Many individuals find themselves facing a bankruptcy more than once in their lifetime.  If you are considering filing for bankruptcy and have filed in the past there are a few things you need to know.  There are waiting periods between filing for bankruptcy if you want your debt to be discharged.  Technically, you can file for bankruptcy protection at any time, but if you re-file to soon you may not get a discharge and then will be faced with another waiting period.  There time frames are as follows: If you previously filed a Chapter 7 Bankruptcy the waiting period before filing for another Chapter 7 Bankruptcy is eight years. If you previously filed a Chapter 7 bankruptcy the waiting period before filing for a  Chapter 13 Bankruptcy is six years. If you previously filed a Chapter 13 Bankruptcy the waiting period before filing for another Chapter 13 is two years. If you previously filed a Chapter 13 Bankruptcy the waiting period before filing for a Chapter 7 Bankruptcy if six years. The waiting periods are from filing to filing.  For example, if you filed a Chapter 7 Bankruptcy on March 1, 2004 you would be eligible to file again on March 2, 2012.  The discharge date isimmaterial here.  Further, the waiting periods are only applicable if you actually received a discharge.  If you Chapter 7 was not discharged you would be eligible as if you had not filed.  If your Chapter 13 was dismissed prior to completion you would not need to worry about the waiting period.  However, if you are filing for a second case and there are any unpaid court fees from a prior case they will need to be paid in full and you may not be eligible to pay your current court costs in installments.  Further, depending on when you filed, the stay in bankruptcy may not be automatic, or may be for a limited time period.  However, your attorney can file a motion to extend the automatic stay to protect your assets. If you have questions, or would like to schedule a consultation, contact a St. Louis Bankruptcy Attorney today!

As the law stands now, it is difficult to get student loans discharged in bankruptcy. For many years, student loan recipients under federal government programs like, Stafford and Perkins loans, have not been able to discharge their loan debt through bankruptcy. A new portion of the law was enacted in 2005, which added the stipulation that private loans from banks would also not be eligible for discharge in bankruptcy petitions.    Sometimes, the lender has their own regulations in place under which student loans can be forgiven. A debtor should first contact the lender and describe the situation that causes the default of the debt. A Universal discharge application used for all Federally Subsidized Loans can be found here.   Even though student loan debt is difficult to discharge in bankruptcy, it is possible to do so. The borrower needs to show that payment would cause him undue hardship. Different tests by courts are used to determine if undue hardship exists for the borrower on an individual basis. The Brunner test is often used for proving this hardship. The requirement of the test is met if a bankruptcy petitioner can’t maintain a “minimal” standard of living for the debtor and his family if he has to pay his student loan payments. It must be shown that circumstances are present that will probably continue for the entire repayment period. In addition, the debtor needs to have made sincere attempts to repay the loan. These rules (Brenner v. New York State Higher Educ. Servs. Corp. 831 F.2d395 (2dCir.1987) are the standard, but courts show some flexibility. If you or your attorney can show undue hardship, you won’t be responsibility for your student loan debts.  In order to discharge student loans, the debtor would file an adversary proceeding arguing undue hardship. The court then would need to decide whether the student loan can be discharged (Rule 7001, Federal Rules of Bankruptcy Procedure). Even if you have already filed for bankruptcy, you can reopen the case to include a request for determination of undue hardship. The court is charging court cost for reopening the case, and your bankruptcy attorney might charge an additional fee for handling the adversary proceeding.   In past cases, circumstances that can lead to discharge of loan debt are varied. In some cases, circumstances such as low income and high expenses, disability, high medical costs, attending fraudulent schools, ongoing mental illness and sometimes alcoholism. Courts interpret circumstances differently so decisions vary somewhat.   The St. Louis Bankruptcy court granted in a recent decision the discharge of student loan debt in a case where a debtor was mentally ill and the doctor provided a statement from his doctor stating that the patient was not able to work anymore.   In a different case, the court denied the discharge of student loan debt in a decision involving a debtor who had income but had several dependents and was unable to pay for basic needs and pay student loans. The court stated economic hardship is not sufficient to establish undue hardship.   The leading case about hardship discharge for the St. Louis Metro area (Eastern District of Missouri) is in re Jesperson. The debtor was an alcoholic who was not able to work due to his addiction.   If the debtor receives Social Security Disability, it might be possible to obtain an agreed order from the lender to the discharge of the student loan. Otherwise a statement from a doctor or having the doctor testify about the medical condition will be beneficial to win the case.    In cases where loan debt discharge, using a plea of undue hardship doesn’t seem likely, another option is to file for Chapter 13 bankruptcy. This is a reorganization of debt in order to pay creditors over time using future income. The debtor will be able to continue to pay the ongoing student loan payments and lower or eliminate payments on other debts.    What happens with the co-borrower’s (most often the parents) liability when the borrower received a discharged of his student loan debt?   The answer depends on the student loan. When it is a Federally Subsidized Student Loan, and the Federal Student Loan guarantor determines that the borrower has a total and permanent disability, the debt will also be discharged for the Guarantor (the parents). This information is available from the Rights and Responsibility Letter the borrower signs when taking out the student loan.   It is different for Parent Plus Loans, even when the borrower becomes disabled, the parents still will be liable for the repayment of the loan. For the question whether tuition is dischargeable or is handled the same as student loans, watch my video about tuition or read the article.

