Here at Shenwick & Associates, we've written extensively about the "means test," which is a complex calculation that debtors must pass to qualify for relief under chapter 7 of the Bankruptcy Code if they're over the median income for their state and household size. Since the means test was implemented as a result of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, we've filed hundreds of Chapter 7 cases, and usually manage to vault potential debtors over the hurdle of the means test. Here are a few of our tips and strategies on how to pass the means test: Determine if a majority of a debtor's debt is non–consumer/business debt. If it is, they are exempt from the means test.Make sure that all of your expenses are listed: Taxes are deductible from the means test–includes FICA, Social Security, federal, state and local income taxes. These can add up for most debtors, and has made the margin of difference between passing and failing in many cases.Involuntary deductions from wages, such as mandatory retirement plans, union dues, uniform costs, and work shoes, but not voluntary 401(k) contributions or loan repayments. Term life insurance, health insurance and disability insurance.Payments on secured claims (for mortgage, car loans, etc.) coming due in the 60 months following filing, as long as the debtor is keeping the collateral. Continuing charitable contributions, up to 15% of gross income.Child care expenses for babysitting, nursery school, daycare and preschool. Out of pocket health care expenses, to the extent they exceed the national standards amount of $54/month per household member under 65 and $130/month per household member 65 or over.Add other members to the household to increase household size. Bring the kids back home!If possible, reduce your income and your spouse's income for six months (the lookback period for the means test). Make sure your expenses from a business or rental property are fully listed to minimize your net income. In one case, a client who was providing independent transportation services failed to listed his expenses. Once we listed those and deducted them from his gross income, he passed the means test.If you have a spouse, make sure that you're deducting any part of your spouse's income not used for the household expenses of you or your dependents (i.e. for your spouse's tax debts or support of people other than you or your dependents).If you have questions about your unique financial situation and whether you might be eligible to file Chapter 7 bankruptcy, please contact Jim Shenwick.
Judge Gravelle of the Bankruptcy Court in New Jersey ruled that a 2nd mortgage secured by property that was owned by debtor and a non-filing ex-spouse of the Debtor can be stripped in a chapter 13 case. In re Mensah-Narh, No. 15-33385 (CMG), 2016 WL 5334973 (Bankr. D.N.J. Sept. 23, 2016). The motion was filed as to the Debtor's residence. The ex-spouse signed his interest to the Debtor by quit-claim deed after the bankruptcy was filed. Both the note and mortgage were signed by both the Debtor and the ex-spouse. There was no evidence the the record as to any requirement in the divorce for him to transfer his interest in the property to the Debtor. Section 506(a)(1) of the Bankruptcy Code permits debtors to modify secured claims by stripping down the secured portion of the claim where the value of the property is less than the secured portion. Nobleman v. Am Sav. Bank, 508 U.S. 324, 328 n.3 (1991) made this available to debtors in chapter 13 cases. While this is not available when there is any equity in the property after the prior mortgages per 11 U.S.C. 1322(b)(2); where the mortgage to be stripped is wholly unsecured, the relief is still available. In re McDonald, 205 F.3d 606 (3rd Cir. 2000). There appear to be few cases involving co-owned properties. An opinion from the Southern District of Florida attempting to strip a lien of a homeowners association found that under Florida law a debtor who is not the sole owner of the asset encumbered by the lien cannot strip off a lien. In re Fernandez, 2013 WL 5976249 (Bankr. S.D. Fla. Nov 3, 2013). The factual situation in the Florida case involved an ex-wife that had discharged her liability in a prior chapter 7, and quitclaimed the property to the debtor 3 months after the filing of the bankruptcy. The Court found that this three month period following the filing of her 7 case prevented the lien strip. [Note 11 U.S.C 523(a)(16) making post-petition homeowners association dues nondischargeable in chapter 7]. A Minnesota decision denied the motion as to a mortgage where the ex-husband quitclaimed his interest in the home to the debtor after a divorce but prior to the bankruptcy filing. In re Brown, 536 B.R. 837 (Bankr. D.Minn. 2015). The court ruled that since the husband remained liable on the mortgage after the quitclaim deed. It found that a non-debtor's liability the the mortgage holder is not