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“Her assurance that there was nothing to be ashamed, of gave us the incentive to proceed.” D.
“Diane was fabulous during our bankruptcy, guiding us every step of the way. After medical bills got us behind, we didn’t know where to turn and felt uncomfortable filing. Her assurance that there was nothing to be ashamed, of gave us the incentive to proceed. Two years later we had questions in another matter, in which she again went to bat for us without further fees. I would recommend her firm to anyone in financial difficulties.” D.
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The post Diane guided us every step of the way. appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy Attorney.
Fast Company shares the stories of multiple people who have filed for bankruptcy. They share why it has been the best decision they’ve ever made.
“Clean Slate”
Whitney Reynolds filed for bankruptcy in 2014 because of overwhelming credit card debt. She had racked up $23,000 of credit card debt since graduating college. Her father suggested bankruptcy to her. He said, “‘There’s a lack of knowledge of what it means to somebody who’s making an average income and has run into some trouble and made some mistakes. For most people, it’s just a clean slate”‘. Since Whitney’s bankruptcy, she now has started budgeting properly and has an emergency credit card that she keeps frozen in her freezer – which literally can only be used for emergencies. Whitney’s credit score is now in the 700s.
“Last Resort”
Mopelola Gloria Fagbemi filed for bankruptcy because of her divorce. Once her marriage ended, she had to keep her finances afloat and take care of her three children. She knew bankruptcy was her last hope when she received a garnishment from her payroll. She was nervous about filing because she did not want to feel like a failure. Fagbemi says, “‘I’m part Nigerian, part American, and you’re not supposed to give up…People will tell you that you can push through and make the payment. They’ll say don’t file for bankruptcy, but they’re giving that advice based on what they believe. You need to think about what’s good for you and how you can sustain it—and then make your decision only based on that'”.
“Trying To Live Life Without Debt”
Robert Gale & his ex-wife had a large amount of consumer debt. They decided to file bankruptcy together before divorcing so that they could both split their debt. Gale had many worries about bankruptcy. He worried about losing his assets, his good credit score, etc. Gale says, “‘I thought we were going to lose the house, the cars—that they would take anything that’s got any value to it… That’s not exactly true for Chapter 7. If you can show that you’re able to pay specific debts, you can reaffirm debts that are larger and continue to pay those”‘. Though he didn’t originally want to file, Gale says it benefitted him in the end. Now remarried, Robert Gale’s only debt is his mortgage.
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The post “Filing For Bankruptcy Is The Best Decision I’ve Ever Made” appeared first on Allmand Law Firm, PLLC.
Chapter 13 cases are three to five year payment plans. Creditors receive a monthly payment based on a debtor’s ability to pay, the type of debts they owe, and the amount of unprotected property they own.
But how does one make the payment? Who do you pay?
Chapter 13 payments are paid to the Chapter 13 Trustee, typically an attorney appointed to oversee the bankruptcy case. In Nebraska that person is Kathleen A. Laughlin.
HOW DO YOU PAY THE CHAPTER 13 TRUSTEE?
There are only two ways to pay the Trustee:
- Money Order or Cashier’s Check.
- Garnishment of paycheck.
No other payment methods are allowed. (Read this.)
What about payment in cash? Are personal checks allowed? What about paying via a debit card? Can you pay online? Can you set up an automatic payment? What about BillPay services?
None of those payment methods are allowed. And, to be honest, I just don’t understand.
WHY CAN’T AUTOMATIC PAYMENTS BE SET UP?
I wish I understood the answer to that question. I really see no reason why an automatic payment cannot be set up. In fact, the TFS company has established a program to facilitate automatic payments in chapter 13 cases. Many chapter 13 trustees around the country use TFS, including Iowa.
What I do know is that automatic payments work. Clients who have the payment deducted from their paycheck complete their payment plans at a much higher percentage than those who do not.
But not everyone can have a payroll deduction, and that is a real problem. Many clients are self-employed. Many are underemployed and they do not earn enough from one job to make the payment. Others have jobs where their employers look dimly on payroll garnishments thus causing employment issues.
SUMMARY
Working in our nation’s bankruptcy system for nearly 30 years, I can say that Nebraska has just about the best court system in the country. Really, there is something special about Nebraska’s system. Maybe it is because we are small population state and we just know each other better and cut through the red tape. Attorneys just don’t appreciate how great Nebraska’s bankruptcy judges and trustees are until they practice elsewhere.
But the lack of automatic payments in Chapter 13 drives me nuts. Come on Nebraska, we can do better than this! Let’s automate!
