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 ”
In emergency situations, it does not take long to get your bankruptcy case filed. If I have room in my schedule, I can get your Georgia bankruptcy case filed the same day you come into my Rome Office. However, if you have an emergency filing, you need to plan on spending the entire day in my office while we prepare your bankruptcy petition. We file all of our bankruptcy cases on the electronic system. We can file a bankruptcy any time of day as long as the court system has not been shut down for maintenance.
In most situations, my Georgia clients like to take a week or two before they make the decision to file. I don’t believe in pressuring anyone to file. If you ever feel like a bankruptcy attorney is pressuring you to file bankruptcy, find another attorney.
Most clients will come to my office for a 30-45 minute interview where we go over all of the debts, assets, and all of your income. We make every effort possible to minimize your time in the waiting room. It is extremely rare for anyone to have to wait more than five minutes past their appointment time. Every now and then, we have emergency situations that put us behind schedule but these are rare.
During our meeting, I have a long list of questions I like to go through with you. I want to give my clients enough time to give me all of the background information that has led to the case filing. During your initial free consultation, I will be looking for potential pitfalls in your case. If I find any, I will explain them to you in great detail.
Once a client decides to file, we will set up a two hour sign appointment. I am a firm believer that anyone who is considering filing bankruptcy should carefully review every single page of the petition with their bankruptcy attorney. If some bankruptcy attorney tries to rush you through the process, you are being set up up for disaster. You should not be made to feel like a hamburger in fast food joint. When you sign a bankruptcy petition, you are signing it under penalty of perjury. Your neck is on the line. Take your time! In my opinion, the most important part of the petition is your list of creditors. You must make sure that every single creditor you have is listed on the petition. You are required by law to list them all. Even if you are cosigned on a debt, you must list it as well.
In some situations, clients need to get a case number as soon as possible. For example, if the car creditor says to you, “I am going to repo the car tomorrow,” you will need a case number today to prevent tomorrow’s repo.
Some bankruptcy attorneys will file a front page petition. I will not. A front page bankruptcy petition is basically your name and address. You get a case number but you must file the rest of the petition within a short period or your case will get dismissed. Rather than running the risk of you not being able to make back into my office before the deadline, I would rather get it all done in one day so that we know we have a case that will work well when it is filed.
The Wall Street Journal recently reported on a mortgage company regulation bill that is working its way through Congress (Click here to read the article). The Journal reports that mortgage companies are lobbying Congress to “soften a series of provisions that reshape how most Americans obtain home loans.”
The bill proposes:
1. To require lenders to hold 5 percent of the loans they originate that are sold to investors as securities;
2. To give borrowers greater protection when the mortgage process breaks down; and
3. To force mortgage companies to charge all origination fees upfront or reflect them in the mortgage interest rate but not both.
I think we will most likely see some type of mortgage reform come out of Congress before the November elections. In response to the mortgage meltdown of 2009, Congress is going to pass laws forcing mortgage companies to take a much closer look at potential home buyers before they are given any mortgage loans. The Journal reports that the current proposed legislation “would require lenders to ensure that borrowers can repay their loans and to prove that any refinancing provides a ‘net tangible benefit’ to the borrower.”
The end result is going to be that obtaining a mortgage in the future will be much more difficult than it has been in recent times. Because of these new stringent requirements, some people who are considering surrendering their house in a foreclosure may want to think twice before letting the house go.
Houses can be saved from foreclosure by filing a Chapter 13 bankruptcy. A Chapter 13 can eliminate credit card debt, medical debt and any other type of unsecured debt. Furthermore, any mortgage payments that have been missed can be put in a Chapter 13 plan. In some cases, Chapter 13 can make it easier to pay future mortgage payments because you no longer have to worry about credit card payments or medical payments.
One of the cruel side effects of the new legislation is that some people who have owned homes in the past will never be able to buy another one in the near future. Self employed applicants who have extreme income fluctuations throughout the year will have a difficult time complying with the new standards.
Any person in Georgia who is considering surrendering their house in foreclosure should first meet with a local bankruptcy attorney. It cannot hurt to explore all of your options.
