Can I Put My Property In My Spouse’s Name & File For Bankruptcy In Arizona? The Repercussions Of Putting Your Property In The Name Of Your Husband Or Wife & Filing Bankruptcy Our Phoenix Bankruptcy Lawyers and Tucson Bankruptcy Attorneys discuss the repercussions of putting your property in the name of your spouse and then filing bankruptcy in Arizona. Our experienced Phoenix debt relief attorneys define Chapter 7 Bankruptcy and chapter 13 Bankruptcy. Additionally, they dive into different scenarios of property transfers and declaring bankruptcy in Phoenix and Tucson, Arizona. Bankruptcy can be a powerful tool that reorganizes or eliminates your debts. Erasing thousands of dollars of unsecured debt could give you several new opportunities in life. Filing bankruptcy also triggers the Automatic Stay, which stops your creditors from taking actions like repossessing your vehicle, garnishing your wages, foreclosing your home, and more. But you can’t take advantage of these massive benefits if you have the financial means to pay your debts on your own. There are strict requirements you must meet to be eligible to file Chapter 7 bankruptcy in Arizona, which is the type of consumer bankruptcy that doesn’t require you to pay back your debts. And while not a strict requirement, any assets that aren’t protected by state bankruptcy exemptions are at risk of being taken by your bankruptcy trustee to pay your creditors. So sometimes, clients come to us with what they believe is a novel workaround- filing bankruptcy without their spouse, and transferring non-exempt assets to their spouse beforehand. Read on to learn more about how using this strategy could work out when you file an Arizona bankruptcy. Arizona Bankruptcy Basics It’s almost impossible to continue without first giving a brief overview of some bankruptcy basics. Most people in Arizona file either Chapter 7 or Chapter 13 bankruptcy. If you are married, you have the option between filing as an individual or as a married couple. A bankruptcy trustee will be assigned to oversee your case, making sure you aren’t hiding assets that could be used towards your debts. You will need to attend a hearing known as a 341 Meeting of Creditors, in which you will meet with the trustee and any creditors that choose to attend. Filing Chapter 7 Bankruptcy In Phoenix, Arizona Chapter 7 bankruptcy is what most people think of when they hear the word “bankruptcy.” It clears away unsecured debts like credit cards, medical bills, and personal loans. To qualify for such an enormous benefit, you must meet one of two income requirement tests. The first is a comparison of your income to Arizona’s median income based on your household size. For a single individual, this is $55,839 per year. If you are married or have one minor child, it is $69,975. This increases to $75,560, $85,714, $94,714, and so on, for each additional family member. Only a spouse and children under the age of 18 count as family members for bankruptcy calculation purposes. If you make more than the Arizona median income for your household size, you will need to qualify for Chapter 7 bankruptcy using the Means Test. The Bankruptcy Means Test in Arizona is a bit more complicated than comparing your income to the state median income. If you aren’t paid on a salary basis, you will first find your average monthly income over the previous 6 months. Then, you will subtract necessary expenses from your average monthly income. This includes a wide variety of expenses, like rent or mortgage payments, utilities, student loans, child support and spousal maintenance, taxes, and more. The number you calculate, which represents how much spare income you have that could be used to pay your debts, is known as your disposable monthly income. If this number is negative, or falls within Arizona’s limits, you can file Chapter 7 bankruptcy. If you can’t qualify under either of these methods, you will need to instead file Chapter 13 bankruptcy. Qualifying For Chapter 7 Bankruptcy in Arizona Another major concern besides income qualification when filing Chapter 7 bankruptcy is protecting your assets. Each state has its own bankruptcy exemptions, which represent how much equity you can hold in certain asset categories. Unlike some other states, Arizona doesn’t allow for use of federal bankruptcy exemptions. Your bankruptcy trustee has the right to seize any assets that aren’t protected by exemptions to sell and pay your debts. They also have a great incentive to do so, as they also receive a percentage of the proceeds. The homestead exemption, or the exemption used to protect your house, RV, etc., is $150,000. For motor vehicles, the exemption