
Though absolute discharge of student loans can prove to be a pretty elusive goal, both Oregon and Washington debtors can at least find three to five years of relief under Chapter 13 of the Bankruptcy code. For an explanation of how that might work for you, please feel free to contact me anytime at either 503-232-5303 or 206-674-4559
The original post is titled Student Loans and Bankruptcy , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
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