A Chapter 13 EDO is much different than a state ordered garnishment of your wages.  EDO is an abbreviation for an Employer Deduction Order which is a signed order by a Federal Bankruptcy Judge.

In Georgia, the most important difference is the liability for your employer.  Under Georgia State Law, if your employer makes an error in paying a Georgia garnishment, they can be held liable for the entire amount of your debt.  For this reason, most employers hate garnishments because of the potential liability.  In contrast, there is very little liability for an employer with respect to a Chapter 13 EDO.  For example, if an employer deducts the wrong amount from a debtor’s paycheck in a Chapter 13, it is the debtor’s responsibility to send in the difference to the trustee.  This type of error can be easily fixed by your bankruptcy attorney calling your payroll department and faxing them another copy of the EDO.

A second difference between a Chapter 13 EDO and a Georgia garnishment is the creditors that are covered by the deduction.  With a Georgia garnishment, the only creditor that receives money is the one who filed the judgment and the subsequent garnishment papers.  Paying your house payment can be extremely difficult when one single creditor soaks up one fourth of your take home pay with a garnishment of your paycheck.

In contrast, a Chapter 13 EDO covers all of your future car payments, arrears on your house, credit card payments, and any other unsecured debts.  Before any Chapter 13 bankruptcy is filed, your bankruptcy attorney will go over your entire budget and make sure you can actually afford the Employer Deduction Order.

A third difference is the amount of money you pay.  With a Georgia garnishment, twenty five percent of your net income will be taken out of your paycheck regardless of your ability to pay.  In contrast, your Employer Deduction Order is determined by your ability to pay.

An Employer Deduction Order commands employers to stop all Georgia garnishments of your wages.  As a result, you should never have to worry about an Employer Deduction Order and a Georgia State Court ordered garnishment coming out of your paycheck at the same time.

Other Posts:

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Stop Garnishment

5.  Stop Foreclosure

Getting divorced during a bankruptcy presents major ethical considerations for your Georgia bankruptcy attorney when a husband and wife file a case together (See Georgia Model Rules of Professional Conduct).  In an individual case, your Georgia bankruptcy attorney may simply need to file amendment reflecting the loss income of the spouse and a new expense list.  In either situation, the bankruptcy attorney will need to sit down with the client and review the entire case.

Divorce in Joint Bankruptcy Cases

In a joint case, your attorney has an ethical duty of loyalty to both the husband and the wife.  How can your bankruptcy attorney be one hundred percent loyal to you and your spouse at the same time if a conflict arises?  Its impossible.  As a result, most attorneys will withdraw from representing either party.  Any attorney that fails to withdraw in conflict situations may face sanctions from the Bankruptcy Court.

Example of Conflict in a Joint Bankruptcy Case

An example of a conflict that would force a bankruptcy attorney to withdraw from the case is a reaffirmation agreement.  Lets say you have a husband and wife that are joint signers on a note for a 2009 Monster Large Truck.  The husband loves the Monster Truck and does not want to give it up at any cost.  In contrast, the wife is ready to get divorced and move on with a fresh start in life.  In this scenario, it is clearly not in the best interest of the wife to reaffirm this debt.

Lets say she reaffirmed this debt.  A few years down the road, ex-husband is remarried and has two children by his new wife in his new life.  Out of the blue, he loses his job.  He can no longer afford the Monster Truck.  Sadly, the car creditor repossesses the Monster Truck.  Then, the creditor follows Georgia law and auctions it off.  Unfortunately, the Monster Truck sells for less than half of what is owed to the creditor.  Guess who is going to get sued for the deficiency?  Drum roll please.  The answer is the ex-wife.  She thought she moved on with a new start in life.  She had heard about his new wife and children.  She thought it was all behind her until the Floyd County Sheriff show up at her house one fine summer afternoon in front of all the neighbors and served the lawsuit from the creditor.

In divorce situations, it is always best for debtors to have separate attorneys.

Since hiring a new attorney to review your entire case and proceed with continuing the case is expensive, most joint debtors will beg their attorney to keep representing them both to save money.  In this situation, the attorney will have the clients sign an agreement stating that they understand the potential for conflict and that the attorney will withdraw from representing either debtor in the event a conflict arises.

In cases where there is no secured debt or when every type of secured collateral is being surrendered to the creditors, the chance for conflict is low.