Yes, you can file a Chapter 13 bankruptcy in Georgia even if you are unemployed as long as you are receiving unemployment income. If you have zero income, you obviously won’t be able to file a Chapter 13 bankruptcy.
A great place to search for jobs for free in the Northwest Georgia area is craigslist.
One of the main reasons someone who is receiving unemployment chooses to file Chapter 13 bankruptcy in Georgia is to save their house from foreclosure by the mortgage holder. Any person in this type of situation must be able to show the bankruptcy court that they are able to make their future mortgage payments and a Chapter 13 payment.
In most of these types of situations, usually one spouse has a job and the other is receiving unemployment. I am hesitant to file these types of cases because once the unemployment runs out, the case is doomed to be dismissed by the trustee unless the family can make all future mortgage payments and all future Chapter 13 payments based only on the salary of the employed spouse. In most cases where once spouse is employed and the other receives unemployment, the only thing that will ultimately save the Chapter 13 case is when the unemployed spouse finds a job. I have seen a few cases of mine this year where the unemployed client was able to find a new job right before the unemployment was about to run out.
It is always an absolute joy for me to see someone stop a foreclosure and save their house. Not every case has a happy ending but those that do are fun to celebrate.
Another reason why someone who is receiving unemployment in Georgia may choose to file a Chapter 13 bankruptcy is to save an automobile from repossession If the only source of transportation gets taken back by the car creditor, finding a new job can be even more difficult. Georgia can get blazing hot in the summertime. Walking to a job interview is not a reasonable option in a high temperature and high humidity climate. For many people, saving the car means saving their livelihood.
I am amazed by how many of my clients love their car beyond reason. Some of them are petrified by the thought of their vehicle getting repossessed. I was meeting with a client in my Rome, GA office the other day who said that he would rather lose his wife than his car. I hope he was kidding.
To sum up, the biggest challenge to this type of Chapter 13 bankruptcy is that the person who files the Chapter 13 must find a new job before the unemployment runs so that the Chapter 13 case will not be dismissed.
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.
I have been a practicing consumer bankruptcy attorney for over 11 years. My main office is located at 107 East Fifth Avenue, Rome GA 30161. We are located on top of Clocktower Hill in the historic district of Rome. We are diagonal from the Clocktower. If you are driving from Turner McCall down Broad Street, take a left onto East Fifth Avenue. We are on top of the hill on your left. Please check out my home page at www.kellycanhelp.com.
If you are driving in from GA Highway 20, as you are coming into Rome, you will see Home Depot on your left and Kroger on your right. When you come to the CVS drugstore, take a left onto 1st Avenue. At the top of the hill, take a left onto East Fifth Avenue. We are just a few blocks down on your left.
If you are coming from Highway 53, stay to the left when the road forks. You should see Dairy Queen on your left and BP Gas station on your right. Go straight and cross over Turner McCall Blvd. At the top of the hill, take a left on 5th Avenue. We are just a few blocks down on your left.
Yes. Chapter 13 stops the foreclosure of your house. We don’t need the permission of your mortgage company to stop the foreclosure of your house. Also, Chapter 7 may stop temporarily stop the foreclosure of your house while the Chapter 7 trustee evaluates the value of your house. I encourage anyone who is facing foreclosure to read every article on this website that relates to foreclosure of your home.
The purpose of this blog is to give you a rough idea about why you must know the value of your house before you even think about filing bankruptcy in Georgia. Under Georgia Law, a single person can exempt a maximum of $10,600 of equity in their house when they are filing either Chapter 13 or Chapter 7 (see GA Code 44-13-100). For married couples filing bankruptcy in Georgia, the maximum exemption is $21,200.
Lets say a married couple has a home in Rome, GA worth $100,000. They owe $70,000. Their equity in the house is $30,000. If we subtract the the exemption amount of $21,200, we are left with $8,800. If this person were filing bankruptcy, I would recommend they file a Chapter 13 to protect their home. In a Chapter 13, the person will have to pay back $8,800 to the unsecured creditors to protect their home in Rome. In this situation, if the couple owes $100,000 in credit card debt, they will have to pay back only $8,800 assuming they pass the means test and their income and budget justify a composition chapter 13 plan.
