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 ”
I have friends who buy into this myth that people who file bankruptcy go out and run up their credit cards right before filing. The truth is that almost no one does this and those few that do end up paying it all back.
In a Chapter 7 bankruptcy, you cannot incur debt with the intention of discharging it in your case. Under section 523(a)(2)(A) of the Bankruptcy Code, a discharge under Chapter 7 “does not discharge an individual debtor from any debt for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by…false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition.” 11 U.S.C. 523(a)(2)(A).
A great example of a debtor getting nailed by the Bankruptcy Court for going into debt with the intention of wiping it out in a Chapter 7 is the case of Bucciarelli (Bankruptcy Case No. 07-13114). In this case, the Bankruptcy Court in the Newnan Division of the Northern District of Georgia ruled that the debtor could not wipe out legal fees she incurred from her divorce proceedings because she incurred the debt with the intention of discharging it in her Chapter 7 case.
The facts of the case are summarized as follows: In Bucciarelli, the Debtor filed her Chapter 7 case in December 2007. In January 2008, she entered into a contract for legal representation in her divorce proceedings. In addition, she signed a promissory note agreeing to pay her divorce attorney $25,000 for representing her. The promissory note granted her divorce attorney a lien on her interest in her ex-husband’s 401k. Her divorce case never actually went to trial. Her divorce attorney billed her for $35, 625. When the debtor did not pay her divorce attorney, she was sued in Georgia state court. The Georgia state court proceeding was stopped because of her active Chapter 7 case. In response, her divorce attorney filed an adversary proceeding against her to declare the debt nondischargeable.
In Bucciarelli, the Court noted, “To establish that a debt is excepted from discharge under section 523(a)(2)(A), the creditor must prove by a preponderance of evidence that:
(1) the debtor made a false representation, other than an oral statement respecting the debtor’s financial condition with intent to deceive the creditor;
(2) the creditor actually relied on the misrepresentation;
(3) the creditor’s reliance was justifiable; and
(4) the misrepresentation caused a loss to the creditor.”
What sank the debtor in Bucciarelli was the testimony from her “friend.” Her friend testified under oath that Bucciarelli told her that she incurred the legal fees from her divorce with no intention of ever paying it back. The “friend” also testified that Bucciarelli told her that the purpose of her bankruptcy was to discharge all obligations arising from the the attorney fees in her divorce case. The Bankruptcy Court took note that this same friend testified in the Debtor’s favor during the Debtor’s divorce proceeding.
Judgment was entered by the Bankruptcy Court in favor of the divorce attorneys against the Debtor. The debt was ruled to be nondischargeable.
After Bankruptcy, many clients wonder how fast they will have to move out of the house in cases where it is the intention of the debtor to surrender the house. In the Northwest Georgia area, it can be difficult to find the right place to rent. No one wants to rush out and sign a lease without having time to investigate the area. At the same time, a most debtors want to stay in their house as long as they can so that they will be able to save money for the future rent.
In a Chapter 13 and a Chapter 7, the automatic stay stops all creditor actions. Even in cases where it is the intention of the debtor to surrender the house, a mortgage company will file a Motion for Relief so that they may begin the foreclosure process. As a general rule, a hearing will be held in the Bankruptcy Court in Rome, GA approximately thirty days after the Motion for Relief is served on the debtor.
After the Motion for Relief is granted, the mortgage company will begin advertising your house for foreclosure in the local newspaper. In Georgia, a mortgage company must advertise your house in the legal organ of your county for four consecutive weeks before the foreclosure date. As a general rule in Georgia, foreclosures take place the first Tuesday of every month.
If your bankruptcy case was just filed in Georgia, you should have somewhere between two and three months before you have to move out. However, some mortgage companies may drag their feet before they start foreclosure I have seen some cases where the debtor stayed in the house rent free for one year before the mortgage company started foreclosure!
I have also seen a case where the debtor moved out of the house and then mortgage company called the debtor and begged them to move back in. In that case, the mortgage company reworked the loan and the debtors did in fact move back in. It doesn’t hurt to ask your mortgage company if they would be willing to do a loan modification.
If you decide to move out, make sure you give your new address and phone number to your bankruptcy attorney so that they will be able to keep you updated on your bankruptcy case.