in Arizona for married couples is $6,000 each for two vehicles or $12,000 for one vehicle. The exemption for household goods and furnishings is also $6,000. For engagement and wedding rings, the Arizona exemption is $2,000. Only $20,000 of life insurance proceeds are protected in an Arizona Chapter 7 bankruptcy. However, all child support and spousal maintenance payments are exempt. One important Chapter 7 bankruptcy exemption to note in Arizona is for bank accounts. Arizona only allows $300 on the day of filing for an individual, and $600 for a married couple. This means carefully timing your bankruptcy petition to make sure there aren’t nonexempt funds in your account on the day of filing. Contact our firm for your free consultation if you need additional information about Arizona’s bankruptcy exemptions. Filing Chapter 13 Bankruptcy In Phoenix, Arizona Chapter 13 bankruptcy is usually available to those whose income exceeds Arizona’s Chapter 7 income limits. It reorganizes debts into a payment plan that is divided and paid off in four categories of debt. For someone who qualifies for Chapter 7 bankruptcy, the payment plan will last 3 years. For those who don’t, it lasts 5 years. You are safe to keep paid in full assets in a Chapter 13 bankruptcy because you will be paying off most of your debts in your payment plan. Only some of your unsecured nonpriority debts may be discharged at the end of your payment plan. So if your assets aren’t protected in a Chapter 7 bankruptcy, you may want to consider filing Chapter 13 instead. If I Transfer a Non-Exempt Asset To a Relative Or Non-Filing Spouse, What Happens If My Chapter 7 Bankruptcy Trustee Finds Out? Some resourceful Chapter 7 filers consider the idea of transferring an asset such as a vehicle or real estate to a loved one that won’t be included in the bankruptcy before filing. This might seem like a creative solution to the issue of non-exempt assets being taken in a Chapter 7 bankruptcy to pay creditors. But your bankruptcy trustee will have an eye out for these types of maneuvers. The trustee can review 2-4 years of prior transfers to make sure you haven’t hidden any assets that could be used to pay debts. It’s always best to be honest and give full disclosure of prior property transfers on your bankruptcy petition. Your bankruptcy trustee may “claw back” preferential payments to your family members, as well as recover any other property like a vehicle or expensive watch. If the transfer was money, but the money is now gone, you will most likely be required to pay that sum to the trustee or face case dismissal. In serious cases, you could even be charged with bankruptcy fraud, which would result in massive fines and even prison time. Protect Your Interests With a Dedicated Phoenix Bankruptcy Attorney Whether or not you’ve made a “creative” transfer in recent years, it’s always best to proceed with the guidance of a professional when it comes to bankruptcy. And if your bankruptcy trustee catches you in a sketchy transfer, your case could be dismissed and make your financial situation even worse. You could even face felony charges for lying on your bankruptcy petition. Make sure your petition is filed in accordance with state law by filing with a knowledgeable and experienced bankruptcy attorney. Our team of Phoenix and Tucson bankruptcy attorneys has collective decades of experience helping our clients achieve their bankruptcy goals and move forward with a fresh start. Furthermore, we will guide you through each step of the process, starting with your free initial consultation. Our free consultation is confidential and is the perfect opportunity to have all your questions about filing bankruptcy in Arizona answered. It’s also your opportunity to interview us. During your free consultation, we will check your bankruptcy qualification, as well as see if you qualify for our Zero Down Bankruptcy Payment Plan. Let us know when is most convenient for you through our online form or at 480-833-8000; telephone appointments available.     Arizona Offices: Mesa Location: 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: (480) 448-9800 Email: [email protected] Website: https://myazlawyers.com/ Phoenix Location: 343 West Roosevelt, Suite #100 Phoenix, AZ 85003 Office: (602) 609-7000 Glendale Location: 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: (602) 509-0955 Tucson Location: 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: (520) 441-1450 Avondale Location: 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: (623) 469-6603 The post Can I Put My Property In My Spouse’s Name & File For Bankruptcy In Arizona? appeared first on My AZ Lawyers.

