Northwest Georgia Bankruptcy Attorney

4. Stop Garnishment

5. Stop Foreclosure

Chapter 7 Bankruptcy – Should I Reaffirm a Car Lease?

Jeff Kelly, Esq. — Thu, 02 Sep 2010 01:11:38 +0000

When you file Chapter 7 bankruptcy in Georgia, I don’t think you should ever reaffirm a car lease.

Chapter 7 bankruptcy gives you the chance to be free from your debt. When you reaffirm a debt, you basically agree to treat to the debt as if you have never filed bankruptcy against it so that you can keep the collateral. Why would you ever want to reaffirm a car lease? Many Georgia consumers don’t realize how much money they are going to have to pay the car company at the end of the lease because of the fees for going over the mileage limits. Any person who is considering reaffirming a car lease should review the lease carefully with their bankruptcy attorney and try to make an estimate of how much money you will have to pay the car creditor at the end of the lease.

A car lease deal usually starts with a buyer walking onto the car lot dreaming about some luxury vehicle. You look and the shiny exterior and wonder in amazement as to how anyone could have designed such a beautiful car. You open the car door and smell the leather. You sit in the driver’s seat and feel comfort like you have never felt in any other car. Then, you put your hands on the wheel and imagine yourself driving fast on the Georgia mountain roads with the top down. Next, you get out of the car and look at the price tag. Reality slaps you across the face and steals your dream. But wait! Here comes the car salesman! So what if you can’t afford to “buy” the car. You can “lease” it and drive it home today.

Ask yourself this question, “If they won’t let you buy the car because you can’t afford it, why would they let you lease it?” The short answer is that they get to take advantage of you when you get suckered into a lease.

Chapter 7 bankruptcy is the time to get free. It is not the time to put debt shackles on your hands and feet. Don’t reaffirm the car lease!

Other Posts:

Chapter 13 – Can I Keep Paying for My Child’s College Education?

Jeff Kelly, Esq. — Mon, 30 Aug 2010 03:02:56 +0000

In a Chapter 13 bankruptcy in Northwest Georgia, you can keep paying for your child’s college education if you are in a 100 percent plan. A 100 percent Chapter 13 bankruptcy plan means that you are paying all of your creditors back. However, there are exceptions to every general rule.

I recently met with some bankruptcy clients in my Rome, Georgia office who were extremely upset by the thought of not being able to help their child graduate from college. As a father of four, I can certainly understand why a parent would want to help their child get a college degree. You watch your kids grow up dreaming of entering some profession. You watch them work hard in school. They study hard, behave well, and graduate with honors. You see the excitement in their eyes when they get accepted to the college of their choice. “Sorry kid, I can’t help you.” This just doesn’t work when you love your child with all of your heart.

Some cases are not ideal for fulfilling the family educational dreams. In Chapter 13 bankruptcy cases where we are wiping out debt (also known as a composition plan), parents cannot make payments toward their child’s college education. When you have a Chapter 13 bankruptcy plan that eliminates credit card or medical debt, you can’t pay for any expenses that could be categorized as a luxury. For example, you can’t pay for a boat, airplane, or a four wheeler while you are in a composition plan. Why would anyone be able to eliminate credit card or other unsecured debt but still be able to pay for boats or other luxuries at the same time? It can’t be done. Unfortunately, many bankruptcy judges believe that you paying for your child’s college education is a luxury.

In most situations, this is almost never an issue because children of people who are suffering economically generally qualify for some type of financial aid form their school. In addition, Georgia offers the HOPE scholarship which pays are large amount of the education costs regardless of financial necessity.

The typical case where I see a parent have to make the choice between filing bankruptcy or keep paying for the child’s college education is divorce situations. One of the parents files bankruptcy and the other does not. One parent suffers economically but the other makes enough money to eliminate the child’s ability to qualify for any type of financial aid.

I wish every story had a happy ending in this world but sometimes life just stinks. The good news is that kids who can make the grade always find a way to get the degree. It may take a few years longer, but determined hard working people always come out on top.

Other Posts:

2. Should I sign my house over to someone else before I file bankruptcy?

4. Stop Garnishment

5. Stop Foreclosure

What Is A FIFA (writ of fieri facias) and How Can I Get Rid Of It in Bankruptcy?

Jeff Kelly, Esq. — Thu, 26 Aug 2010 01:00:09 +0000

A writ of FI FA (writ of fieri facias) is a document that is issued by your local county clerk’s office for the purpose of recording a lien on your house after a creditor obtains a judgment against you. In addition to putting a lien on your house, a Fi Fa can be used to seize your personal assets. A Fi Fa can also be used to perfect a lien on your automobile. Just the other day, I was meeting with a bankruptcy client from Chatsworth, Georgia in my Dalton office who was freaking out because they received a copy of a Fi Fa (or writ of fieri facias) in the mail.

