If you are a cosigner on the debt, then you and the other debtor are technically joint and severally liable for that debt.  One common form of debt that’s jointly owned is that for a vehicle.  If somebody else filed a Chapter 13 bankruptcy on it vehicle that you cosign, you may be protected under+ Read MoreThe post If I am a cosigner on the debt, how does Chapter 13 affect me? appeared first on David M. Siegel.

This is the case of William Forte, who comes to see me from Great Lakes, Illinois which is Lake County, Illinois regarding a Chapter 7 bankruptcy petition.  He did file a bankruptcy back in 1999 under Chapter 7.  It’s been over eight years so he is eligible to file again.  He does not own a+ Read MoreThe post The Case Tilts Toward A Chapter 7 Bankruptcy Filing appeared first on David M. Siegel.

 What happens to your co-signers when you file a Chapter 7 bankruptcy?  Can you avoid damaging your co-signer’s credit report? It used to be that if you filed bankruptcy, your co-signer’s credit report would immediately show the account as “included in bankruptcy.” That happened even if you or the co-signer kept paying the account on […]The post Bankruptcy and your co-signer’s credit report appeared first on Robert Weed.

Allied Cash Advance does NOT legally do payday loans in Virginia On Google, Allied Cash Advance does payday loans.  But they tell the State of Virginia that they don’t. To legally do payday loans in Virginia, you have to have a payday loan license.  Allied dropped their payday loan license in 2009. (Here’s the list. […]The post Allied Cash Advance is Not Legally a Payday Loan Company appeared first on Robert Weed.

This is the case of Melika Murray who comes to me from North Chicago which is Lake County, Illinois for a bankruptcy consultation.  Ms. Murray has never filed for bankruptcy before, even though she states that she has been struggling for debt for over 20 years.  She owns no real estate.  She is renting and+ Read MoreThe post Chapter 7 Bankruptcy Would Provide The Fresh Start Needed appeared first on David M. Siegel.

This is the case of Jeffrey and Debra Miller who live in Gilberts, Illinois which is in Kane County Illinois.  They were here for a consultation on either Chapter 7 or Chapter 13 bankruptcy.  As we run through the facts here, they have not filed a bankruptcy before.  They do own a home with a+ Read MoreThe post Bankruptcy Filing Will Depend Upon The Means Test appeared first on David M. Siegel.

We filed a chapter 13 bankruptcy case for a couple we’ll call Larry and Laura.  This allowed them to pay their debts off with one monthly payment over a period of 5 years.  But things went south for them.  Larry lost his job and one of them had to go to the hospital. The co-pays and deductibles were more than they could handle.  They could no longer afford to make chapter 13 payments.  But they still wanted to get out of debt.  So we decided together to convert, or switch, their case to a Chapter 7 even though they weren’t eligible to file for chapter 7 when we first met them. That’s because they were making enough money back then that the Bankruptcy Code would call their case an “abuse” under the “means test”. The US Trustee didn’t like Larry and Laura’s idea to discharge their debts in chapter 7.  That’s because they used to afford a chapter 13 case and five years’ worth of payments.  The US Trustee thought it was Larry’s fault he lost his job and that they couldn’t pay their hospital bills. We help people file for bankruptcy in chapter 7 and for bankruptcy in chapter 13.  We help individuals and married couples determine what kind of bankruptcy is right for them.  If you are eligible for chapter 7, we help you file for immediate relief.  If you are eligible for chapter 13, we help you figure out the lowest payment you are legally required to pay. Whenever we file a bankruptcy, the Office of the United States Trustee, a part of the Justice Department, reviews the bankruptcy paperwork.  What does the US Trustee’s office do?  The US Trustee’s job acts as a gatekeeper and make sure that filers are entitled to a “discharge” of debts in bankruptcy.  The office also reviews the “means test” and other schedules to see if Chapter 7 filers should be in Chapter 13.  Sometimes, they believe someone doesn’t deserve a bankruptcy discharge and in even extreme cases, they will refer cases where people may have committed bankruptcy crimes to be prosecuted by a U.S. Attorney in federal court. When the US Trustee objected to Larry and Laura “converting” their case from chapter 13 to chapter 7, Lakelaw went into action. Lakelaw proved to the Milwaukee Bankruptcy Court that Larry and Laura lost income because Larry lost his job.  Not only that, we established the hospitalization was something they didn’t want to happen.  So even through their original income was very generous, it wasn’t enough to pay creditors now. The Bankruptcy Judge agreed with Lakelaw, so Larry and Laura are now eligible to file for chapter 7 and get a prompt discharge of most of their debts.  The US Trustee’s unreasonable position was defeated.  We did this for Larry and Laura as part of our normal services.  When you hire Lakelaw for your bankruptcy, we advocate for your interests from start to finish. Count on Lakelaw to stand up for you.  The US Trustee acts to fight cases it thinks are wrong, but we fight for people who deserve a bankruptcy discharge.  Call or e-mail us to tell you how we can fight for you.

