Northwest Georgia Bankruptcy Attorney

Garnishment & Collection Lawsuits in Georgia – JP Morgan Backing Off

Jeff Kelly, Esq. — Tue, 17 Jan 2012 10:00:11 +0000

The American Banker reported this past week that JP Morgan Chase and Company has “ceased filing lawsuits to collect consumer debts around the nation, dismissing in-house attorneys and virtually shutting down a collections machine that as recently as nine months ago was racking up hundreds of millions of dollars in monthly judgments” (click here to read the full article).

Why would a major bank suddenly give up on their collection efforts? Is it because they have decided to ease up on people who are hurting because of this awful economy? Of course not!

Publicly, the bank is not making any comment about why it has stopped collection lawsuits.

The article states that a whistle-blower has alleged that the bank “falsely overstated the balances of thousands of delinquent accounts it sold to a third party.” Since the bank won’t comment, we can only speculate.

So what does all this mean for Georgia consumers? I think it means that more people will be able to ignore JP Morgan Chase without fear of a collection lawsuit being filed against them. The harassing phone calls will continue but no collection lawsuits are going to be filed until they get their paperwork in order.

In Georgia, a creditor must first file a collection lawsuit against you to collect on a credit card. After they receive the judgment, they will use it to:

1. Take all of your money out of your checking account;

2. Garnish 25 percent of your net paycheck; or

3. Put lien on your house that will collect 12 percent interest per year until it is satisfied.

Many consumers will file either a Chapter 13 or a Chapter 7 to stop a garnishment or a collection lawsuit.

This past month, I have noticed a sharp drop for collection lawsuits in Floyd County, Georgia. I predict that in the short run, we will see a drop in consumer bankruptcy filings.

Eventually, JP Morgan Chase will get their paperwork in order and start trying to collect once again. Last year, they collected over 1.4 billion dollars from delinquent credit card accounts. I can’t imagine any bank giving up on that kind of revenue source.

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Bankruptcy and Exempting Equity of Your House in Georgia

Jeff Kelly, Esq. — Wed, 11 Jan 2012 02:27:34 +0000

Filing bankruptcy is a scary decision for some people who own a house in Georgia. The truth is that housing prices are extremely depressed so much in Georgia that almost no one needs to worry about the value of their house being too high.

However, some people actually have homes where the mortgages have been completely paid off. In Rome, Georgia, some houses sell for as little as $40,000.

On occasion, I will meet with an older couple who has no debt on their house but they owe a lot in credit cards.

Earlier this week, I received a call from a potential client who was upset because he mistakenly thought that he could exempt only $10,000 of the value of his house. Since he was married, I informed him that he could actually exempt $20,000.00 even though the house was in his name only. He worried that he needed to run out and add his new wife to the deed. He was a bit relieved when I informed him that this was not necessary.

He claimed to have read something on the internet which contradicted the advice I was giving him. As a result, I decided to write a blog on this topic and quote directly from the Georgia Code.

In section 44-13-100 of the Georgia code, it states in section (1) that you can exempt “the debtor’s aggregate interest, not to exceed $10,000.00 in value, in real property or personal property that the debtor or dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor. In the event title property used for the exemption provided under this paragraph is in one of the two spouses who is a debtor (emphasis added), the amount of the exemption hereunder shall be $20,000.00″.

If you have a question about how Georgia bankruptcy exemptions might affect you, why not take advantage of a free consultation and meet directly with me? We can go over your entire situation and weigh the pros and cons of filing bankruptcy.

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Bankruptcy – Should Filing Be a New Year’s Resolution for You?

Jeff Kelly, Esq. — Tue, 03 Jan 2012 10:00:20 +0000

The year 2012 is finally here and it is time to make new year’s resolutions.

For some, filing bankruptcy is a great resolution. The new year is a good time to get rid of that nasty debt that is hanging over your head and won’t go away by itself.

Some people think that the world is going to end this year because of ancient predictions. Others think that our financial worlds will crash this year. I’m an optimist. I don’t believe the world is going to end and I think things are going to get better.

For some, the first step to a better financial life is filing bankruptcy. The truth is that most people don’t want to file bankruptcy even when every reasonable indicator says they should. Most people do everything they can to try to avoid it.

The number one mistake I see people make trying to avoid bankruptcy is withdrawing everything from their 401k retirement plan and using the money to pay off debts that could have been eliminated in a bankruptcy. Not only do they lose their retirement but now they have a large tax bill from the Internal Revenue Service because of the early withdrawal penalty.