Other Posts

1.  Bankruptcy and Divorce Orders /a>

2.  Should I File Bankruptcy Before or After the Divorce?

3.  How Much Does it Cost to File Bankruptcy?

4.  What is Chapter 13?

Some of the harsh results of the bankruptcy means test might be reduced by the recent Supreme Court decision in Jan Hamilton, Trustee vs. Stephanie Kay Lanning.  In this case, the Supreme Court has held that bankruptcy judges don’t have to apply a “mechanical approach” to means testing in Chapter 13 bankruptcy cases.  Bankruptcy judges can take a forward looking approach and consider the realities of a debtor’s income.  This case is good news for any consumer who is considering filing bankruptcy in Georgia.

In Lanning, the debtor received a one time buyout payment from her former employer during the six month period that preceded her Chapter 13 bankruptcy case.  As of result of this buyout, her income for the six month period was greatly inflated as compared to the future income she expected to receive.  The Chapter 13 trustee argued that the means test should be applied mechanically and the buyout from her employer should be taken into account when calculating her future Chapter 13 payment.  The trustee argued that the proper way to calculate projected disposable income was simply to multiply the number at the end of the means test by sixty months.  The problem with this approach is that debtor was never going to receive another buy out from her employer but yet her Chapter 13 payment was going to be calculated as if she were going to keep receiving this payment.

Fortunately, the Supreme Court decided that bankruptcy judges do not have to ignore reality when calculating Chapter 13 payments for a debtor.  In Lanning, the Court states that the “arguments in favor of the mechanical approach are unpersuasive.”  The Court continued, “a court taking the forward-looking approach should begin by calculating disposable income, and in most cases, nothing more is required.  It is only in unusual cases that a court may go further and take into account other known or virtually certain information about the debtor’s future income or expenses.”

Georgia consumer bankruptcy expert Jonathan Ginsberg predicts that “judges will use the rationale of Lemming to reduce some of the harsh results of the means test and help debtors improve their chances at success in Chapter 13 ”

Other Posts:

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Stop Garnishment

5.  Stop Foreclosure

When I meet with clients from the Northwest Georgia area, one of the first questions I usually get is, “Can I keep my tax refund if I file bankruptcy?”  For some, the answer is yes and for others, the answer is no.   Most people have plans for how they are going to spend those tax refunds long before they receive them from the IRS.  For some, its clothes for the kids.  For others, its car repairs, house repairs, catching up past utility bills and on and on.  A few weeks ago, I met with some clients in my Rome office who needed all of their refund to repair their roof.  In their case, everything worked out.

So can you keep the tax refund if you file bankruptcy?  The answer to this question is maybe.  First it depends on what type of bankruptcy case you are filing.  Second, it depends on how much of your Georgia Bankruptcy Exemptions have been used up on other assets.  Third, how much of your refund can be attributed to the Earned Income Tax Credit?

Lets say you file a Chapter 7 bankruptcy.  If you have a tax refund that you anticipate receiving before your case will be discharged, the tax refund must be exempted as an asset in your case.  Every case is different.  As a general rule in Georgia, if your tax refund is less than $5,000.00, we should not have a problem.  However, you must remember that every case is different.  If you have other assets that use up all of your Georgia Bankruptcy Exemptions, we may have a problem.  We will be able to tell if you have an issue before the case is filed.  If your tax refund is based entirely on the Earned Income Credit, you should be able to keep all of it. Make sure you explain to your bankruptcy attorney the amount of your tax refund that can be attributed to the Earned Income Credit.

If you file a Chapter 13, the trustee wants every extra dime you have to be paid toward your Chapter 13 case.  As a result, they want all of your tax refund that you receive during the applicable commitment period of the plan.  However, you can keep any amount of the refund that can be attributed to the Earned Income Tax Credit. Like I said above, you must disclose all tax refund information to your bankruptcy attorney in order for him to protect any of the tax refund money.

Other Posts:

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

Yes, you can file a Chapter 13 bankruptcy in Georgia even if you are unemployed as long as you are receiving unemployment income. If you have zero income, you obviously won’t be able to file a Chapter 13 bankruptcy.

A great place to search for jobs for free in the Northwest Georgia area is craigslist.

One of the main reasons someone who is receiving unemployment chooses to file Chapter 13 bankruptcy in Georgia is to save their house from foreclosure by the mortgage holder. Any person in this type of situation must be able to show the bankruptcy court that they are able to make their future mortgage payments and a Chapter 13 payment.