a debt matchable to a claim that is allowable or cognizable in the bankruptcy case of a third party to that debt. The obligation of the ex-spouse could not be considered an allowed claim as to the debtor, and 11 U.S.C. 524(e) provides that a grant of discharge does not affect the liability of any other entity on, or the property of any other entity for, such debt. These two cases stand for the proposition that the transfer of ownership interest from the non-debtor ex-spouse to the debtor does not affect the obligation of the ex-spouse to the mortgage holder. Judge Gravelle agreed with this analysis, but found that the filing of the chapter 7 by the debtor modifies the analysis. The estate's interest in the property is an undivided 100% interest not subject to a tenancy by the entirety or a tenancy in common. The fact that the quitclaim deed was executed post-petition is irrelevant, as the estate includes any interest in property that the estate acquires after the commencement of the case. 11 U.S.C. 541(a)(7). The interest of the 2nd mortgage (a single lien securing joint obligations) in the estate's interest in the property (sole and undivided) may be unsecured to the extent the value of its interest (the total amount of the debt owed) is less than the amount of such allowed claim. This leaves the issue of whether Debtor's treatment of the 'allowed claim' in the bankruptcy can affect the debt against a third party, ie the ex-spouse. In Johnson v. Home State Bank the Supreme Court ruled that an in rem claim against property of a debtor that had previously discharged his in personam liability, remains a claim against the debtor. The quitclaim deed gave debtor full ownership of the property, subject to the in rem claim as to the ex-husband. The in personam liability of the ex-husband remains his separate obligation unaffected by her bankrutpcy. Since the in rem claim as to the ex-husband is against property of the Debtor, it is also a 'claim against the debtor' pursuant to §102(s) and is subject to modification under the Code. The in rem obligation, which is enforceable against the owners of the collateral, is an allowable claim under 11 U.S.C. 502(b)(1) because it is enforceable against property that is solely owned by the Debtor. This can be contrasted with the in personam obligation of the ex-husband, which is not an allowable claim because there would be no way to collect from the debtor or otherwise enforce the obligation against her or her property. Allowing Debtor to strip the lien would deny the mortgage the ability to pursue recovery against the ex-husband through the foreclosure process. However, the alternative proposed by Brown and Fernandez ignores the plan language of the Code which makes clear that any in rem obligation as to property of the estate is an allowable claim subject to §506. This decision is consistent with §524(e). Courts in this district have held that a chapter 13 debtor's ability to strip off a wholly unsecured mortgage lien on a principal residence is not contingent upon discharge, but is instead effective upon completion of hte debtor' obligation under this plan. In re Scotto-DiC Lemente, 459 B.R. 558 (Bankr. D.N.J. 2011) (discharge, and completion of plan payments are two separate and distinct events, and fulfillment of plan obligations does not always result in discharge). Prohibiting lien stripping in situations where both mortgagees are not joint debtors would essentially preclude divorced debtors from availiing themselves of the ability to lien strip - a key feature of chapter 13 banrkuptcies. The court set further hearings to determine whether the lien was, in fact, wholly unsecured.Michael Barnett, www.tampabankruptcy.com
If you are struggling to meet your monthly financial obligations, and barely earning enough to make it paycheck to paycheck, a wage garnishment can be more than an inconvenience. It can be absolutely devastating. Ohio law allows for wage garnishments. It also provides relief for some garnishments by way of bankruptcy. What is a Wage Garnishment? When you fall behind in payments for your debts, your creditor may get a court judgment ordering you to pay. The creditor can also get an order from the court that allows them to garnish your wages. A wage garnishment order is a court order to your employer to take a certain amount out of your wages and send it to the creditor. Some creditors can order your wages to be garnished without a court order. This includes: State and federal government for payment of taxes Court-ordered child support Defaulted student loans In Ohio, with only a few exceptions, a creditor can only take up to 25 percent of your disposable income. Disposable income is what is left to you after taxes and other mandatory deductions have been withheld. Health or life insurance are not considered mandatory deductions, so you will have to pay those out of what is left after the garnishment. If