May a person contribute to 401(k) retirement plan during a Nebraska Chapter 13 case?
THE RULE PRIOR TO 2005:
Prior to the Bankruptcy Reform Act of 2005 the answer was fairly simple: No. Contributions to a 401(k) retirement plan are voluntary, and prior to 2005 it was commonly known that contributions were not “necessary” to the support of a debtor.
The maximum required length of a plan was only three years, so to deny this deduction was not a terrible burden on debtors. No matter how high their income was, debtors only had to be in Chapter 13 for three years.
THE RULE AFTER 2005:
But that all changed in 2005 and now higher-income debtors are required to spend up to five years in Chapter 13. Monthly payments are now, in theory, determined by a Means Test based on income received during the prior six months.
The entire intent of the new law was to make filing bankruptcy more difficult and to force debtors to pay back a greater portion of their debts
But the new 6-month income test also contained a new deduction: qualified retirement plan contributions. Debtors might have to repay more of their debts, but at least they could contribute to a voluntary retirement plan, or so it appeared.
CONFUSION OVER RETIREMENT PLAN CONTRIBUTIONS:
The problem with applying the Bankruptcy Reform Act of 2005 is that nobody really understands what it says. The language is confusing and it contains incomplete “hanging sentences.”
As a result, bankruptcy courts have crafted different interpretations of whether a debtor may contribute to a voluntary 401k plan during a Chapter 13 case. (See In re Penfound, 6th Cir 2021)
FOUR INTERPRETATIONS ABOUT RETIREMENT CONTRIBUTIONS:
- Majority View–the Johnson View. The majority of bankruptcy courts hold that a debtor may fund a 401k plan during Chapter 13 if the contributions are made in “good faith.” Under this view bankruptcy courts look at all the relevant factors to see if the contributions are justified. Contributions must be reasonable in light of the debtor’s income, age, health, existing retirement balances, previous contribution percentages, the type of debt owed, and the amount of debt owed. See Baxter v. Johnson (In re Johnson), 346 B.R. 256, 263 (Bankr. S.D. Ga. 2006).
- Priggee Interpretation: Debtors are never permitted to contribute to voluntary retirement plans during chapter 13. In re Prigge, 441 B.R. 667, 677 & n.5 (Bankr. D. Mont. 2010)
- Seafort-BAP Interpretation. A debtor may continue to contribute to a 401k plan an amount they were contributing “at the time” the case was filed. In other words, you may not start contributing to a program after the case is filed.
- CMI Interpretation. A debtor may only claim a monthly deduction for an amount equal to the average amount contributed in the six months prior to filing.
NEBRASKA’S RETIREMENT CONTRIBUTION RULE:
There is no Nebraska or 8th Circuit case exactly on point, but it appears that Nebraska follows the Good Faith rule of Johnson. A reasonable retirement contribution is allowed.
Counsel for the Chapter 13 Trustees often speak about a higher-income debtor’s level of retirement contributions. Objections are raised on “good faith” grounds instead of technical arguments. However, when presented with a case involving a high-income debtor who offers to pay very little to unsecured creditors while making significant contributions to their own retirement plan, is is common for the trustee to object to the debtor’s budget.
OBSERVATIONS AND FINAL COMMENTS:
It is extremely common for debtors to liquidate or to stop contributions to a retirement plan before bankruptcy. The vast majority of people I meet do not realize that retirement funds are shielded from creditor claims and they feel a strong moral duty to liquidate their savings to pay debts.
The other observation is that liquidating a retirement plan to pay debts rarely provides enough funds to pay back all the debt. At best only a portion of debt is paid and income taxes and penalties frequently consume nearly half of the funds withdrawn. Rarely does it make sense to use retirement savings to pay debts.
Those who do use retirement savings to pay debts suffer a tremendous blow. They forfeit decades of savings they can never restore.
When it becomes clear that filing bankruptcy is necessary, a debtor should cease to pay unsecured debts (credit cards & medical bills) and they should consider contributing to a retirement program prior to filing bankruptcy. Bankruptcy courts may balk at contributions to 401k plans if those contributions were not being made prior to filing a case.
Most debtors wait too long to visit a bankruptcy attorney. By the time they do visit one they have wiped out savings that would have been fully protected in the bankruptcy case.
The lack of retirement savings is often a strong factor in deciding to file bankruptcy. Although a young person may learn a hard but valuable lesson in paying back debts incurred foolishly, those in their middle years are running out of time to save up for retirement. Filing bankruptcy enables a person to protect the retirements they have saved so far and frees up future income to devote to that purpose. Bankruptcy has as much to do with planning for the future as it does in cleaning up the past.