If you ignore the Fi Fa on your house, it will accrue interest at the judgment rate. Whenever you sell your house, the Fi Fa will have to be paid before ownership can transfer to another person.

The good news is that Chapter 13 and Chapter 7 bankruptcy can be used to avoid a judicial lien to the extent it impairs your exemption. Let me give you an example. Lets say that this bankruptcy client from Chatsworth has a house worth $100,000.00. If the Chatsworth client owes 90,000.00, there is equity of $10,000.00. With the Georgia bankruptcy exemptions, all of the equity of the Chatsworth client be exempted. As a result, all of the judicial lien could be completely avoided.

Lets change the scenario for the Chatsworth client. If the house is worth $110,000.00, there is equity of $20,000.00. Assuming the Chatsworth client is single, we would be able to exempt only $10,000.00 of the equity leaving a remainder of $10,000.00. Is this unlucky example, the Chatsworth client would be able to wipe out only the part of the judgment lien that exceeds the $10,000.00 exemption.

As you can see from these examples, it is extremely important to know the value of your house before you file bankruptcy.

Why would anyone want to wait until the creditor obtains a judgment against you before you consider bankruptcy? Even though its never too late to file bankruptcy, why not take care of the problem before a Fi Fa is issued against you?

Other Posts:

1. How do I protect my assets in a Chapter 13 or a Chapter 7 bankruptcy?

3. What is Chapter 13?

4. What is Chapter 7?

5. How much does it cost to file?

Bankruptcy – Can I Keep a Credit Card After I File?

Jeff Kelly, Esq. — Sun, 22 Aug 2010 16:57:29 +0000

As a general rule, you cannot keep a credit card after you file bankruptcy. I meet with clients from Dalton, Rome, Cartersville, Hiram and Dallas Georgia who will ask, “Why can’t I keep just one credit card for emergency situations?”

When you first meet with your bankruptcy attorney, tell him about every single credit card in your possession so that he can reinforce what I am about to say in this article.

When you file Chapter 13 bankruptcy, you cannot incur any new debt after the case is filed. For this reason, the bankruptcy trustee will specifically ask you at your hearing if you are in possession of any credit cards. If you answer yes, the bankruptcy trustee will file an objection to your case. Also, if you answer yes, your bankruptcy attorney might be a little upset that you did not tell him about the cards beforehand.

Filing bankruptcy in Georgia is a matter of public record. Credit card companies keep a close eye on who is filing for bankruptcy. As a consequence, most credit card companies will cancel your charging privileges whether you list them in your case or not. It does not matter whether you file Chapter 7 or Chapter 13 bankruptcy.

If you have zero balance on your card, you won’t need to list it in your bankruptcy case in Georgia. However, you will need to tear it up and throw it away if you are filing Chapter 13 In a Chapter 7 case, the creditor will most likely cancel your use of the card after your bankruptcy case is filed.

Even if you could keep a credit card, why would you want to? Keeping a credit for emergency situations is a bad idea. As you already know, most credit card companies charge you thirty percent interest. This means that if you get stuck behind the debt snowball, your debt could double in three years! Imagine how much money you will save over your lifetime if you never pay anymore interest on credit cards.

The solution is to establish an emergency fund. This emergency fund should never be touched unless you absolutely cannot go on without tapping it. Every single Georgia family will have some type of financial emergency at some point. For example, you know your car will break at some point. Do you have an emergency fund to cover the car repairs? If you own a house, you know that the roof is going to leak at some point. Some major appliance in your kitchen will break some day. Might be a few years from now but you know its coming. Start building the emergency fund now.

Other Posts:

4. Credit Card Scam – Sounds Too Good to Be True? It is.

Bankruptcy And Assets of Parents

Jeff Kelly, Esq. — Thu, 19 Aug 2010 09:31:03 +0000

Bankruptcy and assets of parents is usually never an issue. However, every now and then, we come across a case where the parent was too cheap to use an estate planning attorney and decided to put their life savings in the name of their child.

When a person files for bankruptcy and later finds out that their parent has put some asset in their name, the asset may end up getting seized by the bankruptcy court. For example, I recently spoke with a client from Cartersville Georgia whose chapter 7 bankruptcy case appeared to have zero problems. Unfortunately, we found out after the case was filed that his mother had put his name on her bank account (which contained her life savings) just in case something ever happened to her.

Adding your child as a joint owner of your bank account is always a bad idea. In the Cartersville case, the Chapter 7 bankruptcy trustee gets to step into the shoes of the child. As a result, the Chapter 7 bankruptcy trustee can take all of the mother’s money out of her bank account and use the money to pay for all of the debts owed in the child’s bankruptcy case.

Some people may argue, “Its not my money. I never put any money into that bank account. How can the bankruptcy trustee take it?” The answer is that when your mother put your name on her bank account, you became legally entitled to access all of the money in that account. The fact that you did not ever make any deposits and that you do not consider it to be money that belongs to you is not relevant. All that matters is that you have legal title to the money.