Mention tax calculations to a bankruptcy attorney and 7 out of 10 freeze on the spot. I’m not a tax attorney, they retort. That’s right, but, if you are a bankruptcy attorney, that doesn’t relieve you  from knowing enough tax to get the means test right. Not to mention not giving up your client’s tax refund to the Chapter 13 trustee. Mistakes made simple It’s so easy to go wrong, when it comes to taxes. Your petition preparation software has you input the deductions from the debtor’s wages.  By default, those withheld taxes are carried over from the CMI look-back income to the projected future taxes incurred. Great, no thinking required. But wait!  Have you verified the connection between the taxes withheld and the actual tax liability? If not, you’re courting a mistake. Taxing questions To figure out whether the withheld taxes are right, or close to right, going forward, you need to ask questions of the documents in your possession and of the client sitting across the table from you. For the purposes of this exercise, let’s assume that the client tells you that things are essentially unchanged from the situation in the last tax year. Did client get a refund last year? A refund indicates that more money is being withheld from the client’s paycheck that he will owe in taxes.  Using the paycheck withholding for projected taxes incurred will overstate the allowable deduction for taxes. Since we have determined that things are essentially unchanged from the prior year, you need to reduce the tax deduction by 1/12th of the refund received. If this is a Chapter 13 and your local practice requires the debtor to turn over the tax refund to the trustee, you also need to advise the client to reduce the amount withheld to match the expected tax.  Otherwise, he’ll be living without the amount overwithheld during the year, and handing it to the trustee when the refund arrives.  Not smart. Because Schedules I and J and the means test are both projections, your  means test income tax number should match the amount withheld for taxes on Schedule I. Did client owe money last tax year? If the client wrote a check with his last tax return, or worse yet, owed money and couldn’t write the check, you need to make changes to the tax projections on B-22. The amount withheld on the pay stubs understates the taxes to be incurred post petition. Getting a number good for the year as a whole simply requires that you add 1/12th of the amount owing in excess of withholding at the end of the tax year to the “taxes withheld” number from the pay stubs on B-22. But the problem is a bit stickier. Suppose it’s July 1 when you’re doing your calculation, and the client is $500 a month underwithheld.  You can add $500/month to his taxes, and going forward, that keeps him from falling any further behind. But when April comes around, if the client has only added $500/month to withholding for the last half of the year, he’s still facing a $3000 shortfall representing January through June’s underwithholding. It’s not clear to me whether you can add that amount to the means test deduction, but you certainly want to budget on Schedule J for a “current year income tax catch up” amount. Otherwise the debtor faces a tax bill for which he has made no provision. When things change As we know, not all of our clients live lives without substantial changes. Another time, we’ll walk through how to approximate the tax numbers when the current year and/or the years to come are not the same as the year represented in the prior year’s income tax return. It’s not too late to vote Please take a minute to cast a vote for Bankruptcy Mastery in the ABA’s poll of favorites among their 100 Top Blawgs for 2013.  Mastery made the top 100.  I’d really appreciate your vote for this site in the Niche category.  Vote here.   Round up friends and co workers and get their vote, too.  Unfortunately, you can only vote once for Mastery.  But you can scan the other real winners among the best of 2013. More on the means test Means test and health insurance Business income and the means test Escaping the means test altogether Image courtesy of Flickr and SalFalko.     

Togetherness is nice at the holidays. Don’t overlook the ability to keep your client and litigation that you want or need to go forward post petition together, in bankruptcy court. You can keep them together by removing pending state court actions to bankruptcy court. I say “bankruptcy court” because that’s almost inevitably where the case, removed according to statute to the district court, will end up. Removal will promote efficiency and hopefully consistent rulings. Removing actions to bankruptcy court The relevant statute is 28 USC 1452. In contrast to the removal statutes that precede it in the chapter, where the right to remove is confined to defendants, §1452 entitles “a party” in a civil action to removal when it relates to a bankruptcy case. The right to removal requires the district court (read “bankruptcy court”) to have jurisdiction of over the claim under 28 USC 1334. Section 1334 helpfully provides: (e) The district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction—(1) of all the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate…. That covers a lot of territory. Removal procedure The time lines and the how-to’s are found in FRBP 9027. Different deadlines cover cases pending in other courts when the bankruptcy case is filed contrasted with cases filed elsewhere during the pendancy of the case. Actions pending at commencement of the bankruptcy are removal for the longer of 90 days from the order for relief, or other shorter periods running from termination of the stay or appointment of a Chapter 11 trustee. Actions filed while the bankruptcy is pending may be removed within 30 days of service of the summons. Removal is accomplished by giving notice of removal, accompanies by the “short and plain” statement of the facts entitling the movant to removal. The notice is to be accompanied by a copy of all the pleadings in the court in which the matter was originally filed. The propriety of removal can be challenged by a motion to remand.  Rule 9027(d). Add removal to your quiver of weapons when there’s war in your client’s future. There’s still time to show your support for Bankruptcy Mastery in the ABA’s poll of 100 Top Blawgs for 2013.  Voting is open til December 20th.  I’d appreciate your vote in the Niche category.  Vote here. Image courtesy of Flickr and Dev null. 

Bankruptcy Mastery was selected one of the 100 top Blawgs of 2013 by the American Bar Association! I’m blown away. Mastery serves such a distinct segment of the law world that I never expected that anyone beyond bankruptcy lawyers, and new bankruptcy lawyers at that, would notice. But someone did notice (thank you whoever nominated this site). Now, the ABA has opened voting for the top blog within 13 different segments.  Mastery is in the Niche category, along with several blogs in the ABA’s blog Hall of Fame. My goal is at least not to finish last in my group<g>. Please vote I would very much appreciate your vote.  Register here, take a look at the marvelous blogs nominated, and vote your conscience <G>. Then line up friends, family, and sycophants.  Solicit their votes! Read a few of the other top blogs.  There are some workhorses here. Come back here later in the week, when I’ve stopped grinning about this honor and am back to thinking about how we can be better bankruptcy lawyers.