I learned something new last week and it took the ***!#### means test to teach it to me. The case involved a couple where the non filing wife ran an interior decorating business.  The income and expense information we were presented with showed “lots” of money flowing through the business. Subtract the given business expenses and our figures said these folks should be paying several thousands of dollars a month. Yet the oral narrative said they were driving old cars, the house needed maintenance, and they hoped for a total payment in the $500 range. The problem We got the bookkeeper prepared income and expense statements.  My partner and I sat together huddled over tax returns and a calculator to try to find the disconnect.  Something was missing.  Why did the numbers show gobs of money, and the clients cry poor? It wasn’t until I dragged both of them in to go over what we had that I learned something new:  the sales taxes didn’t appear on an income and expense statement. Bingo!  Evidently, in bookkeeper-speak ,  taxes aren’t a business expense.  They get paid, and these clients were paying them, but the standard accounting form didn’t show them.  Subtract the sales tax, and the means test worked. And as I talked to them, I learned the freight charges paid on the goods the decorator ordered weren’t on the expense statement either. The lesson So, the narrow take-away is that some taxes don’t appear on Quickbooks income and expense statements. The broader lesson though is the need to keep digging til you’re convinced you have the numbers right. Sometimes what you see is the reverse of my problem:  lifestyle that is inconsistent with the money flowing through the bank.  You have to ask if the client is helping themselves to cash from the till or whether the business is paying some of the personal expenses. I love business cases and business people.  Add a facility with small business to your skill set and the world of clients who need you expands.  But keep asking questions til you get the answers that make sense and fill the gaps. Image:  Gorilla-Fotolia.com    

Can a school withhold school transcripts until tuition is paid? A common scenario: our bankruptcy client owes school tuition and need a transcript from the school. The school was listed on the bankruptcy petition, but is withholding the transcript because of the outstanding balance. Can they do this? Do you have to pay in order to get the transcript? The school tuition might be considered an educational loan made under a program funded in whole or in part by a nonprofit institution pursuant to 11 U.S.C. §523(a)(8). Even though the tuition might be non-dischargeable, withholding the transcript would constitute a collection effort and violate the automatic stay. In our district, the Eastern District of Missouri (St. Louis area), the court decided this issue in the decision In re Carson, 150 B.R. 228 (Bankr. E.D.Mo., 1993). Logan College of Chiropractic told the student that he could not obtain a transcript of his records and that he would be prohibited from attending the graduation ceremony unless payments were made for the payment of tuition. The court held that the action by the College to withhold confirming a degree and to withhold delivery of transcripts is an act to collect a pre-petition debt. This act is stayed by the operation of Section 362. But be aware, this decision is old and the judge is not at the court anymore. Such a case might be decided differently today. In the above case, the judge made the school provide the transcript with the argument withholding violated the automatic stay. However, if the tuition is non-dischargeable, the court is more likely to allow the school to withhold the transcript. So when is tuition dischargeable? It depends on the school. §523(a)(8)(B) talks about an educational loan. Many people think that tuition is not a loan and think §523(a)(8)(A)ii is applicable which talks about “funds received”. But the applicable section is (B) which refers to a qualified educational loan which is defined as a “qualified higher education expense”. So we get away from the word loan and are now looking at an expense which is the cost of attendance an “eligible educational institution”. The question is what is an eligible educational institution (20U.S.C. 1088). Primary school is not “higher education”, that means K through 12 grade, sorry, tuition is discharged and transcript must be released. What about trucking school, beauty school, and we even had the question whether helicopter school tuition is dischargeable? These schools might be qualified educational institutions. A school can meet the requirements with just 15 weeks of instruction or 10 weeks if an associate degree is required for admission.