there is more than one creditor who has garnished your wages, the maximum amount of your wages that can be held back is still 25 percent unless the garnishment is for child support. In that case, it is possible that up to 50 to 60 percent of your earnings may be garnished for child support. Impact of Filing for Bankruptcy on Wage Garnishment When you file for Chapter 7 or Chapter 13 bankruptcy, all collection action must stop. Since garnishment is considered a collection action, garnishments must stop during a bankruptcy. This does not apply to garnishments for child support. A bankruptcy attorney can inform you as to any other exceptions that might apply. Although the bankruptcy trustee sends a notice to your creditors that collection action must stop, you should contact the creditors that have gone after your wages and inform them that you have filed for bankruptcy. Also, you should give the payroll department of your company notice that you filed for bankruptcy to be sure the garnishment stops. Any garnishments that occurred after the date you filed for bankruptcy must be returned to you except those taken for child support. At the close of the bankruptcy proceeding, debts that are discharged that were the subject of a garnishment before are no longer debts. Thus, the garnishments will no longer be in effect. For more information on wage garnishment and bankruptcy, contact the Chris Wesner Law Office. We will evaluate your individual situation and together we will decide how to proceed. The post Wage Garnishment in Ohio appeared first on Chris Wesner Law Office.
Operating a vehicle impaired (OVI), driving under the influence (DUI), and driving while intoxicated (DWI) are all offenses relating to driving while under the influence of either alcohol or drugs. The state of Ohio does not use DUI or DWI acronyms. It now uses the OVI acronym in all cases of drug and alcohol impairment while operating any vehicle, including non-motorized ones. DUI and DWI: Alike But Different A DUI can refer to the use of alcohol, drugs, or both. A DWI refers only to the use of alcohol. In the states that have DUI and DWI, the difference between the two charges may be more than just the method of impairment. In jurisdictions that have both DUI and DWI, the degree of impairment plays a role in the charge. DUI is a lesser charge, while the DWI is used in cases where there was a higher degree of impairment. Because the state of Ohio does not have DUI or DWI, all charges of this type are labeled as OVI. The OVI Penalties in Ohio The penalties for OVI in Ohio can vary, with the severity of the punishment increasing after each progressive offense. First OVI: In the first OVI, jail time can range from a minimum of three days to a maximum of six months. The fines and penalties range from $375 up to $1,000. The suspension of driving privileges ranges from six months to three years. Second OVI in six years: In a second OVI, jail time can range from a minimum of 10 days to a maximum of six months. The fines and penalties range from $525 to $1,625. Driver’s license suspension ranges from a minimum of 1 year to a maximum of 5 years. An Ignition Interlock Device must be installed on the driver’s vehicle before they may drive again. Third OVI in six years: In a third OVI, jail time can range from 30 days to 1 year. The fines and penalties range from $850 to $2,750. Driver’s license suspension ranges from two to 10 years. An Ignition Interlock Device must be installed on the driver’s vehicle before they may drive again. Fourth or fifth OVI in six years or sixth OVI in 20 years: Jail time ranges from 60 days up to 1 year. Fines and penalties range from $1,350 to $10,500. Driver’s license suspension lasts for a minimum of 3 years, and could be permanent. If driving privileges are allowed again, an Ignition Interlock Device must be installed on the driver’s vehicle before they may drive again. These are the basics, but your fine and jail time could drastically change if you tested well above the legal limit. The Lookback Period The lookback period is the period of time that the state of Ohio looks at previous OV Is. That lookback period is six years. This means that any OV Is in the past six years are included when the sentencing is done. Because OV Is are relevant for sentencing purposes for such a long period in Ohio, it is essential that people facing these charges for a second time or more get experienced legal help right away. Even people facing their first and only OVI have a tough road ahead of them if they don’t have legal help. Chris Wesner has been a practicing member of the Ohio bar since 2007. He can guide you through the court process as efficiently as possible, so that the charges will have the least impact upon your life possible. Contact us today for a free consultation. The post Difference Between OVI, DUI, and DWI and the Penalties appeared first on Chris Wesner Law Office.