 Bankruptcy Deadlines must be observed! The recent case of In re U-Haul, 21-bk-20140, 2021 Bkr LEXIS 3373 (Bankr. S.D. W. Va. Dec. 10, 2021) demonstrates this rule. In the U-Haul case, a creditor needed to file a proof of claim for $53 million and their attorney  waited until the last moment to do the filing. Unfortunately the attorney  did not have the proper password and the proof of claim was filed approximately 9 hours late.Counsel for the Debtor objected to the late filed claim. Creditor counsel argued “excusable neglect” (the argument usually made by attorneys  when deadlines are missed see  Pioneer Inv. Servs. v. Brunswick Assocs. Ltd P’ship, 507 U.S. 380 (1993)) and creditor counsel lost. For those that do bankruptcy work on a day to day basis, this is a painful case to read. A lesson for all lawyers is to prepare for deadlines, observe deadlines, do not wait until the last minute to file and prepare and plan for the unexpected. Jim Shenwick, Esq.

What Does the Bankruptcy Trustee Investigate? Every person considering filing Chapter 13 bankruptcy or Chapter 7 bankruptcy is concerned about running afoul of the Trustee. You’ve probably heard that the Trustee has the power to seize your assets or dismiss your case. This is true, under certain circumstances. Learn from noted Philadelphia bankruptcy lawyer David M. Offen who the bankruptcy Trustee is, what their duties are, how and when you and your attorney interact with the Trustee, and how your bankruptcy lawyer helps you navigate the bankruptcy process and provide everything the Trustee requires so that you have a successful bankruptcy filing. Call us if you have any questions. You can discuss your concerns with us free of charge. We have over 20 years of experience helping our clients satisfy the Trustee and successfully complete their bankruptcy case. We can help you too. What the Bankruptcy Trustee Is A bankruptcy Trustee is an officer of the Department of Justice appointed by the United States Trustee to represent each debtor’s estate in their bankruptcy proceeding. Bankruptcy Trustees evaluate debtors’ cases and investigate, make recommendations, and take action in accordance with the United States Bankruptcy Code. What a Bankruptcy Trustee Investigates in Chapter 7 The Chapter 7 Trustee has many duties, among them inspecting the debtor’s filing, inspecting creditors claims, confirming the identity of the debtor, and holding the 341(a) Meeting of Creditors. Without the approval of the Chapter 7 Trustee, no one can complete a Chapter 7 case and receive a discharge. These are the questions that trip up Chapter 7 debtors the most: Did the Debtor Pass the Chapter 7 Means Test? The Chapter 7 Trustee’s first obligation is to confirm that the debtor is eligible to file Chapter 7. The Trustee examines the debtor’s completed and filed means test as well as the financial information and documentation the debtor provides. If the Chapter 7 Trustee has concerns or requires further information or documentation, they will contact the debtor’s attorney or ask for what they require at the 341(a) Meeting of Creditors. If the Chapter 7 Trustee finds that the debtor is ineligible to file Chapter 7, they will recommend either case dismissal or case conversion. That is why before you file for Chapter 7 your attorney wants to make sure that you pass the means test, or have very special circumstances that would permit the Chapter 7 to proceed even if you do not pass the means test. Does the Debtor Have Nonexempt Assets? Another of the Chapter 7 Trustee’s primary duties is to protect the interests of creditors. If the debtor’s attorney has applied all applicable exemptions and there are non exempt assets left over, the Chapter 7 Trustee has the power to seize and sell those assets for the benefit of the debtor’s creditors. If there are no such assets, the Trustee files a Notice of Abandonment with the court. If there are no non-exempt assets that you wish to keep, then your attorney may recommend that you file for bankruptcy protection under Chapter 13. Is the Debtor Entitled to Chapter 7 Discharge? The final and perhaps most crucial step the Trustee takes is to determine whether the debtor is entitled to a discharge. The Chapter 7 Trustee may object to discharge if: The debtor has previous recent bankruptcy filingsThe debtor filed bankruptcy in bad faith (example: to unreasonably delay creditor action)The debtor lied on their petition or schedulesThe debtor lied under oath at the 341(a) Meeting of CreditorsThe debtor failed to disclose incomeThe debtor failed to disclose assetsThe debtor attempted to conceal or destroy propertyThe debtor incurred debt fraudulentlyThe debtor incurred debt in contemplation of filing bankruptcyThe debtor failed to cooperate with the Trustee’s requests  What a Bankruptcy Trustee Investigates in Chapter 13 In addition to what the Chapter 7 Trustee investigates, a Chapter 13 Trustee must verify that the debtor has sufficient income to fund their plan, that the debtor’s creditors are receiving as much through the plan as they could have gotten had the debtor filed Chapter 7 and had nonexempt assets, and the value of any property affected by the plan, such as a car or real property. What a Bankruptcy Trustee Has Access To A bankruptcy Trustee has access to the debtor’s complete filing and has the power to demand just about any kind of supporting documentation of the debtor. The Trustee can also subpoena third parties to testify under oath about the debtor’s finances. Because the Trustee has wide-ranging power, there is little a debtor can do to hide income or assets or cover up fraudulent behavior. Failing to Divulge Information in Bankruptcy Failing to divulge all financial information in their bankruptcy filing is the most common way debtors fall afoul of the Trustee. Often what looks like fraud or nondisclosure to a Trustee is simply a mistake or oversight by the debtor.  