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Ch 13

The Different Types of Bankruptcy

A little over a hundred years ago, Supreme Court Justice John Clark McReynolds laid out the intent and purpose of the then-new Bankruptcy Code in Williams v. U.S. Fidelity Guarantee Company (1915): “It is the purpose of the Bankrupt Act to convert the assets of the bankrupt into cash for distribution among creditors, and then to relieve the honest debtor from the weight of oppressive indebtedness, and permit him to start afresh free from the obligations and responsibilities consequent upon business misfortunes.” History has not remembered Justice McReynolds very fondly, but his assessment about consumer bankruptcy was spot-on and is still quoted...

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Financial Troubles? When to File Bankruptcy

Bankruptcy filing rates are down overall, but four Georgia counties are among the top ten in the nation in terms of consumer bankruptcy filings. With 1,096 bankruptcy filings per 100,000 people, Clayton County (Jonesboro) is second only to Shelby County in Tennessee. The recession hit folks in Clayton County hard, as unemployment peaked at 13.5 percent in 2010 and remained above 10 percent for several years. Making matters worse, a large grocery store chain recently left the area and took a number of jobs with it. Three other Georgia counties – Henry County (861 per 100,000), Newton County (850), and Douglas...

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The Tide Has Turned Against Collectors in Bankruptcy

"A deluge has swept through U.S. bankruptcy courts of late.  Consumer debt buyers - armed with hundreds of delinquent accounts purchased from creditors - are filing proofs of claim on debts deemed unenforceable under state statutes of limitations," writes Judge Richard Goldberg in Crawford v. LVNV Funding LLC, et al (11th Circuit 7/10/14). For years, some collection agencies have gotten away with filing proof of claims on stale debts.  Many states have laws against filing lawsuits on debts where the statute of limitations has passed.  For example, in Georgia, the statute of limitations on credit card debt is six years.  This...

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Bankruptcy and The Gun Toting Debtor

When a person files for bankruptcy, what will happen to their guns?  In Northwest Georgia, guns are a treasured commodity and part of a favored pastime. People are so crazy about guns around here that Wal-mart won't let you buy more than two little boxes at a time.  I asked a Wal-mart cashier why I was not allowed to give more of my money to Wal-mart and allow them to make a profit off of me.  She responded that if there were no limit on ammunition sales, they would never be able to keep any in stock because it flies off...

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Bankruptcy – Eliminating an IRS Tax Lien With Chapter 13

Chapter 13 bankruptcy can be a great tool for paying off an IRS tax lien without having to pay the entire amount owed on the lien.  However, you must understand that in dealing with the IRS in bankruptcy, there always seems to be exceptions.  If you want to know how the law applies to your specific situation, you must sit down with a qualified bankruptcy attorney. To give you a general idea of how eliminating an IRS tax lien in a Chapter 13 bankruptcy works, let's assume that you have a $50,000 tax lien filed against you.  Let's also assume that...

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Chapter 13 Bankruptcy – Where Does My Tax Refund Go?

If you are in a 100 percent Chapter 13 plan in the Northern District of Georgia, you will be able to keep all of your tax refund.  However, if you are in a Chapter 13 case where your credit card debt, medical debt and other unsecured debts are being eliminated in your plan, you will be required to mail your tax refund to your Chapter 13 trustee during the applicable commitment period of your Chapter 13 plan. What does the Chapter 13 trustee do with all of the money she gets from your tax refund? The answer is that she distributes it...

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Do I Make Too Much To File Chapter 13 Bankruptcy?

I recently spoke to a potential client who said to me, "Hey Jeff, I need to cancel my appointment with you tomorrow because my friend told me that I make too much to file bankruptcy." "Is your friend a bankruptcy attorney?" I asked. "No."  He responded. Until a qualified bankruptcy attorney completely reviews your entire economic situation, no one should say that you make too much to file. With some high income earners, it makes sense to file Chapter 13 to stop all of the interest and late penalties on credit card debt.  In many situations, a bankruptcy filer is able to consolidate all...

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Chapter 13 Horror Story

Since Halloween is just around the corner, I thought this might be a good time for me write about a possible Chapter 13 horror story. Chapter 13 plans typically run for about three to five years.  During this time, it is possible that you or your spouse may lose their job.  In almost every Chapter 13 case, there will be an employment deduction order whereby the monthly Chapter 13 payment will be deducted directly from your paycheck.  During a Chapter 13 plan, you are required to pay all of your future mortgage payments directly to your mortgage company. This is how the...

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Employment Deduction Order in Chapter 13 Bankruptcy – Is It Required?

Many potential bankruptcy clients hesitate to file even when reality demands it because they don't want their employer to find out about the bankruptcy.  The idea of having the court order the employer to deduct the chapter 13 payment directly out of the person's paycheck is just flat out repulsive to some.  The truth is that the employment deduction order is not required in every Chapter 13  in the Northern District of Georgia. For example, you are not required to have the employment deduction order if doing so might prevent you from being promoted in the future.  In this type of...

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Chapter 13 Bankruptcy and Stripping Your Second Mortgage – Bad Idea?

The word is starting to get out in Northwest Georgia that you can eliminate your second mortgage in a Chapter 13 bankruptcy.  I recently met with a potential client who came to see me because he was told by a coworker that he might be able to get rid of his second mortgage. Many consumers from Dallas, Georgia all the way up to Dalton, Georgia are upside down on their houses because of the economic depression that our area is currently experiencing.  While eliminating a second mortgage works for some, for others it just doesn't. For example, if your house is worth...

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