No one wants to be the one to have to file for bankruptcy, but filings are actually fairly common. Last year 884,956 American households filed for bankruptcy. Yet, like many unpleasant and scary procedures, bankruptcy’s reputation is based on a few tidbits of truth combined with a lot of embellishment. Falsehoods about filing are rampant, from the people who file to the implications for those who proceed. Truth be told, bankruptcy is not nearly as frightening once you understand it and today we’re shedding some light on the 9 biggest bankruptcy myths. 1) Married Couples Will Both Have To File Assuming you and your spouse both need to file for bankruptcy is assuming you both share the liability for the debt. It’s not unusual for one spouse to have a significant amount of debt solely in their name. In these cases it’s best to file for bankruptcy alone. However, if debt is shared between spouses then both should file. If both spouses are liable for debt and only one spouse files, then creditors can demand payment in full from the spouse that didn’t file. 2) Bankruptcy Permanently Kills Your Credit Under no circumstances will a bankruptcy completely terminate your credit. Sure you can expect limited access to credit and for the seven to 10 years that a bankruptcy remains on your report, but the effects are not permanent. In fact, you’re likely to receive credit card offers within weeks of your debt discharge. Granted, those cards will be secured cards with a low limit. It’s astonishing how quickly credit scores can recover from bankruptcy. A report from the Federal Reserve Bank of Philadelphia revealed that those who file for Chapter 7 bankruptcy in 2010 had an average credit score of 538.2 on the Equifax scale of 280 to 850. In the six to eight months it took for bankruptcies to be finalized, scores jumped up to an average of 620. Your credit will be far from doomed should you file for bankruptcy. 3) If You Recklessly Spend Right Before Bankruptcy You Won’t Have To Pay That Money Back Being that credit card debt is dissolved in Chapter 7 bankruptcy, in theory you should be able to embark on a spending spree ahead of time and have all of the debt removed in court…right? This is a common misconception some people fall believe. Courts have ruled that racking up charges ahead of a bankruptcy filing is considered fraud. Moreover, debt that is incurred as a result of fraud is not discharged. Unfortunately, bankruptcy won’t afford you a debt free shopping spree. 4) Bankruptcy Discharges All Debt Many file for bankruptcy hoping for a clean slate and fresh start, which isn’t quite the case. Chapter 7 bankruptcy will discharge most unsecured debts such as personal loans, utility bills, credit card charges, medical bills, and back rent. Chapter 7 can even relieve you of secured debts under certain circumstances, but not all debt can be discharged in bankruptcy. Debt arising from child support and spousal support cannot be removed under any circumstances. Similarly, as a result of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, student loan debt is also undissolvable along with most tax debts. 5) Bankruptcy Filers Are Financially Irresponsible It’s easy to wave off bankruptcy filers as reckless spenders who don’t understand how to manage their own finances, but more often than not, bankruptcy is not the result of a personal failing. In fact, the three major causes of bankruptcy are divorce, severe illness, and job loss. Many avoid bankruptcy fearing it as an admission of failure or character flaws. However, bankruptcy is a financial remedy that is available all US citizens for a reason. Long-term unemployment, the legal fees, and support costs associated with divorce, and the high cost of medical care have driven many well-intentioned Americans into bankruptcy. From 2013 to 2016 the average long-term unemployment rate hovered at 1.84%, leaving 2.8 million Americans out of work for six months or more at a time. Furthermore, the cost of medical deductibles has grown seven times faster than wages. Hence, bankruptcies are likely the result of stagnant wages and an unhealthy economy rather than poor financial management. 