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.

Other Posts:

1.  What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  How do I stop a garnishment?

5.  How do I stop a foreclosure?

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

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.

Other Posts:

1.  What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  How do I stop a garnishment?

5.  How do I stop a foreclosure?

Newspapers across our nation have been full of articles detailing bank foreclosure practices that have been abusive.  It now looks like the federal government will attempt to respond to this foreclosure abuse.  The Wall Street Journal has reported that federal regulators will review millions of foreclosure cases to determine whether some consumers should be compensated for mistakes made by banks (click here read the entire article).

The Journal reports that this review process could be unveiled in the next few weeks.  The Office of the comptroller of the Currency estimates that 4.5 million borrowers coul be eligible for review.

The federal government will be setting up a website and a toll free number giving the details of the process.

What bothers me is that the reviews will be conducted “by third party companies that were hired earlier his year by 14 banks that signed consent order in April with the OCC and the Federal Reserve.  The regulators had to sign off on the selection of these companies”  (See page C1 Wall Street Journal, October 4, 2011).

It seems to be like the government has agreed to allow a fox to be in charge of guarding the hen house.  I doubt we will see many people recover anything.  I bet there will be a few token cases where awards will be granted so that the foxes can claim to the government that they are doing their job.

Important points of the article are:

1.  Money awards will be determined on a case-by-case basis.

2.  There will be a deadline for borrowers to request reviews.

3.  Very few borrowers are expected to have their foreclosures overturned and their homes returned to them.

4.  Banks could be held liable for miscalculating mortgage payments.

5.  Banks could be held liable for impermissible fees and penalties.

6.  Banks could be held liable for forcing expensive insurance coverage into the mortgage payment and pushing consumers into foreclosure

7.  Banks could be held liable for starting foreclosure proceedings while they were receiving payments as part of trial loan modifications.

8.  Banks may be liable for foreclosing on people who provided all of the necessary documentation for loan modifications but still got foreclosed.

I think the proper place for these issues to be resolved is in a court of law and not some review process that will be run by “third party” companies.

Three years, Congress had the opportunity to pass a bill that would have allowed bankruptcy judges to modify mortgages.  Had this bill passed, the entire foreclosure meltdown would have been avoided.

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Stop Garnishment

5.  Stop Foreclosure

I offer a free consultation to any person in Northwest Georgia who is considering bankruptcy.  Here are my top ten bankruptcy tips for keeping your free consultation hassle-free.  Please note that most bankruptcy clients don’t bring anything to their first appointment with me because they just want some basic information.  However, if you want the most hassle-free consultation if you are considering bankruptcy, please read this list of tips carefully.

1.  Make a list of all your debts.  On this list, include names, addresses, account numbers, and amounts owed.  Simply getting a copy of your credit report from www.annualcreditreport.com  is not good enough because some creditors do not report to any credit bureaus.  Making a list will help you get every creditor you owe into your case.  If you owe a buy-here-pay-here, I need to know about when I’m trying to analyze your situation.  Don’t leave any creditor off this list.

2.  Make a list of all your assets.  If you file a bankruptcy case, it is extremely important that all of your assets are listed in the case so that we can protect them.  If it is not listed in the bankruptcy, it is not protected.  In order for me to whether bankruptcy is right for you, I need to know every thing you own.  There are some rare cases where its better not to file bankruptcy because of some high value asset.  For example, I met with a person last year who did not want to file bankruptcy after he found out that a Chapter 7 trustee could take his antique car that was worth more than $50,000.00.  Fortunately, this person was smart enough to tell me everything so that I could warn him to stay away from Chapter 7 bankruptcy.

3.  Bring as many paystubs as you can for the last six months.  Your gross income for the last six months will determine what type of bankruptcy case you may be able to file.

4.  Bring your most recent tax return.

5.  Fill out my client questionnaire before you come into the office.  This will save a lot of time.  Click here to download it.

6.  When filling out the bankruptcy questionnaire, pay close attention to your monthly budget.  If we are going to come up with a plan that actually works for you, the budget must be realistic.