  If there’s a bright spot in the midst of this recession, it’s the thrill bankruptcy lawyers get in stripping mortgage liens from underwater property. Action taken at the depths of home values will benefit clients long into the future if the client can hang on to the home til things recover. Yet I hear lawyers wrestling with  lien stripping worries revolving around mismatches between who’s on title to the property; who is liable on the debt; and whether the necessary persons are in bankruptcy. Let me suggest that the issue is simpler than that and invite you to tell me if I’m missing something It’s all about the property Put simply, my proposition is that the only one of the questions posed above that matters is: does the bankruptcy estate include all of the property from which you want to strip a lien? Or, put another way, in the affirmative, a bankruptcy court can only strip a lien from property of the estate. Lien stripping is grounded in the idea of an allowed secured claim.  Section 506(a)(1)  provides: An allowed claim of a creditor secured by a lien on property in which the estate has an interest, … is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property, Notice that secured status has no connection to whether it is the debtor who is liable on the underlying claim.  The focus is on the property which is property of the estate. Lien stripping in practice Suppose the debtor inherited the real property in question from his grandmother subject to liens in favor of her creditors.  In the debtor’s bankruptcy case, a lien securing the grandmother’s promise to pay Big Fat Bank is just as strippable as if the debtor was the borrower.  As long as the property which is collateral for the debt is before the court, the lien is subject to valuing, and stripping. Contrast a case where the debtor is a co tenant with a sibling on the same inherited house.  Both halves of the house are subject to the bank’s lien.  If only one heir files bankruptcy, only that heir’s interest in the house is property of the estate, and the court can only strip the lien from the fraction of the property that is in the bankruptcy estate. The more common fact pattern seems to be that one spouse is on title to the property and the other spouse is liable on the note.  If applicable law brings all the real estate into the bankruptcy estate, then who took the loan is irrelevant.  It’s strippable to the extent the collateral is property of the estate. Get this problem pinned down, and life as a bankruptcy lawyer is easier. Image courtesy of wikimedia and some ancient Greek.

Because bankruptcy is a legal process that is intended to help consumers and businesses deal with the debt they are unable to pay, bankruptcy fraud is considered a federal crime. Being honest and fully disclosing information and details about your situation not only helps your bankruptcy attorney understand your financial background, it helps the court in determining the best outcome for your case. Providing false details may lead to paying a hefty fine, criminal charges and even imprisonment.Bankruptcy fraud can be committed in different ways such as hiding or concealing assets, filing too many times during a short time period or making false statements in court. Withholding information about assets is the most common type of fraud. This may even include transferring of assets such as bank account funds or property title. With multiple filing there have been debtors known to file with assumed or fictitious names. They may occur in more than one state while failing to submit a complete list of assets in each filing.Concerns about assets should be discussed with your bankruptcy attorney. Some may feel the need to hide certain assets when filing bankruptcy but the concept could make your case more complicated and lead to your case getting dismissed without a discharge. In many cases, you can still retain most if not all of your assets since bankruptcy provides several exemptions depending on which chapter is filed.Working with an experienced legal counsel can help you understand your financial situation, review equity in detail, give clarity on what to expect during your bankruptcy case and ensure legal procedures are followed accordingly to avoid your case from being dismissed or, even worse, being accused of bankruptcy fraud. --> 