Most people don’t know that their 401k retirement plans are protected from creditors. Most people expect to lose their 401ks when they file bankruptcy. The truth is that you get to keep all of your 401k retirement.

Other people choose to ignore their debt problems. Their phone rings constantly but they just don’t answer it. Their mailbox gets filled with collection letters but they just don’t open them. The Sheriff serves a collection lawsuit on them but they pretend that it never happened.

Ignoring the reality of debt can be extremely painful in Georgia.

Once a creditor obtains a judgment against you, they can use it to garnish 25 percent of your net paycheck. Can you imagine getting a paycheck that has an unexpected twenty five percent bite out of it?

The most painful consequence of ignoring creditors is when they use the judgment to garnish all of the money in your checking account.

If you are struggling with debt problems, why not avoid the nightmare scenarios and meet with a bankruptcy attorney to see if it is time for you to get a new financial start?

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Bankruptcy – Directions to the 341 Meeting of Creditors in Rome

Jeff Kelly, Esq. — Tue, 20 Dec 2011 23:52:01 +0000

Almost all bankruptcy 341 meeting of creditors for the Rome division of the Northern District of Georgia are held in the Federal Building in Rome, Georgia.

If you get lost on your way to meeting don’t bother asking the average person in Rome “Where is the Federal Building?” or “Where is bankruptcy court?” The most likely answer you will receive is, “I don’t know.” Most people in Rome call it the old Post Office Building.

The street address for the Federal Building is 600 East First Street. Don’t bother trying to use some computer program because many of them are wrong. Many people have been late to bankruptcy court because they received bad directions from their computer program.

Please Note: If you do not bring BOTH your Social Security card and your driver’s license to bankruptcy court, your hearing will not be heard and you will have to come back at a later date.

If you are driving from Acworth/Cartersville:

Take I-75 north to exit 290. At the end of the exit ramp, take a left. You will go under the expressway and you should see a Cracker Barrel on your right. You are going to stay on this road until it dead ends. You will pass a Wal-Mart on your left. When the road dead ends, you will see a Shell gas station straight ahead. Turn left and then make a quick right. There is a stop sign at the end of the ramp onto 411/GA 20. At this point, you should see my glorious billboard. Take a right. You will by a QT gas station. After you pass the Racetrack gas station, turn right when you see the sign for Rome. You will be on this road for roughly 25 miles. As you approach Rome, you will pass by another Wal-Mart. Watch the signs carefully. You will fork to the right. You will pass a Kroger and a Home Depot. After you cross the river, you will see a CVS drugstore on your right. Take a left at that traffic light. Go thru the traffic light at the bottom of the hill and turn left into the parking lot of Federal Building.

If you are driving from Calhoun/Dalton/Chattanooga:

Take I-75 South to the Exit 312 (Rome/Fairmount). At the end of the exit turn right. You will be on Highway 53. Take a right onto state Highway 53 and follow the signs to Rome. It is approximately 23 miles from the exit to the Federal Building. At the fourth red light as you come into Rome, bear left past Old Tymer BBQ and stay in the middle lane. Go straight through the next light at Turner McCall Blvd. The Federal Building is located on East First Street, one and a half block off Turner McCall Blvd.

If you are driving from Summerville/Chattooga County:

Take Highway 27 South into Rome. This highway becomes Second Avenue once it enters Rome. You will go past Floyd Medical Center and Safe Lock & Key (on your left) and you cross the Oostanaula River Bridge. At the first traffic light in downtown, turn left. This is Broad Street. Head northeast on Broad Street toward East 6th Avenue. Turn right at East 6th Avenue. Take the first left onto East 1st Street.

If you are driving from Carrollton/Bremen/Cedartown:

Take Highway 27 North into Rome. This highway becomes Turner McCall Blvd. At the fifth traffic light (Checkers will be on your right and a brown tile building will be on your left), turn left onto Broad Street. Head northeast on Broad Street toward East 6th Avenue. Turn right at East 6th Avenue. Take the first left onto East 1st Street.

If you are driving from Atlanta Airport/Rockmart:

Camp Creek Parkway/US 278 exits from the Airport. On this road, you will travel through Powder Springs, Hiram, Dallas, and then to Rockmart. Turn right onto US 101 North in Rockmart. US 101 will become Dean Avenue. Stay in the right lane. Highway 27 North will connect with Turner McCall Blvd. At the fifth traffic light (Checkers will be on your right and a brown tile building will be on your left), turn left onto Broad Street. Head northeast on Broad Street toward East 6th Avenue. Turn right at East 6th Avenue. Take the first left onto East 1st Street.