7.  If you have been served with any lawsuits, please bring them with you to the appointment.

8.  Please bring any letters you have received from nasty bill collectors.

9.  Bring your most recent bank statement for all of your bank accounts.

10.  If you own a house, bring your most recent tax assessment which shows the fair market value of your house.

Call me today at 706-295-0030 for your free consultation. 

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Stop Garnishment

5.  Stop Foreclosure

Bloomberg News reports that Ray Guy’s three Super Bowl rings will be auctioned off in his bankruptcy case (click here to see to full article).

The article reports that the rings are worth between $70,000.00 and $90,000.00.  I’m no expert in jewelry valuation but it seems like a Super Bowl Ring would be worth a lot more.

Ray Guy, who is from Swainsboro, Georgia, filed for bankruptcy protection in Augusta, Georgia in April 2010.  Bloomberg News reports that the IRS is the first lien holder on the rings.

The Ray Guy Award is given to the best college football punter every year by the Greater Augusta Sports Council.  Can you imagine being so good at a specific position in football that an award for the best player in that position is named after you?

It seems extremely harsh and unfair that this football great will have to sell his Super Bowl rings in his bankruptcy case.  When I was in high school, I won a few trophies when I won some races.  I still have those trophies.  If someone were to ever take them away from me, I would surely cry.  I cannot imagine the pain that Mr. Guy must feel at the thought of losing these symbols of such a tremendous achievement.

Georgia does not have any bankruptcy protection for sports memorabilia.  However, Georgia does have a total wildcard exemption of $5,600 that can be used for anything of value.

However, Mr. Guy has the IRS on his back.  Unfortunately for him, even if Georgia had an exemption in bankruptcy that protected Super Bowl Rings, it would not help Mr. Guy because the IRS lien trumps Georgia bankruptcy exemptions.

If Mr. Guy were able to propose a plan that paid the IRS back the same amount of money that they would receive if the rings were sold at auction, he would be able to keep the rings.

I am praying that somehow he will end up keeping these rings.  I like stories with a happy ending and I’m trusting that somehow things will work out well for Mr. Guy.

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

I believe that the consumer bankruptcy world is going to be drastically affected by the federal debt ceiling crisis.  As you have probably seen in most media reports, the United States will lose its AAA credit rating in the event of a default.  Some are predicting that even if the debt ceiling is raised without addressing how to ultimately reduce the debt, the government will still lose its AAA credit rating.  As a consequence, interest rates across the board are going to rise.

The problem with increasing interest rates is the effect on monthly mortgage payments.   Many of  my Chapter 13 bankruptcy clients have adjustable interest rates on their home mortgage.

It’s important to note that a Chapter 13 bankruptcy has zero effect on your future mortgage payment.  Thus, if you have an adjustable mortgage rate that is set to increase your monthly mortgage payment as interest rates rise, Chapter 13 won’t stop the increase.  However, many debtors find that it is much easier to pay a rising mortgage payment if you can eliminate all of the credit card debt and medical debt in a Chapter 13 bankruptcy.

It’s unfortunate that bankruptcy judges don’t have the power to lower future mortgage payments.  If I had my way, judges would be able to modify the loans.  The foreclosure meltdown would have been prevented  if bankruptcy judges had possessed this power before the crisis hit.

When the mortgage payment increases by a few hundred dollars per month, this will be enough to push the payments out of reach for many of my bankruptcy clients.  As a consequence, they will lose their homes to foreclosure when they can no longer afford the future mortgage payments.

For many Chapter 13 cases, saving the home is their only reason for making the case work.  Once they lose their home, I predict that many debtors will either convert their Chapter 13 to a Chapter 7 or just quit the case altogether.

Many people who are currently considering Chapter 13 as an option will most likely lean toward Chapter 7 once their future mortgage payments go up as a consequence of rising interest rates.  Thus, Chapter 7 filings will rise and Chapter 13 cases will drop.

I am hoping and praying that the United States will not default.

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

Some people believe that a Chapter 13 bankruptcy will be a miserable experience.  The truth is that for most people, it’s a huge relief because it ends the pressure from your creditors.  Below, I’ve listed the top seven ways your life will improve after you file Chapter 13 bankruptcy.

