Don’ts and more Don’ts when considering a bankruptcy. 2017 Edition.

Thirty-Two Don’ts in preparing to File Bankruptcy

  1. Don’t leave out Bank, Checking, Savings, Brokerage, Credit Union Accounts, PayPal Accounts or HSA accounts.
  2. Don’t use your credit cards prior to filing.
  3. Don’t take Credit Card Cash Advances.
  4. Don’t use convenience checks
  5. Don’t do balance transfers
  6. Don’t pay money to family or friends until after your bankruptcy is done.
  7. Don’t tell a creditor that you intend to pay.
  8. Don’t leave assets off of your paperwork.
  9. Don’t file if you are about to receive a tax refund or an inheritance (without consulting your attorney).
  10. Don’t fail to tell your attorney about your small business, sole proprietorship, partnership, LLC, LLP, LC, corporation, or money making hobby.
  11. Don’t purchase a home shortly before filing bankruptcy without consulting your attorney.
  12. Don’t give or gift property to anyone.
  13. Don’t pay more than $600.00 on any past due bill.
  14. Don’t transfer property to anyone.
  15. Don’t cash out retirement plans or 401k’s.
  16. Don’t take out a second mortgage.
  17. Don’t gamble.
  18. Don’t hide assets or debts.
  19. Don’t take out payday loans.
  20. Don’t put your money in your kids’ bank accounts.
  21. Don’t omit or save a credit card for after your bankruptcy.
  22. Don’t fail to list a debt to a family member or other insider.
  23. Don’t write bad checks.
  24. Don’t borrow money.
  25. Don’t forget to tell your attorney about liens you may have on your home or unpaid judgments, we want to help you make them go away.
  26. Don’t make major financial decisions without talking to your attorney.
  27. Don’t get married before filing if your spouse has a high income.
  28. Don’t misrepresent facts to your attorney.
  29. Don’t run up your credit cards before filing
  30. Don’t fail to appear at State court hearings, trial or proceedings; coordinate with your attorney.
  31. Don’t hide from your attorney.  Keep him or her up-to-date with your address, phone number and email address.

Culled from NACBA listserve with embellishments from yours truly.

Steve Palmer
Licensed in WA and OH

Do What You Love: I Am a Bankruptcy Attorney and I Love It.

arrows-1577985_640

How many times were you told when you were growing up that you should do what makes you happy? Dozens? Hundreds?  I was told that over and over, and I struggled with it through university.  After taking a 4 year break teaching English in Japan, I went to law school.  I then graduated at a terrible time for attorneys.  Large firms were not hiring, government was not hiring, so I put out nearly one hundred applications until I was picked up by a large consumer bankruptcy law firm in Ohio.  I had no idea how I was going to like practicing bankruptcy law.  None.  About a year into it, I realized I really liked what I did.  Now nearly 1000 cases in, I love it.  I lucked into a career that I love.

As a bankruptcy attorney, I can help turn peoples lives around and give them the fresh start that is provided for in the law.  I can stop foreclosures, wipe out second mortgages, save cars from being auctioned, stop garnishments, get people their driver’s licenses back, and generally give them a new lease on life.  It is awesome.

Find something you love and stick with it. You are going to spend somewhere around 90,000 hours of your life doing it.

Best of Luck,

Steven Palmer
Licensed in WA and OH
http://www.northwestbankruptcyattorneys.com
http://www.curtislaw-pllc.com

Uber Leases: The Company Towns of the 21st Century

car and moneyRemember the stories of the little towns owned by coal companies?  The coal company would provide housing and had a general store where the miners would use company script to purchase their needed goods.  After paying for their rent and food needs, the miners often had nothing left while the coal companies made money from both the coal that was mined and from the miners themselves.

Fast forward to the “Gig Economy.” The Gig Economy, as it is known, has proven to be a decent way for people who are otherwise out of work to make some money.  Think Uber, Lyft, and Airbnb.  Some companies offering their platform offer money that rivals that of a full time job.  The work they offer seldom comes with benefits.  This post is a warning for people looking to lease through Uber.

As a bankruptcy attorney, I often see people who are down on their luck and who frankly have pretty bad credit.  These people are often offered the very worst rate on auto financing, home financing and credit cards.  How does a 29% interest car loan sound? Unfortunately, Uber is getting in on the subprime lease game through a company they own called Xchange Leasing.  Knowing, presumably that their drivers are often people who have lost a job and thus don’t have credit, they offer people a way to get into an “Uber qualified” car.  Bloomberg recently ran a report with an Xchange customer who is paying $160/week for a 2015 Honda Civic SE  That works out to $693.33 per month.  52 weeks in a year / 12 months.  Contrast that with Honda, who, as of this post, is offering a $139.oo per month lease with zero down.  That is a 499% premium that Uber Xchange customers pay over a qualified lessor.