6) You’ll Lose Everything In Bankruptcy If you file for bankruptcy you can rest assured knowing you won’t be left out on the street with nothing to your name other than your underwear. Most property in a bankruptcy filing is exempt and debtors rarely lose anything at all. Assets considered exempt vary from state to state, but your house, vehicles, and clothes are safe. Even the items that aren’t exempt creditors often don’t want. Your flat screen T Vs and smartwatches are worthless to a creditor. Many assets either have little intrinsic value or are overly encumbered with debt. 7) You’ll Lose Nothing In Bankruptcy Conversely, there’s the myth that attorneys hold more power than they really have. Some people make the mistake of believing that an attorney can shield all of their assets, from the yacht to the mansion. In reality, you’ll lose a fair amount of things in a Chapter 7 bankruptcy. Property that isn’t protected by an exemption is at risk and unnecessary luxury goods that are completely paid off can be sold with the proceeds applied to the debt. Sure, you’ll hear stories about the lucky filers who managed to keep their mansions and boats within their possession, but chances are they didn’t fully own the property. Assets that are leased, rented, or heavily leveraged cannot be used by creditors. 8) It’s Hard To File For Bankruptcy It’s actually quite the opposite. Technically speaking, you don’t even need an attorney to file for bankruptcy. You can fill and file all of the paperwork yourself. However, it’s not recommended you file without legal aid. There are a few components to filing a bankruptcy that you could unknowingly mess up. You could file under the wrong chapter, incorrectly cite property exemptions, or even fail to adequately defend against an action seeking to deny discharge. In many cases people file for bankruptcy completely unaware that there are other alternatives available to them that may be a better fit for their situation. In any case, it’s best to consult with an attorney first to discuss your options. 9) You Can Only File For Bankruptcy Once There’s always the chance you may find yourself in a financial rut more than once in your lifetime. Luckily, you can file for bankruptcy more than once should you need to. You can file for Chapter 7 bankruptcy once every eight years. Chapter 13 reorganizations can be filed once every two years, but because it typically takes three to five years to complete a Chapter 13 repayment plan, you can normally file for a new Chapter 13 immediately after your previous reorganization ends. Nonetheless, just because you can file for another bankruptcy doesn’t mean you should. Multiple bankruptcies do not look good and can deteriorate your credit rating. It’s best to only file for an additional bankruptcy if it’s absolutely necessary. The post The Top 9 Bankruptcy Myths appeared first on Chris Wesner Law Office.
Chapter 7 Bankruptcy: Best Plan or Best Guess? Donnell’s Chapter 7 bankruptcy got discharged this month. We have about 30 to 40 bankruptcies discharged—that means approved and done—every month. But Donnell’s was special. He explained why, when he wrote me one of our best reviews ever. You can read it here. Donnell says he […]The post Bankruptcy: Best Plan or Best Guess? by Robert Weed appeared first on Robert Weed.
The New Agreement Getting paid as a chapter 13 debtor’s attorney has always proven somewhat difficult. Not the least of which is that the debtor typically must make chapter 13 plan payments from which counsel can be paid. Add on top of that the fee application, the fee order and the presentment been before the+ Read More The post New Court Approved Retention Agreement For Chapter 13 Cases Arrives Suddenly appeared first on David M. Siegel.