1.  The phone calls from creditors will stop.  Any creditor that calls you after your case has been filed is violating the automatic stay   As a consequence, if they keep calling your after your case is filed, they are breaking the law.

2.  The foreclosure stops.  The thought of losing your house is scary.  Without bankruptcy, you are totally at the mercy of your mortgage company when you are behind on your house payments.  After filing Chapter 13 bankruptcy, the foreclosure stops the second your case is filed.  We do not need permission from your mortgage company.

3.   The garnishment stops.  Losing 25 percent of your net income is impossible to bear for most people.  Unfortunately for the citizens of Georgia, a creditor can garnish up to 25 percent of your disposable wages.  With Chapter 13, you don’ t have to worry about this.  Once your case is filed, we need to fax a judicial order to your payroll department to get it stopped.

4.  The lawsuit stops.  Knowing that you have a deadline to respond to a lawsuit can be extremely stressful.  Once you file Chapter 13 bankruptcy, we take care of that for you.  You won’t have to worry about the lawsuit once your case is filed.

5.  The interest rate on credit card debt is lowered to zero percent.  Without bankruptcy, most people pay between 25-30 percent interest on their credit cards.  For many people, its a struggle just make the interest payments.  In contrast, people who file Chapter 13 have the peace of knowing that there is light at the end of the tunnel.

6.  The late fees stop.  Getting nailed by a late fee is so frustrating.  Your money just goes up in smoke.  With Chapter 13, the late fees on your credit cards completely stop.

7.  The interest rate on your car note is lowered.  In  Dalton Georgia, its not uncommon to see an interest rate as high as 30 percent.  I see rates this high in the Rome, Cartersville and Dallas areas as well.   Many people pay back more in interest than the purchase price for the car!  With Chapter 13, we can lower the interest to around six percent in most cases.

There is light at the end of the tunnel.

Other Posts:

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  How do I Stop a Garnishment in Georgia?

5.  How do I Stop a Foreclosure in Georgia?

6.  What do I need to bring to my first meeting?

When you file bankruptcy, you want to list every single debt you have in the entire world.  Bankruptcy is your chance to wipe the slate clean and you want to clean it all.

However, what happens when you forget to list something?  What happens when some creditor from years ago comes out of nowhere and now demands payment?

First, you want to check with your bankruptcy attorney to see if the debt is already barred by the Georgia statute of limitations.  If so, you may not need to list it anyway.  Out of abundance of caution, I say list it anyway just to play it safe.  However, if a claim on a debt that is barred by the statute of limitations is filed in your case, your bankruptcy attorney will need to object to it.

What do you when the debt is not barred by the Georgia statute of limitations?

If you are in an active Chapter 13 bankruptcy, you simply pay your bankruptcy attorney $26 to add the debt.  (Please note that your bankruptcy attorney in the Northern District of Georgia cannot charge you more than $26 to add a debt to your case without filing a fee application with the bankruptcy court).

In a Chapter 7 bankruptcy, its more complicated.  If your case has been discharged, your bankruptcy attorney may have to file a motion with the court to reopen the case.  The charge for this can be expensive.  As a result, the best thing for you to do is to get it right when you first file your case.

Getting your credit reports from Experian, Transunion, and Equifax is a great place to start.  Hopefully, you are not one of those people who throws your bills in the garbage without looking at them.  If you have been saving them in a box, bring them to your bankruptcy attorney so that he can get them listed in your case.

Whether you file Chapter 13 or Chapter 7, it is your responsibility to make sure every single debt you owe has been listed.  Sometimes I will have a client who will say to me, “Jeff, I don’t need review this petition.  I trust you.”  My response is that I’m glad they trust me but I insist that they review every single page since they will be signing the documents under oath.

Taking time to review your petition is an absolute must.  If your bankruptcy attorney ever tries to rush you, ask for your money back and run out of the office as fast as you can.