Bankruptcy often follows divorce. I recently met with a bankruptcy client in my Rome GA office who went through a nasty divorce proceeding about two years ago. The judge in the divorce case ordered my client to sign his interest in a house with equity over to his now ex-wife. His ex-wife and his four children still live in this house.
After the divorce, my client had a tough time paying his child support and his living expenses. Hoping that his situation would improve, he incurred some credit card debt to make ends meet. Unfortunately for my client, things did not work out as he hoped. He lost his job and had to file bankruptcy.
His major concern was that if he filed bankruptcy, would a bankruptcy trustee try to take back the house away from his ex-wife? Would his property transfer be at risk as a result of the bankruptcy? As a general rule, the answer to this question is no. Georgia bankruptcy trustees do not try to overturn a divorce order unless there are extremely exceptional circumstances.
It is extremely important in every bankruptcy case to disclose all transfers of any type of property that has occurred within the last two years.
In the bankruptcy petition, statement of financial affairs question number 10 specifically requests the information. In this section, a bankruptcy debtor must disclose the date of the transfer, the recipient of the transfer, the relationship of the recipient to the debtor, the fair market value of the property in question, and the amount of any debt owed on the property at the time of transfer. I like to specify that the transfer was made pursuant to a divorce decree.
It is always a great idea to have your bankruptcy attorney review your order from the divorce court. If there any issues, you want to discover them before your bankruptcy case is filed.
Failure to completely answer all questions in the statement of financial affairs can land you in jail. At the very least, it will make the bankruptcy trustee suspicious of you and put your case under even more scrutiny.
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.
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.
Just because you file a Chapter 13 or a Chapter 7 bankruptcy does not mean that you can’t have a bank account in Georgia. However, if you have no bank account at all before your case is filed, it is possible that you may have difficulty opening a new one after bankruptcy. When you file, your case is a matter of public record. Banks can check to see if you have filed bankruptcy before they allow you to open an account with their institution.
If you have a checking account with a bank that you owe money for a loan, credit card or any other type of debt, I would recommend that you close that account and open a new one with an institution that you don’t owe any money to before you file. Under Georgia law, a bank has a right to setoff. This means that if you have $100 in an account with Rome GA Bank, that bank can take your $100 as soon as you file a bankruptcy if you owe Rome GA Bank any money. If money has been seized through this type of setoff after the bankruptcy case is filed, we cannot get the money back after you file your case. The money is gone.
If you decide to open a new bank account before you file, make sure you don’t forget to change any direct deposit orders as well. Nothing is worse than having your entire paycheck seized by a creditor bank because you forgot to change the order. Get some type of confirmation from your payroll department that the change order has been received and processed.
I recently met with a client in my Dalton office who works for a large carpet company. My client completely forgot to close her bank account and open another one with a bank that she owed no money. After we filed the case, her paycheck was directly deposited into her bank account. Since she had a credit card with this same bank, they seized a good chunk of money. Don’t let this happen to you. Plan carefully before you file.
You must take a credit counseling class before you file any Chapter 13 or a Chapter 7 bankruptcy. If any person files a Chapter 13 or Chapter 7 bankruptcy without having first completed a United States Trustee certified Credit Counseling Class, the case will be subject to dismissal. It is absolutely imperative that the class be completed BEFORE the filing date.
I recommend Hummingbird Credit Counseling. You can find them on the internet at www.hummingbird.org. The Hummingbird website states that their staff is available to speak with you from 7 am to 11 pm Monday through Friday. On Saturday and Sunday they are available from 10 am to 6 pm. Before you begin your session with Hummingbird, it is a good idea to have your paycheck and your monthly bills in front of you. After you enter your financial information into the website, you will receive an analysis of your situation. After you have read the analysis, you must call a Hummingbird Credit Counselor at 1-800-645-4959 before you can receive your certificate. Since I am a registered user with Hummingbird, you do not need to pay them. We include their cost in your filing cost.
Section 109(h)(1) of the Bankruptcy Code states, “Subject to paragraphs (2) and (3), and notwithstanding any other provision of this section, an individual may not be a debtor under this title unless such individual has, during the 180-day period preceding the date of filing of the petition by such individual, received from an approved nonprofit budget and credit counseling agency described in section 111(a) and individual or group briefing (including a briefing conducted by telephone or on the internet) that outlined the opportunities for available credit counseling and assisted such individual in performing a related budget analysis.”