An experienced bankruptcy attorney helps a debtor avoid any such question or allegation by discussing their financial situation in detail and planning well in advance of actually filing.  Things Bankruptcy Trustees Look for at the Meeting of Creditors The Trustee requires proof of identity such as a driver’s license and Social Security card, and will ask some or all of the following questions, among others: Is the address on the petition your current address?Is the signature on the petition, schedules, statements, and related documents your own (pointing to your filed documents)?Did you review these documents before you signed them?Are you personally familiar with the information contained in your filing?Is the information contained in your filing true and correct to the best of your knowledge?Are there any errors or omissions in your filing that you want to bring to my attention at this time?Are all of your assets identified on the schedules? Have you listed all of your creditors on the schedules?Have you previously filed bankruptcy? If so, when?Who is your current employer?What is the address of your current employer?What do you do for your employer?Have you filed any amendments to the recent tax returns you provided to me?Do you have a domestic support obligation? If so, to whom?Are you current with your domestic support obligation?Have you read the Bankruptcy Information Sheet?Do you own or have any interest whatsoever in any real estate?Have you made any transfers of any property or given any property away within one year prior to filing bankruptcy? Does anyone hold property belonging to you?Do you have a claim against anyone or any business?Are you the plaintiff in any lawsuit?Are you entitled to life insurance proceeds?Are you entitled to an inheritance?Does anyone owe you money?Have you made any large payments to anyone including family in the year prior to filing?At the time of the filing of your petition, were you owed a tax refund from the federal or state government?Do you anticipate that you might realize any property, cash or otherwise, as a result of a divorce or separation proceeding? If the Trustee is dissatisfied with any response, they have the power to reschedule the 341(a) Meeting and demand additional information or documentation.  What if Creditors Show Up at the 341(a) Meeting? Creditors have the right to appear at the meeting and ask questions of the debtor under oath. This can happen if a creditor suspects that the debtor incurred debt fraudulently, asserts that a debt listed as unsecured is actually secured, or is hiding income or assets. For example, an ex-spouse may appear and ask the debtor about undisclosed income or assets, or a business partner of the debtor may appear to ask about company property or funds.  The debtor must answer the creditor’s questions truthfully or risk federal prosecution for lying under oath. Depending upon who the creditor is and what questions they ask, the creditor may take additional actions against the debtor such as filing an objection to discharge or an adversary proceeding to determine that the debt is nondischargeable.  If a Bankruptcy Trustee Suspects Fraud If a Trustee suspects fraud either through their own assessment of the debtor’s case or through the debtor’s responses to creditor questions, they have a number of ways to investigate and take action against the debtor, if warranted. Rule 2004 Examinations If a Trustee suspects fraud but does not yet have the evidence they need to object to discharge or move to dismiss a debtor’s case, they can compel the debtor to testify or to produce documents during an examination of the debtor allowed by Bankruptcy Rule 2004. The Trustee may ask about anything and everything having to do with the debtor’s filing, financial behavior before and during their bankruptcy case, and testimony under oath.   Objections to Discharge If a Trustee finds any evidence that the debtor is not entitled to a discharge, they may file an objection. Such evidence may fall short of fraud but may show that the debtor had a previous discharge shortly before filing this case, or that the debtor did not pass the means test. Adversary Proceedings If the Trustee finds evidence to support a finding of fraud, they may file a lawsuit against the debtor or a third party within their bankruptcy case. This lawsuit is called an adversary proceeding.  