Other Posts:

1.  How do I wipe out my second mortgage in bankruptcy?

2. What is Chapter 13?

3. What is Chapter 7?

4.  Do I have to go to court if I file bankruptcy?

When considering bankruptcy, retirement should definitely be taken in account.

I meet with quite few potential bankruptcy clients in Dalton, Dallas, Cartersville and Rome, Georgia who reluctantly come to my office and resist the idea of bankruptcy even though economic reality demands it.  The tide usually begins to shift when we start talking about retirement.

Sometimes, I ask the question, “How soon do you plan on retiring?”

The potential bankruptcy client usually responds, “To be honest, I haven’t really thought about it.  I get at least 10 nasty creditor calls a day which stresses me out so bad that all I can think about is this debt problem.”

“Why not wipe out the debt problem and start focusing on a retirement plan?”  I will respond.

Many clients become more open to the idea of bankruptcy when they start to contemplate retirement.  When both a husband and wife are working full time, a married couple might be able to squeak by each month and make that minimum credit card payment.  However, once one of them retires, reality hits.  Half the income is gone but the bills are the same.  Actually, with twenty-five percent interest on credit card debts, they can grow rapidly.

I’ve heard many clients say to me, “I wish I had filed this case years ago.  I’m about to retire and I have no savings.”

A most disheartening situation is when a person empties out their 401k account to make payments on credit card debt.  Under Georgia law, your retirement account is 100 percent protected from your creditors.  Why would you ever want to take a protected asset and convert into cash so that you can pay a debt that could have been wiped out in a bankruptcy?

Everyone knows that you can’t retire on social security alone.  You must have some savings to cover medicine and other medical expenses.

Busting your tail to pay twenty five percent interest on your credit card debt instead of funding your 401k retirement account just isn’t smart.  Make funding your 401k a priority and if you there is nothing left for the credit card companies, you need to come see me soon.

Related Posts:

1.  Can I Keep Contributing to My 401k After I File Bankruptcy?

2.  Don’t borrow against your 401k to pay off credit cards or medical debt!

3. What is Chapter 13?

4. What is Chapter 7?

5. How much does it cost to file?

As everyone in Georgia knows, home values have been falling this past year. On the down side, this means that borrowing on the equity of your home is difficult  and if you are trying sell, you may not be able to get the price you need.

People all across Northwest Georgia, from Dalton to Rome, Cartersville, Hiram and Dallas have gasped in agony at the tumble in home values.

From a bankruptcy perspective, falling home values have helped many debtors.  The biggest upside to falling home values is that it gives many Chapter 13 debtors the opportunity to eliminate their second mortgage on their homes. If your house is worth less than what you owe on the first mortgage, you can eliminate the second mortgage in a Chapter 13 bankruptcy case. For a more detailed explanation of how this process works, click here.

Another upside of the falling homes values is that Chapter 7 bankruptcy has become much easier for many debtors.  During the housing boom, there were many debtors who needed to file for bankruptcy but could not do so because they had too much equity in their homes.  For example, married couples with more than $20,000 equity in Georgia should not file Chapter 7   In situations where the equity exceeds what can be protected by Georgia law, a Chapter 7 trustee can put a house up for sale and use excess proceeds to pay creditors.

During the housing boom, it was not uncommon to see a Chapter 7 trustee challenge the value that a debtor listed on their home.  Today, with the tremendous drop in housing values, I not personally seen trustee challenge the home values listed on the bankruptcy petition.

A great place to start when trying the determine the fair market value of your home is your tax assessor.  Take a look at your most recent tax bill.  How much did they list as the estimated fair market value?  In the past, we could not rely on this value but most tax assessors had underestimated the fair market value.  Today, this is no longer the case.

I had a recent bankruptcy case where the county tax assessor had actually overvalued the property by $40,000.00.  In this particular case, the debtor obtained an expert appraisal and overcame a creditor objection.

If you would like to explore your bankruptcy options, please do not hesitate to call me at 706-295-0030.

Related Posts:

1.  How do I wipe out my second mortgage in bankruptcy?

2. What is Chapter 13?

3. What is Chapter 7?

4. How much does it cost to file?