Please take your credit counseling class before you meet with us to sign your bankruptcy petition. If you are refiling a Chapter 13 and have taken the class within the last 180 days, you will not need to take the class again.
You can stop a student loan garnishment in a Chapter 13 if you plan on paying the entire student loan through your Chapter 13 plan. With few exceptions, student loans cannot be wiped out in a Chapter 13 or a Chapter 7 bankruptcy.
In addition to being protected from being wiped out in bankruptcy, the student loan creditor can garnish your wages without having to file suit against you. They can send a letter to the payroll department of your employer that may read something like this,
“Pursuant to authority granted to XYZ Student Loan Corporation by Federal Law (20 U.S.C. 1095a; 34 C.F.R. section 682.410(b)(9), you, the employer of a student loan borrower are hereby ordered to withhold wages from the employee’s disposable pay. The Federal Law expressly preempts all state laws governing garnishment of wages.”
The letter will also most likely contain a warning to your employer that may read something like this,
“If you the employer fail to comply with this Order, pursuant to 20 U.S.C. 1095(a)(6), XYZ Student Loan Corporation may sue you the employer in state or federal court to recover from you the employer any amount that you the employer failed to withhold, as well as attorney fees, litigation costs, and at the court’s discretion, punitive damages.”
This is not the kind of letter that your employer would like to receive.
Call me today at 706-295-0030 for your free consultation so we can review your entire economic picture and see if we can come up with a plan that works for you. We are a debt relief agency that helps people obtain relief from their creditors by filing bankruptcy.
If you are in a Chapter 13 case in the Northern District of Georgia, you can dismiss your case at any time. Your attorney will file a document with the court called a voluntary dismissal.
Personally, I think it is a terrible idea in most cases to voluntarily dismiss a Chapter 13 bankruptcy. First, you might be banned from refiling a case for a period of six months if you voluntarily dismiss your Chapter 13 after a Motion for Relief has been filed. Here is an example of a nightmare scenario. A person living in Dalton, Georgia has a house and misses six mortgage payments while the case is active. This person then decides to quit their Chapter 13 Unfortunately, the mortgage company files a Motion for Relief exactly one second before the voluntary dismissal is entered. Mortgage company then proceeds to begin foreclosure proceedings in Dalton, Georgia. This person then decides to refile a Chapter 13 to save the Dalton house from foreclosure Under Section 109(g) of the Bankruptcy Code, this person cannot refile their Chapter 13 bankruptcy case for a period of 180 days from the date of the voluntary dismissal. In other words, goodbye house.
Another reason to stay with your Chapter 13 is that if you dismiss your case, any creditor that was garnishing your wages is free to restart the garnishment as soon as your case is dismissed. If you throw in a Section 109(g) limitation on your ability to refile and you could be in for a painful six months.
Also, if you dismiss your Chapter 13, your car creditor is free to come and repossess your vehicle as soon as your case is dismissed. All of your bankruptcy protection ends as soon as your case is dismissed.
Any person who is wishing to voluntarily dismiss their Chapter 13 should meet with an attorney and have her go over every single aspect of their case so that there are no unpleasant surprises.
In contrast to Chapter 13, a person in a Chapter 7 bankruptcy cannot quit the case without permission from the Bankruptcy Court.
I think anyone who might be interested in keeping their house should explore Chapter 13 as an option before deciding to do a short sale or let the house foreclose. In a Chapter 13, we can take the payments that you are behind on and put them into a payment plan that will work for you. If you are in a position not able to make the future mortgage payments on your house, Chapter 13 may not be the best answer.
A short sale is when the lender agrees to take a lower price for a house than the amount owed to the lender. The main advantage of a short sale is that it protects your credit score from the damage of a foreclosure A short sale might be a good option for someone whose only debt problem is a house that can’t be sold for the amount owed. People who owe credit card debt, medical debt, car debt, and other types of debt should explore Chapter 13 and Chapter 7 before making a decision to short sale.
