The Bankruptcy Alphabet: “J” is for “Judgment”

September 6, 2012

Credit card companies are becoming more and more aggressive when collecting their debts. They frequently sue consumers to try to obtain a judgment. Many times people are so overwhelmed by their situation that they ignore lawsuit paperwork. Ignoring a judgment can lead to garnishment of bank accounts, liens on property and wage attachments. The good news is that even if a creditor obtains a judgment against you, you may still be able to discharge that debt in bankruptcy. If you are being sued by a creditor, you should consult a bankruptcy attorney right away, so that you can protect your rights and your property.

The Bankruptcy Alphabet: “I” is for “Individual” bankruptcy filing

August 5, 2012

Sometimes a married person would like to file for bankruptcy, but the spouse chooses not to file.  It may be that the spouse has no debt, or that the spouse just hasn’t come to grips with the reality of their financial situation.  The good news is that even if someone is married, they can still file bankruptcy individually, without their spouse.  The spouse’s credit will not be impacted.

The bankruptcy court will look at the household income, including the income of the non-filing spouse. However, the separate expenses (pedicures, gym memberships, Zumba classes, etc) of the non-filing spouse can be backed out of the budget.

It is important to remember that if there is joint debt, but only one spouse files, the non-filing spouse will remain responsible for the former joint debt.

The Bankruptcy Alphabet: “H” is for “Homestead Exemption”

July 20, 2012

A homestead exemption allows a homeowner to protect the equity in their home from attachment by creditors or from sale by a bankruptcy trustee.

“Equity” is defined as the difference between what the property is worth, and what is owed on the property.  In other words, if my home is worth $100,000, and I owe $80,000 on my loan, I have $20,000 in equity in my home.

As of this writing, in Vermont homeowners can protect up to $125,000 in equity in their homestead.  In New Hampshire a homeowner can protect up to $100,000 in equity in their homestead.  The bonus in New Hampshire is that if a husband and wife own the property, each of them can take advantage of the $100,00 exemption, allowing them to protect up to $200,000 in equity.  In Vermont, the homestead exemption cannot be doubled if a husband and wife are both homeowners.

In this economy it is rare to find someone with more than $100,000 in equity in their home.  Consequently, I am generally able to protect someone’s home in a bankruptcy.

The Bankruptcy Alphabet: “G” is for “gift” or loan?

June 1, 2012

Quite often a client will want to characterize money they received from a relative as a loan, when in reality it is probably a gift.  In bankruptcy, transactions between related individuals are probably more carefully scrutinized than any other type of transaction.   How the parties label a transaction is irrelevant.  The court will look to the character of the transaction when determing how to label it.

The factors a court will consider may include any of the following:

  • Is the agreement in writing?
  • Does the agreement include interest on the debt?
  • Is there a fixed repayment schedule?
  • Is the loan secured by collateral?
  • What is the payment history?
  • What was the prospect of repayment?
  • Did the conduct of the parties suggest that this was a loan?
(In Re Killian, 422 B.R. 903, (Bankr. N.D. Ill. 2009)).  These are certainly not the only factors a court may consider.  The moral of this story is that if you are going to enter into a financial transaction with Uncle Joe, if you don’t adhere to the formalities of a loan transaction, a judge may decide that the loan was really a gift.

The Bankruptcy Alphabet: “F” is for “Free Consultation”

May 16, 2012

I offer a free consultation for consumers who want to learn whether or not bankruptcy may be the right choice for them. Why do I do this? It is simple. Bankruptcy isn’t the right option for everyone. Most people who are filing for bankruptcy have very little money and are reluctant to spend it on something they aren’t sure about.

My job is not to “sell” you a bankruptcy, but to make sure that bankruptcy will resolve your debt problems. During the free consultation I evaluate all aspects of a person’s finances. Those include:

• assets
• debts
• income
• expenses
• lawsuits
• foreclosure/repossession issues
• tax issues

It is also important for me to understand a person’s financial goals, so that I can assess whether I can tailor a Chapter 7 or Chapter 13 bankruptcy to meet those goals. Something I find very helpful is when potential clients bring a list of questions to the appointment. We go through those questions one-by-one. That way I know I have addressed all of their questions and concerns, so that they can make an informed decision.

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