Again, two of the primary duties of the bankruptcy Trustee is to determine whether the debtor is entitled to discharge and to protect the interests of the debtor’s creditors. To these ends, the Trustee may ask the bankruptcy court to: reverse prepetition preferential transfersset aside prepetition fraudulent transfers obtain hidden or undisclosed property owned by the debtor revoke discharge if the debtor failed to disclose inheritance or other windfall received shortly after their bankruptcy case closedobtain property or funds from employees or officers who have wrongfully taken assets of a business that filed bankruptcyrecover property that has been wrongfully seized by creditors Refer Bankruptcy Crimes to the Office of the United States Trustee for Prosecution Bankruptcy fraud is a federal crime punishable by fines and incarceration. Examples of bankruptcy crimes a debtor may commit include: Knowingly concealing assets or incomeLying under oathBriberyEmbezzlementFiling a fraudulent petition or schedules Creditors in a bankruptcy case may also be prosecuted for fraud if they file a false claim or otherwise lie under oath. The Trustee refers bankruptcy crimes to the Office of the United States Trustee who in turn refers it to the United States Attorney, the Federal Bureau of Investigation (FBI), or other appropriate federal agency for prosecution in federal court. How a Bankruptcy Lawyer Helps Your Case This article is in-depth because as someone considering filing bankruptcy, you need to know what you may be in for. Many innocent debtors get caught up in Trustee allegations of wrongdoing or fraud because they did not know what the Trustee would be looking for and failed to plan for that. Let experienced bankruptcy lawyer David M. Offen guide you through the filing process so that your bankruptcy goes as smoothly as possible. During your initial consultation, Mr. Offen identifies any potential problems that the Trustee might spot and advise you as to how to deal with them in advance. Put his over 20 years of experience to work for you and get a fresh financial start. The post What Does the Bankruptcy Trustee Investigate? appeared first on David M. Offen, Attorney at Law.

Alternatives to Bankruptcy: Money Management Credit Counselling For high income people who can’t quite handle their debt, “credit counselling” can be an alternative to bankruptcy. Credit counselling services–the kind I’m talking about anyway–have agreements with the major credit cards on what payments they will accept through their program.  Professional and ethical standards for credit counselling […] The post Alternatives to Bankruptcy: Credit Counselling Debt Management by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.

Stress May Be Your Heart’s Worst Enemy That’s a headline in today’s New York Times.   I pass that on because as a bankruptcy lawyer I see people defeated by the stress of debt’s they can’t pay.  Good people go for years dragging around bad debts they can’t pay, before they finally take advantage of the […] The post Stress and Your Heart by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.

If you are struggling financially, you are likely researching your options. Should you try debt consolidation or file bankruptcy? Both options have pros and cons, which Philadelphia bankruptcy lawyer David M. Offen will explain in depth. If you have further questions, call the Law Offices of David M. Offen at (215) 789-4749 for your free, no-obligation consultation to discuss how your unique financial situation might best be solved. Debt Consolidation Explained Debt consolidation is the term used when an individual’s debts are compiled and then paid off over time, usually by a company providing this service. A debt consolidation company enters into contracts on your behalf with each creditor and pays them a pro rata share of what you pay the agency every month until the debt is paid. Sometimes creditors will accept somewhat less than you owe – this is called debt settlement. Be advised that you may incur some income tax liability if a creditor forgives part of your debt. This is not the case if you get that same debt discharged in bankruptcy. Debt Consolidation Loans If you have equity in your house or a high credit score and are looking to simply consolidate your debt into one monthly payment, you might consider taking out a debt consolidation loan. A debt consolidation loan will carry a much lower interest rate than any credit card and may make paying off your debt more affordable, especially if you have suddenly experienced financial hardship such as a reduction of work hours or job loss. A debt consolidation loan is not “debt consolidation,” which is a payoff plan brokered by a private company on your behalf. A debt consolidation loan pays off your creditors so that the debt is marked “paid as agreed” on your credit report.  