I have had two clients in the past month come to me with these leases.  They have among the worst financing terms I have seen.  It would be a far better move to attempt to build your credit a bit and then buy or lease at a much better rate.   Granted, Uber has pretty liberal policies when it comes to getting out of the leases, but you would think that since they take the payment directly from the earnings of their drivers that they would offer something better than sub-prime lease rates.  As it stands, Uber is making money from the trips that are driven and now from the drivers themselves.  Sound familiar?

Best of Luck,

Steven Palmer
Licensed in WA and OH
http://www.northwestbankruptcyattorneys.com
http://www.curtislaw-pllc.com

Tax Refunds and Bankruptcy

Money

Tax refund season is typically the busiest time of year for bankruptcies to be filed.  The reason is pretty simple, people who have been slogging along trying to pay their bills have not had the extra money to use for a bankruptcy attorney.  Their tax refunds change that and finally make it possible for many people to get their cases filed.

If you are considering bankruptcy there are some things to keep in mind if you are expecting a big tax refund.

Filing a case before you receive the refund can lead to some or all of the refund having to be turned over to your bankruptcy trustee.  This all depends on your state’s exemptions. Some states, Ohio for example, will allow you to exempt all of your additional child tax credit and earned income credit.  Some states, Washington and New York for example,  allow you to use either state or federal exemptions.  If you have the option of using federal exemptions and you do not have a home with equity you can exempt a large amount which may protect your entire refund.  Still other states offer very anemic exemptions and make it very difficult to file before receiving a refund.

If you file a case after you receive the refund there are other considerations.  You can still use the exemptions mentioned above.  If, however, you are not able to protect the entire refund, you can spend it on items that are considered reasonable and necessary.  You just have to be aware that trustees will look to see if those were normal expenses that would usually be paid using your regular income.  Reasonable and necessary expenses are subjective but be aware that your attorneys fees and court costs are considered reasonable and necessary.

Many people rely on their refunds to get by.  If you are among them and are considering bankruptcy, make sure you speak to an attorney to protect as much of that refund as possible.

Best of Luck,

Steven Palmer
Licensed in WA and OH
http://www.northwestbankruptcyattorneys.com
http://www.curtislaw-pllc.com

 

Northwestbankruptcyattorneys Blog Year End Review

Fireworks

The year 2015 is almost ready for the history books.  Before we look ahead into what 2016 brings it makes sense to look back to get a greater sense of where we need to be headed.

This year I posted on a variety of bankruptcy issues, mostly general in nature to give my clients and anyone contemplating bankruptcy some issues to think about.

This year started out with looking at how loan modifications can still be pursued by debtors in chapter 13 bankruptcies. (They can be obtained and can be a great way to deal with a home that you had almost lost.)  I then looked at what happens to your car when you file a bankruptcy. (You have lots of options.)  Since so many of my clients are worried about how their credit scores will be impacted by the filing of a bankruptcy, we did a post on bankruptcy and your credit score. (The impact is not nearly as bad as people think.)  I then put together a post looking at some of the do’s and dont’s of filing a bankruptcy.  If you are contemplating a bankruptcy, please read or reread this post.  The award for the biggest northwestbankruptcyattorneys blog post goes to The History of Student Loans in Bankruptcy.  I did a ton of research for this post and am pretty happy with how it came out.  If you are at all interested in the topic, please give it a read.  The changes that have taken place over the course of 60 years are astonishing and terrible.  They remind me of the proverb, the road to hell is paved with good intentions.  From there, I tried to give potential filers some ideas of how they can find a good bankruptcy attorney in 5 Tips for Finding a Good Bankruptcy Attorney.  We then looked back at the topic of homes and bankruptcy in the Halloween Special Zombie Homes Attack.  (You do have options if you have a house that is stuck in your name after bankruptcy.)   The award for biggest rant post of the year goes to Credit Unions: The Devil is in the Details.  In that post we looked at the hidden dangers of using a credit union for a car loan and also having credit cards or bank accounts with those same credit unions.  Lastly, the Christmas Special this year was The Christmas before Bankruptcy.  In that post we looked at some of the hidden dangers of gift giving and receiving before filing a case.

In the coming year, look out for more posts on student loans and ways to deal with your small part of this national crisis.  Another post on zombie homes and getting rid of them through the bankruptcy process.  A more detailed look at what you can do to rebuild your credit.  A post on attempting to avoid bankruptcy.  There will be others as well as the inspiration strikes.  We are also open to writing on topics that people request, so if you have a topic you would like to see an article written on, please suggest it below.