Amy Cochran, a short sale specialist from Cartersville, says that one of the most common mistakes she sees people make after they fall behind on house payments is that they move out of the house before the mortgage company takes any action against the house. When a house is empty, it is much more difficult to get a short sale completed.
It can’t hurt to explore all options. Weigh the pros and cons of each option before making your decision.
I recently spoke with a client who was the victim of Debt Management Company Scare Tactics. After I met with this client and confirmed that the qualifies for Chapter 7, he went home and called his Debt Management Company and asked that they stop deducting money from his checking account because he was filing bankruptcy. The representative from the debt management company responded that my client could not file bankruptcy. When my client asked, “Why?”, the debt management company representative lied to my client by saying “that anyone who owns a house can’t file chapter 7.” The debt management company representative then asked my client, “Do you own a television?” My client answered, “Yes.” The debt management company representative then lied to my client again and told him that the could “kiss the television goodbye.” As you can imagine, my client was upset and disheartened after this conversation with the debt management company liar. Fortunately, my client called me and I was able to calm his fears and set the record straight.
By telling my client that he could not file for bankruptcy, the representative from the debt management company broke the law by engaging in the unauthorized practice of law. Some debt management companies will say just about anything to get your money. Don’t let some debt management company scare you away from exercising your rights. Meet with a real attorney and find out about your legal options to obtain real debt relief.
Here is the truth about debt management companies. Credit card companies are not legally stopped from suing you for collection of the debt. In contrast, Chapter 13 and Chapter 7 prevents credit card companies from suing you for collection. Debt management companies have no power to force any creditor to accept a lower payment from you. In contrast, a confirmed Chapter 13 plan payment or a Chapter 7 discharge is binding on all creditors listed in the case. With Chapter 13 and Chapter 7 we don’t need permission from your creditors.
Taking a second mortgage out on your house to pay off credit card debt is a bad idea in most cases. In the event you need to file bankruptcy, credit card debt can be wiped out if necessary. Even in a Chapter 13 /a> plan where you are paying back all of your debt, the interest rate paid on credit card debt is zero. In contrast, the most common way to get rid of your second mortgage in a Chapter 13 /a> or a Chapter 7 is to surrrender the house to your creditor. To keep the house, all payments must be made on the second mortgage. Why would you ever want to exchange a type of debt that can be wiped out or paid back at zero percent interest for a new type of debt that must be paid back with interest and could result in the loss of your house if you ever get into a position where you can’t make the payment?
Borrowing against your 401k is a terrible idea. With Georgia Bankruptcy Exemptions, your 401k most likely will be 100 percent protected from your creditors.
One of the most common mistakes I see people make is that they will borrow against their 401K to pay off credit card debt or medical debt. Within a short period of time, they realize that they are not going to be able to make the 401k loan payment. Trying to get by, they skip other important bills like car payments and house payments. Then, they come to my office to file Chapter 13 to save the house and car. The reason I feel so bad for these people is because we could have wiped out the credit card debt and the medical debt in a Chapter 13 /a> or a Chapter 7 but now we are stuck with this 401k payment that they cannot afford.
Defaulting on the 401k loan is a bad idea because of the tax penalties. When a person defaults on a 401k loan, they will have to pay the government taxes that they otherwise could have completely avoided if they had never taken out the 401k loan to begin with.
Your 401k is meant for your retirement. Don’t ever treat it like an emergency fund.
In my opinion, this is a bad idea. If you are able to make your mortgage payments, do so. I recently spoke with a person who quit making mortgage payments so that his mortgage company would consider him for a loan modification. They filled out all the papers as requested by the bank for the modification. After about four months of not receiving any payments, the bank started foreclosure proceedings. The debtors never opened their mail from the foreclosure attorney and ignored a certified letter that was sent to their residence. As a result, there house was foreclosed and there is nothing they can do to get it back. Chapter 13 /a> does not lower your future mortgage payment but it can wipe out credit card debt to make is easier to pay the mortgage.
The answer to “when will the house be foreclosed on in Georgia” is that it depends on your mortgage company. Some companies move really fast. Other take up a year before they get around to finally conducting the foreclosure sale in Georgia.