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6. Can I get a student loan after I file bankruptcy?

7. What do I need to bring to the 341 meeting of creditors?

Bankruptcy – How Long Should I Keep Deferring My Student Loans?

Jeff Kelly, Esq. — Tue, 13 Dec 2011 10:00:50 +0000

Almost every bankruptcy client I’ve met with that has student loans has been deferring payments for years before they come into my office. What is the problem with deferring student loan payments? The answer to this question is two powerful words – compound interest.

When you defer your student loan payments, this interest is just compounding on top of you for another day.

As a Georgia bankruptcy attorney, I’ve met with many clients who will ask, “How is it that I only borrowed $10,000.00 and now I owe $20,000.00.” Once again, compound interest.

In addition to compound interest, consumers need to understand the fact that student loans cannot be discharged in bankruptcy. Since there is no way out of student loan debt, I call it slave debt. You are a slave to it until you have it paid off.

Student loan debt is the most dangerous form debt for any person.

If you have a car debt that you can’t afford, you can give the car back to the creditor and file for bankruptcy.

If you have a house that you can no longer afford, you can give the house back to the creditor and file for bankruptcy.

In contrast, when you have student loans that you cannot afford, you are out of luck thanks to the fact that Congress made student loan debts nondischargeable in the mid 90s (this was about the same that college educational started rising rapidly).

How long should you defer payments? The longer you defer payments, the more money you will and the chains of slavery that grip you become stronger and heavier.

The answer is that you should try to pay college loan obligations off as fast as you can. Rent, food, and electricity are top priorities. After the basic necessities are paid, student loan debt needs to be next on this list.

Credit cards and medical debt should be last on this list. If it turns out that you need to file bankruptcy, unsecured debt like credit cards and medical bills can be eliminated.

Many people with student loan debt should consider filing bankruptcy to eliminate the burden of other debts so that they can begin to tackle the nondischareable debt.

One way or another, you must free yourself from the chains of student loans at some point.

Your Death Does Not Stop The Bill Collectors

Jeff Kelly, Esq. — Tue, 06 Dec 2011 10:00:56 +0000

Death stinks. Losing someone you love is just awful. I know this from personal experience. Can you imagine losing someone you love and then having bill collectors come after you for their debts? Its happening.

I recently read an article in the Wall Street Journal about how debt collectors are now going after the families of some debtors after the debtor dies (click here to read the full article). In Georgia, when you die, your debts die with you. Your surviving spouse or children cannot be held liable in a court of law for your debts.

However, if you leave an estate, it is possible that some creditors might file a claim in probate court so that the estate will pay the debt. In contrast, if you have no estate, you would think that creditors would give up since the surviving spouse and children have no legal obligations to pay debts you acquired before your death.

According to the Wall Street Journal, the reality of death does not stop debt collectors from trying to collect. What really makes me sick is that the Journal reports that debt collectors will try to convince surviving family members to make a “morality payment” to satisfy the debt. The debt collectors will argue that since you may have benefited from some of the purchases that were made, you have some moral obligation to pay.

The truth is that most debt collectors pay pennies on the dollar to buy debt from credit card companies and then try to make a profit by shaking down family members to pay debts that they have zero legal obligation to pay.

The Journal reports that debt collectors have systematic approach in squeezing money out of grieving victims. The call usually starts with “a sprinkle of grief counseling.” Then, the bill collector moves on to the topic of the moral obligation and how you need to put this behind you.

As a Georgia bankruptcy attorney, I am often asked by surviving spouses if they need to file bankruptcy to discharge the deceased person’s debts. The answer is no. Unless you signed a contract with them, you are not liable and there is no need to file bankruptcy.

Any person in Georgia who is being hounded by a bill collector for debts that are not theirs should contact a local attorney.

Since surviving family members are not obligated for the debts, there is no reason to file bankruptcy in these types of situations.

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6. Is Mom Liable for Dad’s Credit Cards?

Bankruptcy – My Response To Those Who Say You Should Never File

Jeff Kelly, Esq. — Tue, 29 Nov 2011 10:57:24 +0000

When it comes to the subject of filing bankruptcy, there are a lot of “experts” who may say that you should never file under any circumstances. Any person who says that you should never file under any circumstances has either no idea what they are talking about or they are trying to sell you something.

Dave Ramsey will try to sell you his financial course and talk you out of filing because when he filed for bankruptcy, it was extremely painful. When Dave Ramsey filed bankruptcy he lost “everything he owned.” I believe that his experience with bankruptcy is extremely unusual because most people who file don’t lose any property unless they owe money on it and can’t afford to make the payments.