Happy New Year from all of us at northwestbankruptcyattorneys.com and the Curtis and Casteel Law Group.

Steven M. Palmer, Esq.
Licensed in WA and OH
http://www.curtislaw-pllc.com
http://www.northwestbankruptcyattorneys.com

The Christmas before Bankruptcy

Depending on your family, Christmas gift giving may be huge or it may be minor.  If you fall in the former category and you are considering a bankruptcy you need to be aware of some bankruptcy rules which could impact your bankruptcy filing.

Gift giving and bankruptcy:

If you are a big giver and routinely rack up credit card debt ensuring that everyone gets just what they want, you will want to go easy the Christmas before bankruptcy.  In the forms that are required by the bankruptcy code, there is a requirement that you list any gifts made to a family member of more than $200.00 or more than $100.00 to a charitable organization.  Giving cash or items to a charity is generally not a problem so long as you don’t go over 15% of your gross income during the year in which the contributions were made.  The reason behind the restrictions is that congress did not want potential debtors to squander their assets in an attempt to hide them from their creditors before filing a bankruptcy.  If you did give a bunch of gifts to family members this Christmas, it may be best to wait until next year to file.  Your best bet if this situation applies to you is to contact a local bankruptcy attorney and ask their advice.

Gift receiving and bankruptcy:

What really matters here is what was given and is it an exempt asset.  If you received cash for Christmas, that cash gift could push you over the income threshold between a chapter 7 bankruptcy and a chapter 13 bankruptcy if you were already close.  If instead you received a car or a new mac book, those are items which would need to be listed.  What happens next depends on the value of the assets and the exemptions available.  If you have enough exemptions available, you will not have anything to worry about.  If on the other hand there are not enough exemptions to protect the new assets, a chapter 7 trustee may take them, or you may be pushed into a chapter 13 bankruptcy.  Again, you would want to talk to a local bankruptcy attorney to make sure that this will not be an issue in your case.

Best of Luck,

Steven M. Palmer, Esq.
Licensed in WA and OH
http://www.curtislaw-pllc.com
http://www.northwestbankruptcyattorneys.com

Credit Unions: The Devil Is In the Details.

piggy-bank-1047211_1280 (1)

Credit Union Customers love their credit unions.  They love the level of service that they get and they love the relatively low rates for loans and high rates for savings.  Much of this love is not reciprocated.  Credit Unions, if you are ever forced into a bankruptcy proceeding are fond of forcing reaffirmation agreements and enforcing their nearly ubiquitous cross-collateralization and future advances clauses.  These are things that you almost never have to worry about if you get your financing elsewhere.

Customers must beware.  If you take out a loan with a credit union because they offer you a great rate, beware of the details.  You will likely be signing a loan document that includes language allowing them to hold on to your title until you pay any other loan that you have with them.  If you are a credit union customer and you have a credit card through the credit union the credit card agreement may include language allowing them to secure that card to any future security interest that they hold.  For example, you get a credit card, you happily use it and are happy with the rate, you then decide that you want to get a car loan through the credit union because they are offering a great rate.  Now the car loan is obviously secured by the car, what is not obvious to almost everyone is that the credit card is also secured by the car.  This means that after you have paid off your car loan, the credit union can withhold your title until the credit card is paid off.  The same goes for personal loans with credit unions.

Now if something bad happens to you financially, and believe me it happens all the time, whether you suffer an injury, a job loss, get divorced, or have to support a relative, you could be forced into a bankruptcy.  If that happens and you have a car loan with a credit union you will end up having to pay off debts that otherwise would have been discharged in the bankruptcy if you want to keep the car.

To protect yourself, if you insist on using a credit union to get a car loan, do not take out any credit cards with them, do not take out any personal loans, and do not take out any lines of credit.  Keep your other finances fenced off from the credit union’s dragnet.

If you find yourself needing to file a bankruptcy and you have a car loan through a credit union and a credit card, a personal loan, or a line of credit, speak to a bankruptcy attorney right away and see if there is anything that can be done to protect your interests.  Your best bet is to stay clear of them altogether.