In most of these types of situations, usually one spouse has a job and the other is receiving unemployment. I am hesitant to file these types of cases because once the unemployment runs out, the case is doomed to be dismissed by the trustee unless the family can make all future mortgage payments and all future Chapter 13 payments based only on the salary of the employed spouse. In most cases where once spouse is employed and the other receives unemployment, the only thing that will ultimately save the Chapter 13 case is when the unemployed spouse finds a job. I have seen a few cases of mine this year where the unemployed client was able to find a new job right before the unemployment was about to run out.

It is always an absolute joy for me to see someone stop a foreclosure and save their house. Not every case has a happy ending but those that do are fun to celebrate.

Another reason why someone who is receiving unemployment in Georgia may choose to file a Chapter 13 bankruptcy is to save an automobile from repossession If the only source of transportation gets taken back by the car creditor, finding a new job can be even more difficult. Georgia can get blazing hot in the summertime. Walking to a job interview is not a reasonable option in a high temperature and high humidity climate. For many people, saving the car means saving their livelihood.

I am amazed by how many of my clients love their car beyond reason. Some of them are petrified by the thought of their vehicle getting repossessed. I was meeting with a client in my Rome, GA office the other day who said that he would rather lose his wife than his car. I hope he was kidding.

To sum up, the biggest challenge to this type of Chapter 13 bankruptcy is that the person who files the Chapter 13 must find a new job before the unemployment runs so that the Chapter 13 case will not be dismissed.

Other Posts:

1. How to Stop  foreclosures in Georgia.

2. How to Stop Car Repossession.

3. What is Chapter 13?

When you are in a Chapter 13 bankruptcy and the mortgage company refuses to accept your mortgage payment, you need to call my office and set up an appointment with me as soon as you can.  We must make sure that your mortgage payment is accepted.

Sometimes, when a person files a Chapter 13 bankruptcy, a mortgage company might refuse to accept electronic payment over the phone.  This does not mean that they won’t accept a physical check from you.  The best way to do it is to mail the check to the mortgage company return receipt requested.  This way, you have proof as to when you mailed the payment so that they can’t try to stick you with late fees.

If they refuse to accept your check that was sent in the mail, we must find out why they are refusing it.  Refusing your monthly payment is what a mortgage company usually does right before they are getting ready to foreclose on your house.

At the beginning of your Chapter 13 case, a mortgage company will sometimes make the mistake of ignoring that fact that you are under bankruptcy protection and that the past mortgage payments are included in the Chapter 13 plan.  If this happens, I want to educate them with a written letter.

I’ve had some clients in the past who had their mortgage payments sent back to them and then they spent the money.  A few months later, the mortgage company filed a Motion for Relief from the Automatic Stay and wanted to charge my client attorneys fees for the filing the motion.  Even though the mortgage company created the problem by sending the money back to the client, they wanted to be paid attorney fees for the motion because the client was not able to bring the payments current.

Don’t allow yourself to put in this predicament.  If they mortgage company sends back the payment to you, don’t spend the money!  Save your proof that the mortgage payment was rejected.  Call my office and lets make sure the mortgage company accepts your payment without trying to penalize you.

Other Posts:

1.  The Automatic Stay

2.  Can I Wipe Out My Second Mortgage in Chapter 13?

3.  Mortgage Scams

4.  Bankruptcy and the taxation of my house by the IRS after foreclosure /a>

Whether you file a Chapter 13 bankruptcy or a Chapter 7 bankruptcy, you must disclose in writing on your bankruptcy petition any lawsuit or potential lawsuit that you may have against anyone.  If you fail to do so, you will lose your right to recover any money at all from the defendant.

In the case of Donna Barger vs. City of Cartersville GA, Ms. Barger lost her right to recover any money from the City of Cartersville.  The facts of of the case are as follows.  Donna Barger was a personnel  director for the City of Cartersville.  In November 2000, she underwent back surgery for a ruptured disc.  After she was able to return to work, she was demoted.  As a result of the demotion, Ms. Barger had a valid claim against the City of Cartersville for violation of the Family Medical Leave Act, the Americans with Disability Act, and the Age Discrimination in Employment Act.  Since the demotion resulted in a drastic drop in income, Ms. Barger was forced to file Chapter 7 bankruptcy.  She told her bankruptcy attorney and the trustee about the claim at her 341 meeting of creditors.  However, the claim was never listed on her petition.  Furthermore, the case states that “when the trustee asked Barger about the case, she told him that the discrimination suit merely sought reinstatement of her position as Personnel Director.”  The case states that she filed her bankruptcy petition on September 4, 2001 and did not list her discrimination suit as an asset.