Here is what the mortgage company must do in Georgia to foreclose on your house. First, they must advertise your house for four weeks prior to the foreclosure date. In all likelihood, you will receive a flood of advertisements once your house is being advertised. Pay attention to the mail you receive. A few months ago, I met with a man that lived in Hiram Georgia whose wife was hiding the mail from him. She was so stressed out that she did not open the mail. As a result, their house got foreclosed and they didn’t even know it! Read your mail!
Normally, foreclosures are conducted the first Tuesday of each month. Holidays can mess up this general rule. If you are in the middle of the month and your house is not being advertised in the legal organ of your county, you have at least forty days before the foreclosure can take place because the mortgage company will have to wait until next month to begin to advertise your house.
Second, the mortgage company is required to send you notification of the foreclosure You should have at least four weeks notice of the foreclosure date. Notice to you is generally accomplished by sending you a certified letter. When the mailman shows up to your house and leaves that green sticky thing on your door, don’t ignore it. Drive to your local Georgia Post Office and get that letter so that you know what is coming down the pipe.
Chapter 13 can stop the foreclosure and save your house. Take advantage of a free consultation and meet with a bankruptcy attorney.
For both Chapter 7 and Chapter 13, you absolutely must bring a your driver’s license and your social security card to the 341 Meeting of Creditors. If you can’t find your social security card, bring a W-2 or a 1099. If you don’t have both a state issued picture I.D. and proof of your social security number, your hearing will not be held. If you can’t find any proof of your social security number, go to your local social security office and have them issue you a letter with your social security number on it. It is also a good idea to bring proof your car insurance.
If you have a first and a second mortgage, you may need to consider bankruptcy even if you are willing to let the house get foreclosed. For more information on second mortgage issues, please see my prior post.
If you have only one mortgage and you don’t have any other debt issues, you probably don’t need to file bankruptcy in Georgia. Under Georgia law, a mortgage company is required to file a “confirmation of foreclosure” against you within 30 days of the foreclosure date. Mortgage companies almost never conduct a confirmation of foreclosure in Georgia. It is extremely rare for any mortgage company to pursue a deficiency on a first mortgage.
It might be a good idea to wait at least 30 days after the foreclosure to see if they take action against you. If they do, meet with a bankruptcy attorney.
Section 44-14-161 of the Georgia Code states in part, “(a) When any real estate is sold on foreclosure, without legal process, and under powers contained in security deeds, mortgages, or other lien contracts and at the sale the real estate does not bring the amount of the debt secured by the deed, mortgage, or contract, no action may be taken to obtain a deficiency judgment unless the person instituting the foreclosure proceedings shall, within 30 days after the sale, report the sale to the judge of the superior court of the county in which the land is located for confirmation and approval and shall obtain an order of confirmation and approval thereon.
(b) The court shall require evidence to show the true market value of the property sold under the powers and shall not confirm the sale unless it is satisfied that the property so sold brought its true market value on such foreclosure sale.
(c) The court shall direct that a notice of the hearing shall be given to the debtor at least five days prior thereto; and at the hearing the court shall also pass upon the legality of the notice, advertisement, and regularity of the sale. The court may order a resale of the property for good cause shown.”
In Georgia, if you file Chapter 13 bankruptcy or Chapter 7 bankruptcy, the answer is never. Creditors can’t sue you in a Chapter 13 and a second mortgage holder can be wiped out in a Chapter 7 and a Chapter 13 if you are surrendering the house. In bankruptcy, the automatic stay protects you from lawsuits.
If you do not file Chapter 13 or Chapter 7, the answer to this questions depends on various factors. It depends on the mortgage company and how much money the house is sold for at the auction on the courthouse steps. If the house sells for enough money to pay all of your first and second mortgage, you are in the clear. In Georgia, this almost never happens in real life. In the current real estate market in Georgia, it is extremely difficult to sell a house for the tax assessor’s value. In most cases, a more likely scenario is that the house gets sold for enough money to cover the first mortgage holder but the second mortgage holder gets nothing.
Usually, the first step for the second mortgage holder is to try to work out some kind of payment with you. If this does not work, they will sue you in Georgia. Small banks tend to be the most aggressive collectors on second mortgages in Georgia. I have some case cases where the second mortgage company will sell the debt to some debt collector who may wait a few years before they institute lawsuits to collect on the debt.