Image courtesy Leigh Blackall & Flickr
A new Nebraska bankruptcy court opinion (In re Torres) answers the question of whether a debtor may hold a vehicle title in trust for another person who provided the funds to purchase the vehicle.
In Torres, the debtor’s sister lived in Mexico and she transferred $42,970 to the debtor’s bank account to purchase a 2020 Hyundai Palisade. The vehicle was titled only in the debtor’s name.
The chapter 7 trustee demanded a turnover of the vehicle, but the debtor objected claiming that he merely held the vehicle in trust for his sister.
There was no written agreement between the debtor and his sister. The parties stipulated that the sister did not intend to make a gift to her brother but that the funds were transferred to purchase a vehicle for the sister’s use. Apparently the sister intended to come to Nebraska for medical treatment but was unable to due to Covid-19 travel restrictions. It’s not clear why the sister’s name was left off the title.
THE LAW:
Nebraska statute 60-140 governs the ownership and acquisition of motor vehicles:
No person acquiring a vehicle from the owner thereof . . . shall acquire any right, title, claim, or interest in or to such vehicle until the acquiring person has had delivered to him or her physical possession of such vehicle and (a) a certificate of title or a duly executed manufacturer’s or importer’s certificate with such assignments as are necessary to show title in the purchaser, (b) a written instrument as required by section 60-1417, (c) an affidavit and notarized bill of sale as provided in section 60-142.01, or (d) a bill of sale for a parts vehicle as required by section 60-142.
That seems very conclusive. No person shall acquire any “right, title claim or interest” without possession of the vehicle and a title, a written instrument, or a bill of sale. Something must be in writing.
THE RULING:
Judge Kruse ruled that “any equitable interest Ms. Torres asserts in the vehicle cannot defeat the trustee’s powers under 11 U.S.C. § 544. This court previously refused to recognize the equitable ownership interest of a non-debtor whose name is not noted on a motor vehicle’s certificate of title. See In re Farrell, Case No. BK19-80282, 2019 Bankr. LEXIS 1949 (Bankr. D. Neb., June 28, 2019).”
The court focused on Nebraska Statute 60-140. “No person shall acquire any right title claim or interest of any person in or to a vehicle . . . unless there is compliance with this section.”
In Torres there was no writing between the debtor and his sister. Case closed. The sister had no interest recognized under Nebraska motor vehicle title law.
In re Farrell
In the Farrell opinion Judge Saladino relied on the Strong Arm power of Section 544 to allow the chapter 7 trustee to void the interest of a non-debtor spouse in a motor vehicle. In Farrell the debtor’s mother purchased a vehicle for the debtor and his wife, but the title was only recorded in the debtor’s name. On the bankruptcy schedules the debtor claimed a one-half interest in the vehicle and stated that his wife held an equitable interest in the other half.
Bankruptcy Code Section 544 is called the Strong Arm Power because it allows a chapter 7 trustee to avoid any interest in a judicial or unrecorded lien in property of the debtor.
Importantly, in the Farrell opinion Judge Saladino ruled that Nebraska case law does recognize an ownership interest in a motor vehicle not listed on the vehicle title.
“Nebraska case law makes clear that “while the certificate of title act provides the exclusive method for the transfer of title to a vehicle, it is not conclusive on the issue of ownership[.]” Hanson v. Gen. Motors Corp., 486 N.W.2d 223, 225 (Neb. 1992) (citing Alford v. Neal, 425 N.W.2d 325 (Neb. 1988)). The bankruptcy court has observed that the certificate of title statute’s applicability may not be as broad as initially appears: “The Nebraska Supreme Court recognized that the purpose of § 60–105 is to prevent fraud or misrepresentation, and recognized that there are circumstances where, although § 60–105 would apply by its terms, the circumstances may not be within the intended purview of the statute.” In re Mueller, 123 B.R. 613, 615 (Bankr. D. Neb. 1990) (interpreting the predecessor statute to § 60-140).”
How can we reconcile Judge Saladino’s opinion in Farrell the does recognize a debtor’s ownership interest in a motor vehicle that does not appear on the vehicle’s title with Judge Kruse’s opinion in Torres that “no right, title, claim or interest” may exist without compliance with 60-140?
Judge Saladino, quoting Hanson v Gen Motors Corp says an ownership interest may exist apart from the vehicle title. Judge Kruse says it does not. We have a conflict of opinions here.