In February 2002, Ms. Barger sent the City of Cartersville a copy of her bankruptcy discharge order.  In response, the City of Cartersville moved for summary judgment on the basis of judicial estoppel.  In June 2002, the District court dismissed Barger’s discrimination case by entering summary judgment against her.

Don’t let this happen to you.  When you review your bankruptcy petition, you must make sure you list every asset you have including any potential right to sue any person or any entity.  It is absolutely imperative that you review every single page of your bankruptcy petition before your case is filed.  If you become involved in a lawsuit or have a potential claim after your case is filed, you must contact me as soon as possible and sign an amendment to your bankruptcy petition.

Related post:  Should I tell my Bankruptcy Attorney Everything?

Related post:  How do I protect my assets in a chapter 13 or a chapter 7?

The automatic stay is an injunction against against the continuance of any legal action against a debtor or the debtor’s property. 11 U.S.C. 362. The automatic stay protects a debtor from harassing collection calls, repossessions, foreclosure sales, and garnishment of wages.  The protection from the automatic stay starts as soon as the debtor gets a bankruptcy case number.

For example, let’s say a creditor lawsuit has been filed against a person who lives in Dallas GA and that person comes to see me to file a Chapter 13 bankruptcy.  As soon as we get a bankruptcy case number and notify the creditor of the bankruptcy filing, the creditor must stop all collection actions. Our normal course of action is to file a plea of stay in the local court requesting that the lawsuit be put on hold while the bankruptcy is active.

For another example, let’s say I have a client from Rome GA who is worried that their car creditor is about to repossess their car.  Once we have a bankruptcy case number and we have notified the car creditor, the car creditor must stop all efforts to repossess the car. Any car creditor that ignores the filing of a bankruptcy case and repossesses a car post-petition can be severely punished by a bankruptcy court.

Another great benefit of the automatic stay is codebtor protection.  A Chapter 13 can protect a codebtor who is liable with the a debtor on a specific debt. In order to keep this protection, the debtor must pay back the entire cosigned debt along with contract interest to fully protect the codebtor.

In Northwest Georgia, the automatic stay gives a debtor protection from creditors subject to the oversight of the bankruptcy judges in Rome, Georgia. After a bankruptcy case is filed, the automatic stay remains in effect until the judge grants a request of a creditor to end the stay or the debtor gets a discharge.

The automatic stay does not protect a bankruptcy debtor from criminal proceedings or actions to modify child support orders.

The foreclosure crisis was supposed to end with help from the federal government. Consumer Bankruptcy News reports in the May 6, 2010 issue that the response of the federal government to the mortgage crisis is too slow.  The article reports that is has “been more than one year since President Obama announced the establishment of the Making Home Affordable initiative that included the Home Affordable Modification Plan.”  The plan was supposed to help between 7 and 9 million families restructure their mortgages and save their homes from foreclosure by the mortgage companies.  The article goes on to report that “the actual number of homeowners who have received final, five-year loan modifications through the program administered by the U.S. Department of the Treasury stands at 168,708.

The Congressional Oversight Panel’s April 2010 report entitled, Evaluating Progress of Tarp Foreclosure Mitigation Programs, “finds that Treasury is still struggling to get its foreclosure programs off the ground even as the crisis continues unabated.”  The report also states that in 2009, 2.8 million homeowners received a foreclosure notice,and one in four homeowners with a mortgage currently has negative equity. While housing prices have begun to stabilize in many regions, home values in several metropolitan areas continue to fall sharply.”

I have personally witnessed in my Dallas, Rome, Cartersville and Dalton Georgia office locations that consumers are not getting the promised federal help they need to stop the foreclosure of their homes.  While I have seen a few loan modifications approved even after my clients have filed Chapter 13, most loan modification applications have been denied.  I have been shocked how many mortgage companies are aggressively pursuing foreclosure in this dreadful market.

The good news is that Chapter 13 stops foreclosure   In a Chapter 13 bankruptcy, we can eliminate credit card debt and medical debt.  As a result, most consumers find it much easier to make their future mortgage payments when they no longer have worry about their past due credit card debts and medical debts.