In contrast, if they filed a Chapter 7, the trustee may sell the house and use the proceeds that are not exempt to pay creditors. Could a person in this type of situation roll the dice and file Chapter 7 ? Some Georgia bankruptcy lawyers roll the dice…….I don’t. Some Georgia bankruptcy attorneys will argue that the cost to the Chapter 7 trustee in marketing the property and closing the deal will exceed $8,800 in transaction costs. It might. Why take a chance with your house when filing bankruptcy?
A good place to start when determining the value of your home is your tax bill. Somewhere on your property tax bill, it will state “estimated fair market value.” You can check your county tax assessment online at www.gaassessors.com. Another way to determine the value is to call a Georgia realtor and ask them to give you an estimate on how much you should ask for your house if you were going to sell it. The best way to determine the value is to get a certified professional appraisal.
Remember, there are exceptions to exceptions. Don’t read this blog as legal advice. If you want legal advice, you should call me at 888-832-8249 for your free consultation so we can see how the law applies to your situation.
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 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.
I recently met with a couple from Dallas GA who had about $50,000.00 save up in their 401k. After the husband lost his job, they slowly borrowed against the 401k to make payments toward their credit cards and other living expenses. Unfortunately, they did not come to see me until they had exhausted all of their 401k. Not only did they no longer have any money in their 401k but they also now had over $20,000.00 in tax penalties for the withdrawal. If they had been in a position to pay back the 401k loans, there would have been no penalties. Unfortunately, the husband was not able to find another job.
Your 401k is meant for your retirement. Don’t ever treat it like an emergency fund.
Truth: A free consultation with me does not cost you any money. I will go over your income and budget to help you come up with a plan that works.
Myth #2: I can’t file without hurting my spouse’s credit.
Truth: Your spouse does not have to file with you. If you are not joint on any debts, your filing will not have an effect on your spouse.
Myth #3 I am going to lose everything I own. With Georgia exemptions, most people who file bankruptcy keep everything they own.
Myth #4 The creditors won’t accept my case.
Truth: We don’t need the permission of your creditors.
Myth #5 I signed a contract with a creditor agreeing that I can’t file bankruptcy against them.
Truth: This contract has no power to prevent you from filing against any creditor. We can tell them to stuff it.
Myth #6 The creditor is going to take my car.
Truth: The automatic stay prevents your creditor from taking your car. As long as you keep insurance on the car and keep your Chapter 13 payments current, the Court will not allow the creditor to take your car. If you are current on your car payments and you file Chapter 7, you can reaffirm the car. A reaffirmation agreement basically says that you are going to treat the car debt as if you have never filed against them.
Myth #7: Bankruptcy will ruin my credit forever.
Truth. Not forever. Yes, bankruptcy will damage your credit but so do lawsuits, repossessions and foreclosures. Think about all the famous people who filed and recovered.
Myth #8. The trustee will come to my house and I will be embarrassed.
Truth: I have been practicing in this field of law for over 11 years. I have filed hundreds of cases and I have never known the trustee to go to any one’s house.
Myth #9 I will never be able to buy a house after I file.
Truth: You can buy a house after you rebuild your credit.
Myth #10 I can’t file without my spouse’s permission.
If you miss a few mortgage payments while you are in Chapter 13 in the Northern District of Georgia, the attorneys for the mortgage company will file a Motion for Relief against you. They will charge you approximately $800 for filing this motion. Generally, we can work out a deal with them to put their attorney fees into your Chapter 13 plan and spread out the missed payments over six months. If this is not feasible, the motion will be granted and your house will be foreclosed.
You must keep proof of all mortgage payments you make. If you don’t have proof of the payment, you may get stuck having to make it again.
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.
My Dalton office is located at 201 A West Crawford Street, Dalton GA, 30720. From Walnut Avenue, head north on 41/Thornton Avenue. When you see the Post Office on your left, you need to take a right. We are the second brick building on your right. If you get the Wink Theatre, you just barely went too far. Check out my website at www.kellycanhelp.com.
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.