Resulting Trusts:
In Farrell the debtor did not argue that he held his wife’s interest in trust. (“Mr. Farrell has not suggested that he holds the vehicle in trust for his wife, so § 541(d) need not be addressed further here.”)
Why is that significant? It is significant because if the vehicle was held in trust then it would not be part of the bankruptcy estate and the Strong Arm power of Section 544 would not apply.
It is clear under the Hanson v Gen Motor Corp opinion that Nebraska recognizes that an ownership interest may exist even if it is not recorded on a vehicle title. Nebraska statute 60-140 is not conclusive. Judge Saladino says exactly that in Farrell.
In Torres Judge Kruse specifically finds that Nebraska law recognizes resulting trusts, but he finds that Nebraska that statute 60-140, however, does not allow a resulting trust in a motor vehicle. What Judge Kruse does not explain is why the Hanson v Gen Motors Corp case does not apply. We are left to wonder.
Burden of Proving Existence of Resulting Trust:
Judge Kruse explains that the existence of a resulting trust must be established by clear and convincing evidence. That is a high standard.
In Torres there was no written trust agreement between the debtor and his sister. There was no writing of any type at all to prove the existence of a trust.
Based on the evidence presented, I think the Court got it right in Torres, but we now have a conflict in case law about whether Nebraska law allows a resulting trust in a motor vehicle that will have to be resolved in a future case.
Image courtesy of Flickr and Greg Gjerdingen
While there is an age requirement to vote, consume alcohol, or drive a car, the Bankruptcy Code does not require an individual to be a certain age to file for bankruptcy. However, even though there is no legal requirement under federal law, state laws make filing for bankruptcy at a young age impractical. In California, […]
The post Is There an Age Requirement for Filing for Bankruptcy in California? appeared first on The Bankruptcy Group, P.C..
While there is an age requirement to vote, consume alcohol, or drive a car, the Bankruptcy Code does not require an individual to be a certain age to file for bankruptcy. However, even though there is no legal requirement under federal law, state laws make filing for bankruptcy at a young age impractical. In California, […]
The post Is There an Age Requirement for Filing for Bankruptcy in California? appeared first on The Bankruptcy Group, P.C..
Many Americans are in financial distress from the pandemic. If you feel overwhelmed by medical debt, credit card debt, student loans, or tax debt, you’re not alone. One of the best ways to obtain debt relief and reclaim your financial future is to file a bankruptcy.
Now, you may be anxious about what should happen when you step foot in a bankruptcy law firm. Read on for a comprehensive guide about what you should be doing at the law office as well as the benefits of hiring a bankruptcy attorney!
If you want to get your financial freedom, don’t hesitate. Get in touch with our experienced Portland bankruptcy attorney to get your fresh start today!
Why You Should Hire a Bankruptcy Lawyer
So you’re considering filing bankruptcy. Well, you can go about it by representing yourself “pro se.” However, bankruptcy law can be complicated and a single mistake can cost you your chance to get out of debt. The services of experienced bankruptcy attorneys in Portland can ensure that the bankruptcy process goes in your favor.
There are also many things to take into consideration because there are different types of debt and different types of bankruptcy filings under the US bankruptcy code. A skilled bankruptcy lawyer can take all of this into account to find the best option for you. If you don’t know whether you need to declare bankruptcy or if there are alternatives for you, talk to a Portland bankruptcy lawyer for legal help.
Once you’ve decided to file, your attorney will protect all your rights and maximize the benefits you receive. Skilled bankruptcy lawyers can ensure that your creditors respect your rights, all your dischargeable debts are eliminated, all possible property is protected. They will also see to it that life after bankruptcy can go as smoothly as possible.
Bankruptcy protection offers you an opportunity to reclaim your life. A competent attorney knows the bankruptcy law and the process inside and out. They will help with getting out of your financial problems and rebuilding your life. Call our Portland law firm now for more information about declaring bankruptcy!
What Do I Bring to the Bankruptcy Law Office?
It can be stressful walking into a bankruptcy law firm to file for bankruptcy. One of the best ways to ease your worries is to make sure that you’re prepared. There are documents and files you can bring so that you and your local attorney can decide on the best course of action.
Below is a list of the documents you should bring to your first meeting. Documents for your outstanding loans;
- A list of all creditors, including the amount you owe, the account numbers, and contact information;
- Financial documents (like tax returns, wage statements, receipts, bank account statements;
- Property items that are subject to repossession or liens;
- Information about your major assets and real property that you own or rent;
- Other financial information that can be relevant to your bankruptcy;
Feel free to ask your attorney about other documentation you may need. They may also ask you to provide other relevant documents depending on the nature of your case.