Best of Luck,

Steven M. Palmer
Licensed in WA and OH
http://www.northwestbankruptcyattorneys.com
http://www.curtislaw-pllc.com

Halloween Special: Zombie Homes Attack!

https://pixabay.com/en/zombies-undead-monster-horror-598393/
https://pixabay.com/en/zombies-undead-monster-horror-598393/

With the housing bubble bursting a few years ago, many homeowners were left underwater on their homes.  Some people were so far under that they strategically defaulted on their mortgages and walked away from their homes.  Some filed bankruptcy and “surrendered” their homes only to find out that did not mean they were off the hook.  For others still, their lenders or servicers had commenced foreclosure, obtained a judgment and never executed on that judgment.  Meaning they never sold the homes at Sheriff’s sale or trustee sale.  Whatever happened, thousands of people are stuck with homes that no one wants.  When this happens they find that they are still responsible for housing code violations, condo or homeowners association fees, property taxes until the house transfers, and are liable if anyone gets injured on their unwanted properties.

What to do?  These unsuspecting homeowners have some options.  The first step may be to attempt to get homeowners insurance to protect yourself from liability. You should then contact that mortgage company that doesn’t seem at all interested in the property.  You want to ask them for an application to do a deed-in-lieu of foreclosure.  This would basically allow you to transfer the property over to the mortgage company.  You may also be able to short sell the home.  To do this you use the same application with the bank.  Yet another option is to ask the mortgage company if a short payoff is an option.  With a short payoff, you offer the mortgage company a fraction of what is owed on the home and they release their lien meaning that you would own it free an clear.  I have seen short payoffs for 4% of the amount owed on the loan.  If the mortgage company isn’t interested in any of these options, they may be interested in you transferring the property over to a land bank if there is one active in your county.

What if the mortgage company isn’t interested in any of these seemingly rational options?  An option that has recently come to light is attempting to vest the property in the mortgage company’s name through a bankruptcy.  This option is pretty new and will not work in all jurisdictions.  Look around for an attorney who is willing to attempt this.  They are out there.  You can also contact the CFPB and file a complaint.  http://www.consumerfinance.gov/complaint/ If the lender is headquartered in your state, you can also contact an analogous state agency and file a complaint there, or with the state attorney general.  Of course all of this can be daunting.  If you want help, there are attorneys who specialize in this sort of thing.  They will usually help you out upon payment of a retainer fee with an hourly fee agreement.

Now, what do you do in the meantime?  If you moved out of your house and it is unoccupied, you may want to consider moving back into it until it is actually sold.  Before you do this, contact an attorney to make sure you are following all applicable laws.

Best of Luck and Happy Halloween!

Steven M. Palmer
Licensed in WA and OH
http://www.curtislaw-pllc.com
http://www.northwestbankruptcyattorneys.com

5 Tips for Choosing the Right Bankruptcy Attorney

Handshake

Filing a bankruptcy is a big life choice.  As I have written in previous posts it is not nearly as scary as people assume it to be.  That said, it is important to choose an attorney who knows what they are doing and who has a reputation for good client advocacy.  You don’t want to get stuck with someone who won’t return your phone calls, is rude, or who gets disbarred after they start taking your money.  What follows are some tips for choosing a good bankruptcy attorney.

  1. You can find attorneys with bankruptcy expertise by using the attorney finder function of www.nacba.org.  NACBA is the National Association of Consumer Bankruptcy Attorneys.  Attorneys that you find on this site have paid dues to the organization which I believe shows that they are committed to the bankruptcy field.  You want an attorney who files bankruptcies regularly, not once or twice a year.
  2. Another good source is your local bar association.  Contact your local bar association and see if they have a referral service.  Referral services generally require attorneys to have 5 years of experience in the field you are looking into.  They also often require that their attorneys they refer clients to have completed continuing education courses in the field you are looking for.
  3. Ask around about the attorneys reputation.  If you do not know anyone who has used them, look online.  Attorneys are rated by www.avvo.com.  While their methodology may not be perfect, (for example, you might have a great attorney with 20 years experience who has a rating of 7.0, on the other hand you might have one with 2 years experience with a 10.0.)  I am not sure how accurate the ratings are, but you can at least see if they have any reports of misconduct.
  4. Go to a free consultation.  Most bankruptcy attorneys will offer you 30-60 minutes of their time to figure out if you are a good candidate for bankruptcy and to determine how complex your case is.  This really serves an additional purpose of helping you to determine if it is someone you would be comfortable working with.  Some attorneys do charge a consultation fee.  If this is the case with the attorney you want to meet ask them if they apply that fee to the overall attorney’s fee.  Even if they do charge an additional fee for the consult, it may be worth it if their reputation is sterling.
  5. Ultimately, make the decision using all the information at your disposal.  If they were referred by a reputable source, if they have a good reputation, and if the fee is something you are comfortable paying, be confident in your choice to go forward and provide your attorney all of the information that ask for.  If you have done this, chances are your case will go smooth.

Best of Luck,

Steven M. Palmer, Esq.
Licensed in WA and OH
http://www.curtislaw-pllc.com