Dave Ramsey states,

“As a result of my experience, I don’t like bankruptcy. Do I hate it? Yes. I always look for another solution. Do I tell my listeners never to file bankruptcy? No. I have never done that. Does my team send clients to bankruptcy attorneys for advice in this area of the law? Of course. We treat it the same way we treat divorce. We hate that, too, and we look for another solution. But if that becomes the only way out, we want them to get the best help possible and move on to a better life when the process is complete.” (click here to read the full statement).

I don’t think Dave Ramsey is a bad guy but I don’t believe bankruptcy is the miserable experience that he describes. The vast majority of my clients will tell me that they wished that they had filed sooner. Dave has a great course (my Chapter 7 clients use his after bankruptcy financial management course) but there are some circumstances where bankruptcy is the only reasonable option.

In Georgia, a creditor can garnish up to 25 % of your net income. A creditor can repossess your car and a mortgage company can foreclose on your house in just over 30 days. The bottom line is that sometimes things happen that are beyond your control and sometimes you need to take action just so that you can survive.

Many Georgia consumers receive advertisements in the mail from “Debt Negotiators” who will wave their magic wand and make all of your debts go away in exchange for a small monthly payment. Others will receive letters from some company that will guarantee that you get a loan modification if you will just mail them $2,000.00. The reason it sounds too good to be true is because it is too good to be true. Don’t give your money to some company without checking them out on www.ripoffreport.com to see how many people have had their money stolen.

I agree that bankruptcy is a last resort but there are many situations where there is no other way. Most people wait too long before going to see a bankruptcy attorney because they have heard some myth that the attorney will pressure them into filing when they don’t really need to file.

As a Georgia bankruptcy attorney, I have never and will never put a person into a bankruptcy case unless I believe it is truly in their best interest. Being honest with my clients is not only the right thing to do but its in my best business interests as well. My bankruptcy law firm has been built on referrals from satisfied clients. At least half of the clients that come into my office do so because someone referred them us.

Let me give you a common example of where I will most likely advise someone that they should not file. Many clients come to see me because they have some house that they want to surrender back to the bank. Just this past week, I was talking to a client from Dalton, Georgia who was in this situation. In her case, it is not in the best interest of this Dalton client to file bankruptcy. The reason is that after the bank forecloses, they almost never go after the Dalton consumer for any deficiency in Georgia unless there is a second mortgage. You should see the look on the faces of these people when I tell them the truth that it is not in their best interest to file.

These people usually say, “Thank you so much for your honesty. Now, how much do I owe you?”

My response is always the same in these situations. I say, “You don’t owe me anything for a free consultation but if you know anyone you think might need my services, please send them my way.”

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Bankruptcy And The Problem With Receiving Christmas Gifts

Jeff Kelly, Esq. — Tue, 22 Nov 2011 13:04:19 +0000

I know this sounds really strange but a bankruptcy case can get really messed up sometimes because of Christmas gifts. I absolutely love Christmas and I don’t like the Grinch but it is my job to tell you truth about how Christmas can really wreck a case.

Let me give you an example. Let’s say you have a married couple who is going through a difficult financial situation. Their parents decide to help them out during this Christmas season by giving them $5,000.00. I realize that very few people ever get this kind of gift from their parents but you would be surprised how often this happens when parents see their children struggling.

The problem is that this $5,000 gift must be counted on the median income test. Everyone who files for bankruptcy must list all of their income for the six month period that precedes the date of the filing of the case. Thus, if you receive the gift in December and we file your case in December, then this income won’t count because this six month period that matters is June through November.

However, most people delay filing bankruptcy until the last possible second. As a consequence, most people who receive gifts of money from their parents don’t file until a few months later.

Sometimes, even a small gift can mess us up on the median income test. For example, if you are right on the border of going over the median income test, a small cash gift may be just enough to change your three year Chapter 13 bankruptcy into a five year Chapter 13 bankruptcy.

What is the solution? The solution is to meet with me before you take the gift so that we can see where you land on the median income test.

In addition to the median income test, we need to take a look at the value of your assets. Under Georgia bankruptcy exemptions, you can claim up to $5,600 of a wildcard exemption to protect cash gifts. However, you may need this wildcard exemption for some other asset like your house.

If you have more than $10,000 equity in your house and you are a single filer, you most likely will not have any wildcard exemption that will be left over after you file bankruptcy.

Take advantage of a free consultation with me and call 706-295-0030 so that we can sit down and review your entire economic situation.

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