If you can obtain a debt consolidation loan, it often carries less interest than the debt that you want to consolidate, so it is a money-saving option. However, a low credit score will preclude many people from being approved for such a loan. Advantages of Debt Consolidation One low monthly paymentInterest rate is often lower than the debts you are consolidatingOne due date – you don’t have to keep track of when multiple bills are dueThe fewer creditors you have, the more successful debt consolidation can be Issues with Debt Consolidation Your creditors are not required to participate in your debt consolidation plan, meaning that you may attempt to consolidate your debt only to have one or two creditors refuse and insist on being paid individually. If you cannot afford to pay these creditors as well as your monthly debt consolidation payment, they can still put your account in collections, harass you with phone calls and collection letters, and sue you. If they obtain a judgment against you, they can  levy your bank accounts, and in some cases, garnish your wages. If even one creditor does not accept the consolidation plan as often happens, and you can’t pay the creditor as well, then the whole approach of debt consolidation will falls apart  A debt consolidation plan, whether successful or not, negatively impacts your credit score because you are not paying these debts as you agreed in your contracts with individual creditors. This impact can last up to seven years on your credit report. Bankruptcy Explained Bankruptcy is a federal legal process through which individuals and businesses can reorganize their debt and get unaffordable debt discharged, meaning, they are no longer responsible for paying that debt.  Chapter 7 bankruptcy and Chapter 13 bankruptcy are most commonly filed by individual debtors. Businesses may liquidate through Chapter 7 or may file Chapter 11 to reorganize their finances. Advantages of Bankruptcy All of your creditors are legally required to comply with the bankruptcy process;The automatic stay prevents your creditors from taking collection actions against you, including phone calls, letters, lawsuits, garnishment, and bank account levies, as well as foreclosure and eviction;You are discharged of unaffordable debt such as credit cards, medical bills, and personal loans, and you may be able to get income tax discharged;You can legally surrender any unaffordable collateral, such as real property or a car that you do not wish to keep. People do this when, for example, their house has gone way down in value or needs a lot of repairs, or their car needs expensive repairs. You can then have the underlying debt discharged;You can pay off past due debt such as child support, spousal support, student loans, mortgage payments, and car loan or lease payments over time through a Chapter 13 plan;You can strip off second mortgages or HELO Cs as unsecured in Chapter 13;You can cram down your car loan to the current retail value of the car and pay that amount off in your Chapter 13 plan, at prime plus 1-3% interest;You can pay off your car lease balloon payment in your Chapter 13 plan. Filing for Bankruptcy In exchange for the protection of the automatic stay and opportunity to discharge unaffordable debt and catch up with past due debt, you must disclose your income, assets, expenses, and debts in your bankruptcy filing. To be eligible to file Chapter 7 you must pass the Chapter 7 means test. To file Chapter 13, you must show steady earnings or regular monthly income such as regular support from family members in an amount that covers your expenses and the monthly Chapter 13 plan payment. Which is Better: Debt Consolidation vs Bankruptcy There is no firm answer to this because every individual’s financial situation, including liabilities and goals, is unique to them.  Consider the advantages and disadvantages described in this article and discuss your situation with an experienced bankruptcy attorney. They will help you understand what each of these options offer you and whether you have additional options, such as taking out a home equity loan to pay your debt. You need to consider that if you take out a home equity loan and are unable to make the required payments, the creditor is permitted to file a mortgage foreclosure action against the home. You might also consider refinancing or modifying your mortgage, or pursuing debt settlement negotiations. How Either Affect Your Credit Score Both debt consolidation plans and bankruptcy have an impact on your credit.  Debt consolidation, even if successful, can remain on your credit report up to seven years, as can a Chapter 13 bankruptcy filing. Chapter 7 bankruptcy can remain on your credit report for up to ten years. That said, many who successfully file bankruptcy find that their credit score rises somewhat because their debt-to-income ratio improved dramatically following discharge. There are steps you can take to rehabilitate your credit following any action you take to deal with your debt situation. For example, you might take out a secured credit card, use it for usual expenses such as groceries, and pay it off each month to build credit. And while you are not eligible for the most advantageous interest rates, you might take out a car loan and by making those payments in full and on time each month, further build good credit. Talk with an Experienced Bankruptcy Attorney There is no one-size-fits-all solution to solving debt problems. You deserve to have your individual financial situation and goals assessed by a seasoned professional with over 20 years’ experience helping people solve their debt problems. Call us today and discuss your case, free of charge. The post Debt Consolidation vs Bankruptcy appeared first on David M. Offen, Attorney at Law.