You must be 100% transparent with your bankruptcy attorney. They are here to help you out and the best way for them to do so is by analyzing all information related to your case. The more information you and your attorney share, the easier the bankruptcy proceedings will be.
What if I Can’t Find a Document or If I Forgot To Bring One?
If you’ve tried your best but can’t find them all, don’t worry. The most important thing is to talk to the bankruptcy attorney.
If there’s a document that you cannot find or forgot to bring, be sure to tell your attorney as soon as you can so they can take the necessary actions. Don’t worry or panic, the bankruptcy court usually allocates additional time so you can gather everything you need for the bankruptcy proceeding.
You have to avoid being accused of not properly disclosing your assets or fraud. Make a reasonable effort to locate the documents and communicate with the parties involved, like lenders, employers, or banks.
What Does the Bankruptcy Process Look Like?
It depends on what bankruptcy chapter you file under. Typically, individual consumers can choose to liquidate their assets under Chapter 7 or reorganize their debts under Chapter 13, two types of personal bankruptcy depending on their needs.
Once you file any type of bankruptcy, the court places an automatic stay. This order prevents collection agencies, debt collectors, or debt attorneys from undertaking any collection effort, including collection calls and lawsuits.
Chapter 7 bankruptcy is a liquidation bankruptcy. You’ll need to pass a means test to file bankruptcy under this chapter. Here, a bankruptcy trustee sells your nonexempt property and distributes the proceeds to your creditors before paying off your debt. The debts remaining after this process gets discharged. Examples of dischargeable debts include unsecured debt like credit card debt and medical bills. Unsecured debt not eligible for discharge includes spousal and child support, student loans, recent tax debt, debt incurred by fraud, recent debt for luxury items, and court judgments arising out of intoxicated driving cases.
Chapter 13 is a reorganization bankruptcy. There is no income requirement for a bankruptcy filing under this chapter. Here, you’ll propose a repayment plan to pay off all your debts. This can take 3-5 years depending on your income. Once you have completed your monthly payments, you can get your debts discharged.
What Types of Issues Should I Anticipate?
Bankruptcy is a complicated legal process. It’s not unusual to run into some issues along the way. We list below some of the more common problems that we’ve seen in bankruptcy cases so you can prepare for them.
Lack of Documentation
As you have seen above, there are a lot of documents needed in bankruptcies. There is much more paperwork and bankruptcy forms you have to fill out. An experienced bankruptcy attorney can review everything to ensure that nothing is missing from your bankruptcy petition.
Bankruptcy is a Public Matter
Bankruptcy information is available to anyone. Once your bankruptcy process begins, your friends, family, landlord, or employer can look through the files to see your bankruptcy.
Credit Score Will Tank
If you choose bankruptcy to wipe out your debt problems, you’ll see your credit score decrease. A bankruptcy can stay for years on your credit report. However, since bankruptcy provides you a fresh start, you have the opportunity to rebuild your credit score. All it takes is dedication and discipline to get your credit score back up.
Final Thoughts
Filing for bankruptcy offers you the chance to get back on your feet after financial hardship. Bankruptcy laws provide Americans with the proper process to get rid of or repay their debts when they go bankrupt. It’s important to have skilled legal counsel with you so that your bankruptcy filing goes smoothly.
Our attorneys at Northwest Debt Relief Law Firm are dedicated to your financial success. We can help you overcome common obstacles like stop foreclosure, prevent wage garnishment, or stop creditor harassment with your bankruptcy filing.
Take your first step to a secure financial future by calling our Portland bankruptcy law firm today for a free consultation.
The post What to Expect When You Meet Your Bankruptcy Lawyer appeared first on Portland Bankruptcy Attorney | Northwest Debt Relief Law Firm.
Are you getting your mortgage statements after filing bankruptcy? Some mortgage companies use bankruptcy as an excuse to stop sending mortgage statements. (Or they send them to your lawyer, not to you.) The law is completely clear. The law says to keep sending them to you. That law is Regulation Z. The Consumer Finance Protection […]
The post Getting Your Mortgage Statements After Bankruptcy by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.
Are you getting your mortgage statements after filing bankruptcy? Some mortgage companies use bankruptcy as an excuse to stop sending mortgage statements. (Or they send them to your lawyer, not to you.) The law is completely clear. The law says to keep sending them to you. That law is Regulation Z. The Consumer Finance Protection […]
The post Getting Your Mortgage Statements After Bankruptcy by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.