In this Cartersville case, the mother could have avoided the entire mess by going to an estate planning attorney to draw up a simple will leaving her assets to her child.

Potential car accidents are another reason you don’t want to put assets in the name of your child. If your child wrecks his car and kills someone, his car insurance my not cover all of the liability. Guess where the personal injury attorney is going to look for recovery of money? The answer is any asset that is in the name of your child.

You may save a few hundred dollars by not going to a Georgia estate planning attorney and just put everything in the name of your children. But in the end, you may lose everything as a result.

4. Stop Garnishment

Bankruptcy – Should Someone on Social Security File?

Jeff Kelly, Esq. — Mon, 16 Aug 2010 02:08:21 +0000

As a general rule, filing bankruptcy is not the best option for a person whose single source of income is social security. As with any general rule, there are exceptions. Section 207 of the Social Security Act (42 U.S.C. 407) protects Social Security benefits from being garnished by ordinary creditors. Why would you want to file bankruptcy if your creditors can’t touch your income?

While benefits are protected in most cases, there are four exceptions to this law.

1. Social Security benefits can be garnished to collect child support or alimony.

2. Social Security benefits can be garnished to collect unpaid federal taxes. The IRS can garnish up to 15 percent on your monthly benefit.

3. Recipients of Social Security benefits can elect to have their benefits garnished by the IRS to cover future tax liability.

4. Other Federal agencies can garnish your social security to collect on a debt owed to that Federal agency.

Click here to go the Social Security website for more detail on the exceptions.

I get calls every week from people in Dallas, Hiram, Douglasville, Dalton, Rome and Cartersville who are on social security and who think Chapter 13 bankruptcy will lower their future mortgage payments. The truth is that unless you owe less than five years on your mortgage, Chapter 13 bankruptcy won’t have any effect on your future mortgage obligations in Northwest Georgia. In most cases where social security is the only source of income, Chapter 13 won’t help because any creditor that could be wiped out in a Chapter 13 bankruptcy case also would not be able to garnish the social security benefits.

One scenario where a Chapter 13 may help someone who is on social security is when they own a house or other asset that has no debt. In this situation, it might be possible to write a Chapter 13 plan that will protect the asset.

Another reason many people on Social Security want to file bankruptcy is to get rid of the nasty creditor calls. I can certainly understand why a person would want to get out from under this kind of pressure. In most Social Security situations I’ve seen, it is often best for the client to just get a new unlisted phone number and save themselves from the cost of bankruptcy.

Other Posts:

Bankruptcy – Wipe Out Debt Owed on Timeshares

Jeff Kelly, Esq. — Thu, 12 Aug 2010 01:48:07 +0000

Filing bankruptcy to wipe out debt owed on timeshares can be tricky. Eliminating the mortgage owed on a timeshare in bankruptcy is not a problem. The problem is the maintenance fees which can be extremely high in some cases.

I meet with clients all the time from Rome, Dalton, Calhoun, Dallas, Douglasville, Hiram and Cartersville Georgia who got suckered into some timeshare deal. The scam usually starts with a “free” vacation. You go stay for a week free in paradise in exchange for listening to a high powered sales pitch from professional sharks. Many people yield to the pressure. Some people love their timeshares while other painfully regret the decision to buy.

Here is a example of a nightmare situation that could play out. Lets say a Georgia married couple owns a timeshare free clear but wants to get away from the future maintenance costs. As a result, they file a Chapter 7 bankruptcy and attempt to surrender the timeshare to the association that is in charge of collecting the maintenance fees. A few years years later, the timeshare association files a lawsuit against this Georgia couple to collect post-petition maintenance costs. In this scenario, I think that the Georgia couple will be stuck owing all of the post-petition maintenance costs. The title to the timeshare did not transfer just because they listed it as surrender in their bankruptcy petition. In this particular case, the Georgia couple will be on the hook for timeshare maintenance fees until they can either sell it or talk someone into taking it off their hands in exchange for paying all future timeshare maintenance fees. Hopefully, their bankruptcy attorney explained this possibility to them before they filed their case.

Lets change the scenario by saying that the Georgia couple owes some finance company for the timeshare. Again, the Georgia couple surrenders it in the Chapter 7 bankruptcy petition. Another possible nightmare scenario is that the finance company never forecloses on the timeshare or does anything with respect to the deed. Again, the Georgia couple could be held liable for all future maintenance fees.

I bases my conclusions on section 523(a)16 of the Bankruptcy Code. Some bankruptcy attorneys will argue that this section of the Code does not cover timeshares but does cover condominiums. In my opinion, most timeshares are structured as fractional ownership of condominiums. It will be interesting to see how these timeshare situations work their way through the courts. Perhaps we may get clear direction from future court rulings. In the meantime, I am going to advise my Georgia bankruptcy clients that they should not expect to wipe out future maintenance costs from timeshare interests.

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