The 11th Circuit upheld sanctions against the Florida Department of Revenue for garnishing a chapter 13 debtor's travel reimbursement check post-confirmation to collect child support. In re Gonzalez, No. 15-14804, 2016 WL 4245422, at *1 (11th Cir. Aug. 11, 2016). The amended plan as confirmed provided for the $2,400 claim filed by the Florida Dept. of Revenue for past due child support, and direct payment of on-going child support. Subsequent to confirmation, the Florida Dept. of Revenue intercepted a $4,700 check for reimbursement of Debtor's travel expenses, thereby preventing Debtor from paying his government issued credit card and putting him at risk for suspension from work. Debtor's counsel filed a motion to hold the Dept. of Revenue in contempt. At the hearing the Department agreed to release the funds, and cease further collection efforts, but did not concede that the actions constituted a violation of the automatic stay or violation of the confirmed plan. The Bankruptcy Court for the Southern District of Florida found that the Dept. of Revenue actions violated the confirmed plan and awarded fees to Debtor's counsel. The Department appealed, and the ruling was affirmed by the District Court. A subsequent appeal was taken to the 11th Circuit. At the circuit court level, the Dept. of Revenue argued that 11 U.S.C. 362(b)(2)(C) permits withholding of income that is property of the estate or property of the debtor for payment of a domestic suppport obligation under a judgicial or administrative order or statute. It further argued that the legislative history showed four objectives in the BAPCPA amendments regarding Domestic support obligations: 1) that the courts should interfere as little as possible with the establishment and collection of ongoing support; 2) that the Bankruptcy Code should provide a broad and comprehensive definition of support which should then receive favored treatment in bankruptcy; 3) that the bankruptcy process should insure continued payment of support and arrearages with minimal participation by the creditors; and 4) that the bankruptcy process be structured so as to permit the debtor to liquidate nondischargeable debt to the greatest extent possible and emerge from the process with the freshest start possible. The 11th Circuit focused on 11 U.S.C. 1327(a) providing that the terms of a confirmed plan bind the debtor and each creditor. No exception is provided in §1327(a) for domestic support obligations. Although the DOR makes a strong legislative-intent argument for DSO creditors to collect post-petition—something clearly authorized by § 362(b)(2)(C)—it falls short of demonstrating that Congress intended the exception for the automatic stay to similarly apply following the confirmation of a plan. Rather, the Congressional Record only indicates that Congress sought to enable a DSO creditor to reach assets of the estate post-petition without having to seek relief from stay because “a support creditor had no way of obtaining either on-going support or prepetition support arrearages.”In re Gonzalez, No. 15-14804, 2016 WL 4245422, at *4 (11th Cir. Aug. 11, 2016). This concern does not exist post-confirmation, since the Code requires domestic support oblgations to be paid in full through any confirmed plan. The court also reaffirmed the pre-BAPCPA case of In re Rodriguez, 367 F. App'x 25, 26 (11th Cir. 2010) affirming an award of fees against the Department of Revenue for collection of domestic support obligations after confirmation of a confirmed plan. This despite the fact that the conduct was not a violation of the automatic stay. Rodriguez in turn relied on the case In re Gellington, 363 B.R. 497 (Bankr. N.D. Tex. 2007). In this case the court found the Texas Child support division violated the confirmed plan since the plan binds all creditors because “an order confirming a Chapter 13 plan is res judicata regarding all issues that could have been decided at the confirmation hearing. Because the debtor's plan in Gellington did not have any provision permitting the CSD to garnish the debtor's wages, the bankruptcy court found the CSD's collection efforts in violation of the plan.A plain reading of § 1327(a) makes clear that the binding effect of a confirmed plan encompasses all issues that could have been litigated in Gonzalez's case—including whether the DOR could intercept Gonzalez's reimbursement payment. Accordingly, because Gonzalez's plan fell silent on the issue of whether the DOR could intercept Gonzalez's reimbursement payment, the DOR was prohibited from taking such action.In re Gonzalez, No. 15-14804, 2016 WL 4245422, at *6 (11th Cir. Aug. 11, 2016)Michael Barnett www.tampabankruptcy.com
Nature Of The Debtor This is the chapter 7 bankruptcy case study for Mrs. C., who resides in Wheeling, Illinois. She has come to the office with the simple thought in mind to eliminate her outstanding credit card debt and medical debt. She has been struggling for approximately three years. Although she has been+ Read More The post Case Study For Mrs. C. From Wheeling, Illinois appeared first on David M. Siegel.
When someone is looking to file chapter 13 bankruptcy, they obviously want to pay back as little as possible. They also want to gain the greatest amount of relief during the process. There are a number of factors that go into determining whether or not the monthly payment is going to be high, low, or+ Read More The post Paying Back As Little As Possible Under Chapter 13 appeared first on David M. Siegel.