Life is full of regrets, big and small. Generally speaking, the most regrettable behavior results from poor planning or a simple...

 https://www.forbes.com/sites/zackfriedman/2022/01/04/is-student-debt-cancellation-next/

    In Chowdary v. Ozcelebi (In re Ozcelebi), 2021 Bankr. LEXIS 3541, Case no 10-70295, Adv. no 21-7001 (Bankr. S.D. Tex. 29 December 2021) the Court ruled on a motion to dismiss a dischargeability complaint for violations of Fed. R. Civ. P. 8(a)(2), 9(b), and 10(b).  The complaint asserted that the debt to plaintiff should be excepted from discharge under 11 U.S.C. §§523(a)(2)(A), (a)(4), and (a)(6).  The Court described the problem as 'shotgun pleadings', e.g. imprecise complaints that fail to give defendants adequate notice of the claims against them and the grounds upon which each claim rests.1  Allegations of fraud require a party to plead with particularity the who, what, when, where, and how of such fraud.2  Rule 10 Fed. R. Civ. P. requires a party to state its claims in numbered paragraphs, each limited to a single set of circumstances.   The 11th Circuit has identified four types of shotgun pleadings.  The most common is a multiple count complaint where each count adopts the allegations of all preceding counts, causing each to be a combination of the allegations in the preceding counts, resulting in a situation where most counts contain irrelevant factual allegations and legal conclusions.3   The second type of shotgun pleading is a complaint is full of conclusory, vague, and immaterial facts not obviously connected to any particular cause of action.4 The third is a complaint violating Rule 10(b) Fed. R. Civ. P. by failing to separate into a different count each cause of action or claim for relief.5   The last type is a complaint that includes multiple claims against multiple defendants without specifying which defendant is responsible for each act or omission.6   Shotgun pleadings unfairly burden the defendants and the courts by shifting to them the burden of identifying plaintiff's genuine claims and determine which have legal support.     In examining the count 1 of the complaint under 11 U.S.C. 523(a)(2)(A), the Texas bankruptcy court found it violated Rule 9(b) by adopting the allegations of all preceding paragraphs (here seven pages of factual allegations), and Rule 10(b) by failing to separate each claim founded on a separate transaction into its own count.  Such 9(b) violations should only lead to dismissal of a complaint when the incorporation significantly impairs the defendant's ability to determine the ground upon which the claim is being asserted.7  However the court found that it was unable to properly parse out which facts in the complaint actually align with the §523(a)(2)(A) claim.  The plaintiff also pled at least three claims arising from distinct transactions under the subsection entitled '11 U.S.C. §523(a)(2)(A) property obtained by false pretenses, a false representation, and/or actual fraud.'  These include allegations related to obtaining a client list, allegations referencing an incident of theft, and multiple instances of bad faith litigation tactics, all of which appear to be separate transactions or occurrences.   Such lumping of transactions into a single count violates Rule 10(b).  The Court required an amended complaint under Rule 12(e).   In examining the §523(a)(4) count  the court noted that the section requires both fraud or defalcation, but that such fraud or defalcation be committed while the perpetrator was acting in a fiduciary capacity; or alternatively that the defendant's actions constitute embezzlement or larceny.   Fraud theories must meet the heightened standard of Rule 9(b), while defalcation, embezzlement, and larceny theories must meet the standard of Rule 8(a)(2).  The Court found the same defects in this count as in the prior.  Plaintiff incorporated all prior factual allegations as well as all allegations in their §523(a)(2)(A) claim.  They also fail to separate each distinct transaction or occurrence into a different count as required by Rule 10(b).  Given that the fraud theories are subject to different pleading requirements an amended complaint was again required on these counts.  The §523(a)(6) claims had the same problems as the prior counts.  