After they get a judgment against you, the next step is to garnish your wages. If they garnish your wages in Georgia, they are going to take twenty five percent of your net income. In addition to garnishment, they can use the judgment to seize any money in your bank accounts.
If you have a car that was purchased more than 910 days before you file, Chapter 13 might be a better option for you as opposed to Chapter 7 In a Chapter 13, if your car was purchased more than 910 days before filing, section 506A valuation will apply to your plan. This means that you may have to pay back only the value of the car and not the amount owed. For people who are upside down on their car loans, this is a huge benefit. If you would like to check out the value of your car, I recommend that you go to www.nada.com.
In addition to wiping out some of the amount owed on your vehicle, the interest rate paid on car notes in most Chapter 13 plans is currently between six and seven percent. Most buy here pay here lots in Northwest Georgia charge between 25 and 30 percent annual interest. Chapter 13 can you a huge savings in interest payments.
For people who are behind on car payments, Chapter 13 allows to pay the entire car note through the plan and keep your car. Chapter 13 is a great tool for stopping car repossessions.
Chapter 13 also allows a person to take any missed mortgage payments on a house and pay them out over the course of the plan. Most Chapter 13 plans run from three to five years. Chapter 13 is a great tool for stopping foreclosures.
Call me today for your free consultation at 706-295-0030 and lets see if Chapter 13 can help you.
Yes. While a second mortgage holder may have the power to foreclose, they almost never take this course of action unless there is a significant amount of equity in the home. In order for a second mortgage holder to foreclose on your house in Georgia, they must first pay off the first mortgage holder. Most second mortgage companies are not willing to take the risk of paying off the first mortgage and then failing to recoup their investment at the sale on the court house steps. With the current depressed values of real estate, I don’t foresee second mortgage holders conducting foreclosures anytime soon.
If a person fails to make payments on their second mortgage but continues to pay the first mortgage holder, the second mortgage holder can sit back and wait for the first mortgage holder to be paid off. After the first mortgage is paid off, the second mortgage holder assumes the first position and can then conduct a foreclosure
Chapter 13 is a great tool for catching up past due mortgage payments. Call me today at 706-295-0030 for your free consultation so that we can discuss your options.
The answer to this questions is……..it depends on what type of case you file. If you file a Chapter 13 with a plan to keep the car, the creditor cannot repossess it unless you let the insurance on the vehicle lapse or stop making your Chapter 13 payments. As long as you keep your Chapter 13 payments current and keep insurance on the vehicle, the creditor cannot legally take it.
In contrast to Chapter 13, if you file a Chapter 7 and you are not current on your car payments, the creditor will file a motion for relief from the automatic stay After the motion is filed with the court, a hearing will be held roughly 30 days after the filing of the motion. If you are behind on payments, the motion will be granted and you are most likely going to lose your car. As a general rule, if you stay current on your car and sign a reaffirmation agreement you will be able to keep the vehicle.
In my experience, I have seen many clients who have been forced to file either Chapter 13 or Chapter 7 because of a recent divorce. When the household income is cut in half but the household expenses remain the same, paying credit card debt is impossible.
A common post-divorce example is that each spouse is ordered by a divorce judge to pay half of all joint debts. When one person gets into a situation where they can’t pay, the other person often hauls them back into divorce court for a contempt proceeding for not paying the joint debt. Usually the cause of one spouse not paying is a loss of job or new expenses from a new marriage/new family. Contempt proceedings in divorce court may get the nonpaying ex-spouse to come up with funds to avoid going to jail in the short term but the underlying situation does not change. Whatever the cause, the nonpaying ex-spouse cannot pay. This cycle continues until the person who has been paying their side of the debts can no longer afford to pay an attorney to keep hauling the other person into divorce court. After thousands of dollars and heartache, both end up filing bankruptcy.
Couples who are under financial strain should consider bankruptcy before the divorce. It does not cost anything to meet with me and let me analyze your situation. Perhaps the removal of the financial strain might save the marriage?
The next step is to call my office at 1-888-832-8249 to schedule an appointment. Will will go over your income and budget so that we can come up with a plan that works for you. It does not cost anything to come and talk to us. Please bring a recent paystub and list of all of your creditors. On this list, we need names of creditors, creditor mailing addresses, and amounts owed. We look forward to meeting you soon.