In the absence of a short and plain statement of why the plaintiffs are entitled to relief, the court found that they violate Rules 8(a)(2) and 10(b), and again required an amended complaint under Rule 12(e).1 Fed. R. Civ.P. 8(a)(2)↩2 Benchmark Elecs. v. J.M.Huber Corp., 343 F 3d. 719, 724 (5th Cir. 2003.↩3 Weiland v. Palm Beach Cnty. Sheriff's Office, 792 F.3d 1313, 1324 (11th Cir. 2015).↩4 Id, 792 at 1322.↩5 Id. 792 at 1323 n.13.↩6 Id. at 1323.↩7 Martinez v. Nueces Cty. No. 2:13-CV-178, 2013 U.S. Dist. LEXIS 168223 at *7 (S.D. Tax 2013).↩ Michael BarnettMichael Barnett, PA506 N. Armenia Ave.Tampa, FL 33609-1703813 870-3100https://hillsboroughbankruptcy.com

If you are considering filing Chapter 13 bankruptcy or have filed and are having trouble making your Chapter 13 plan payments, Philadelphia bankruptcy lawyer David M. Offen explains what a Chapter 13 hardship discharge is, when you can get a hardship discharge, and what debts a hardship discharge does and does not include. If you are wondering whether you can afford to file chapter 13 bankruptcy or what happens if you suddenly cannot afford your plan payments, call the Law Offices of David M. Offen at (215) 789-4749. We will discuss your options during your free, no-obligation debt consultation. Let us help you file Chapter 13 bankruptcy successfully and get a fresh financial start. Hardship Discharge Definition The bankruptcy court will grant you a Chapter 13 “hardship discharge” when you have not made all of your plan payments yet cannot continue to pay your plan payments due to circumstances beyond your control.  A temporary loss or reduction of income will not suffice. In order to receive a hardship discharge, your income stream must be unavoidably reduced due to something calamitous, such as the loss of ability to work due to an accident or medical problem. Requirements for a Hardship Discharge In order to receive a hardship discharge you must have paid your unsecured creditors at least as much as they would have gotten had you filed Chapter 7, through your Chapter 13 plan. You calculate this amount by assessing the value of your nonexempt assets and adding it up, then distributing each creditor their pro rata share. What are “nonexempt assets?” Nonexempt assets are the assets in excess of those that would have been exempted from your bankruptcy estate had you filed Chapter 7, having met the income limit for filing Chapter 7 bankruptcy. In a Chapter 7, nonexempt assets are sold for the benefit of your unsecured creditors. In Chapter 13, your unsecured creditors are paid at least as much as they would have gotten had you filed Chapter 7, and more if you have more disposable income than that. When You Might Consider a Hardship Discharge You and your attorney should weigh your options carefully if you find that you can no longer afford to pay your Chapter 13 plan payments. If you still have an income stream, you might consider modifying your Chapter 13 plan to reflect a reduction in income, and get a reduced monthly plan payment.  If your circumstances are so dire that even a reduced plan payment is not feasible for you, that is the time to consider requesting a hardship discharge. A Hardship Discharge Won’t Eliminate All Debt A hardship discharge ends your Chapter 13 plan, so your opportunity to catch up with debt such as missed mortgage or car payments, priority tax debts or secured tax debts, or past-due child or spousal support also ends. Once your case closes, those creditors can take collection actions against you. A hardship discharge will not include these types of debts: Secured debts, if you retain the collateralStudent loansGovernment fines and feesIneligible past-due income taxesOther non-dischargeable and priority debts Talk with a Bankruptcy Lawyer If you don’t know whether you can afford to file Chapter 13, or if you filed Chapter 13 and are struggling to make plan payments, call us. We have over 20 years of experience and have filed over 12,000 Bankruptcy cases helping people like you solve their debt problems. Filing Chapter 13 bankruptcy, modifying your Chapter 13 plan, or getting a hardship discharge may be your answer. Call us today to find out. The post Hardship Discharge in Chapter 13 Bankruptcy appeared first on David M. Offen, Attorney at Law.