When you file Chapter 13, you must attend two court hearings. The first is called the section 341 meeting of creditors and the second one is called your confirmation hearing. If you have had a chapter 13 case dismissed within the past year, you must also attend a motion to extend stay hearing.
Meeting of Creditors: This hearing will take place about six weeks after your case has been filed. During the hearing, the trustee will ask you questions about your case. Your creditors will have the opportunity to attend the hearing and ask you questions as well. Usually, the only creditor who attends these types of hearings are attorneys who represent car companies. It is not uncommon to have the hearing without any creditors in attendance. This meeting will take place in the Forum in downtown Rome. I personally attend all chapter 13 meeting of creditors with you.
Confirmation Hearing: This is the most important hearing for your case because the Judge will decide whether your case can go forward or if it will be dismissed. I will personally attend this hearing with you as well.
Motion to Extend Stay: If you have had a case dismissed within the last year, you must have a hearing before the Judge within 30 days of the filing of your case. If we don’t have this hearing, your bankruptcy protection will end. One week after your case is filed, you must call our office and confirm the dates of all your hearings. I will personally attend this hearing with you.
Meeting of creditors: This is usually the only hearing you will have to attend in a Chapter 7 The trustee will ask you questions after he gets you under oath.
It depends. If the tax debt is less than three years old, it cannot be wiped out. If the tax debt is more than three years old, we may be able to wipe out the tax debt. An important question that I will ask you is, “Has any tax lien been filed against you and in which Georgia county was the tax lien filed?” Tax liens can make your tax debt secured.
The age of the tax debt is determined by the date of the filing of tax return. As a result, if you have not filed any tax returns for the past five years, none of your tax debt can be wiped out. Sales taxes owed by self employed businesses can never be wiped out. Also, payroll taxes cannot be eliminated in bankruptcy.
No. Bankruptcy does not protect you from criminal prosecution for writing bad checks. In fact, bankruptcy does not protect you from any criminal prosecution. I spoke with a client in my Rome office a few weeks ago who wrote some bad checks to a local grocery store. She told me that she was buying food for her kids. I felt terrible explaining the cold hard truth to her. The grocery store has the right to criminally prosecute her even if she filed a Chapter 13 bankruptcy. Even in cases where all the debt is being paid at 100 cents on the dollar will not stop a criminal prosecution. However, it is possible the at 100 percent Chapter 13 plan might persuade a judge that the person is making the best possible effort to rectify the situation.
You should never write a check to anyone unless you have the funds in the bank to back it up. You can’t be prosecuted for owing money to someone. However, you can be prosecuted for writing a bad check.
Getting a cosigner for a loan in Georgia is always a bad idea. Sometimes things happen beyond your control and you may not be able to pay for that car someday. If that happens, the car creditor is going to go after the easiest source of funds…….which might be your cosigner (usually it is a grandma). It does not matter who signs first or who signs second. Unless everyone who signed the contract files Chapter 7 bankruptcy, someone is going to pay for the debt. Family love goes out of the window when the creditor starts calling.
If you file a Chapter 13 bankruptcy, you can protect your cosigner but you will have to pay contract interest. If there are no cosigners, we might be able to pay only the value of the vehicle and pay an interest rate that is lower than the contract rate. In Georgia, Chapter 13 bankruptcy cases work much better when there are no cosigners.
If some Georgia car salesman tells you that you need a cosigner to buy the car, run away from him as fast as you can. They may be promising you a lower interest rate or they may say they can’t do the deal without the signature of another person who is willing to cosign for the debt. In either case, you should run (see what Georgia consumer expert Clark Howard has to say about cosigning a loan).
A few months ago, I was meeting with a client in my Dalton GA office whose sister cosigned for a loan with him. After he lost his job, the car was repossessed. Within a few months of the repossession, he and his sister were sued by the car creditor. Needless to say, family relations were stressed. If he had filed a Chapter 7 bankruptcy, the car creditor would have collected the deficiency from his sister. Fortunately, he was able to find another job and we were able to file a Chapter 13 bankruptcy and pay back the entire balance with interest to protect his sister.