What Is An Automatic Stay in Bankruptcy? In Bankruptcy, an automatic stay protects a debtor from creditors.  The automatic stay prevents a creditor from collecting on debts incurred by the debtor.  The automatic stay is effective immediately upon the filing of the bankruptcy.  As soon as the bankruptcy is filed and a case number is obtained, creditors may no longer pursue judgments, garnishments, foreclosure proceeding, or repossessions.  Creditors also must cease all phone calls, letters, e-mails, and any other form of communication with the debtor.  It is not legal for them to continue attempts to collect on any debts. However, secured creditors can ask the court for a motion for relief from the automatic stay.  A secured creditor has a claim on a debt that is secured by collateral, such as a mortgage on a home or a loan on a vehicle.  If a debtor is not current on their secured debts, the creditor can file a motion for relief.  When a motion for relief is filed, if the debtor does not become current or make arrangements with the secured creditor, the court can grant the motion for relief.  When that is granted, that gives the secured creditor permission to repossess or foreclose on the property.   The debtor is then no longer protected by the automatic stay from those particular creditors. There are exceptions to the automatic stay.  For example, if a debtor is in a situation where their landlord gets a rent and possession judgment against them for rent before the filing of the bankruptcy, that is not protected by the automatic stay.  The automatic stay has certain limitations.  If a debtor has had more than one bankruptcy case pending in the one year prior to the filing of the current bankruptcy, their automatic stay is limited to 30 days.  The debtor would have to file a motion to extend the automatic stay in order for it to last the entirety of the bankruptcy, which would state why circumstances are different with this bankruptcy and that it was filed in good faith.  If two or more bankruptcies have been pending in the last year, there is no automatic stay. If you would like to learn more about this issue or have any other questions, please contact a St. Louis or St. Charles attorney.

What Are Some Common Exceptions to Discharge in a Bankruptcy? In a bankruptcy, there are some common exceptions to discharge.  This means that there are certain things that are unable to be eliminated through a bankruptcy.  According to the United States Bankruptcy Code, Section 523, Debtors are unable to discharge certain taxes.  If the taxes are more than three years old from the date which they are due, i.e. April 15, they are able to be discharged as long as they were filed in a timely manner and were filed more than two years prior.  For example, if it is February 1st, 2012, debtors would be able to discharge taxes for the year 2007 and earlier.  If it is May 1st, 2012, debtors would be able to discharge 2008 and earlier because it is after April 15th. Debtors often inquire about the ability to discharge many other forms of debts.  Student loans, child support obligations, and fraudulent transactions cannot be discharged.  According to Section 523 of the United States Bankruptcy Code, debtors also may not discharge a debt related to an intentional tort against another person or their property.  A judgment related to a vehicle accident may be discharged under a bankruptcy, and the bankruptcy will assist the debtor in getting their license back if it has been revoked as a result of the judgment.  However, the Bankruptcy Code does not allow a judgment on a motor vehicle accident to be discharged if the accident occurred as a result of the debtor being intoxicated or under the influence of drugs. There are also other exceptions to a debtor's discharge.  A debtor cannot discharge a debt that could have been included in a previous bankruptcy, a payment of restitution ordered by the court, a debt pursuant to a divorce judgment or marital settlement agreement to be paid to a debtor's spouse or ex-spouse, or condo fees as long as the debtor maintains ownership of the property.  There are also other exceptions to discharge pursuant to the United States Bankruptcy Code.  The ones discussed are exceptions to discharge that can arise with some frequency.  If you have any questions about exceptions to discharge or other issues, please contact a St. Louis or St. Charles bankruptcy attorney.

Many people turn to bankruptcy due to garnishment or increased collection efforts.  With respect to garnishment, if your wages are not currently being garnished, but you think that you will be subject to a garnishment, filing for bankruptcy will stop any efforts to garnish or collect.  In a Chapter 7 Bankruptcy the debt will be completely discharged and the creditor will not ever be able to try to collect this debt or garnish your wages.  In a Chapter 13, the wage garnishment will stop, but you may be required to pay back that creditor, depending on your plan and the nature of the debt.  If your wages are currently being garnished the wage filing for bankruptcy will stop the wage garnishment.  Once your case is actually filed with the court creditors are not permitted to continue garnish your wages. In some cases it may take a few pay periods to stop.  You are entitled to a refund for any garnishment that occurs after you have filed for bankruptcy.  As a practical matter, it may take some time to receive your refund. With respect to collection efforts, creditors are not permitted to make any attempt to collect the debt after you have filed for bankruptcy.  If your creditors continue to contact you after filing with the court you should inform your attorney who can then contact the creditor, or if the problem persists, make a formal complaint. Some attorneys will accept payment plans for fees, but may not file until you are paid in full.  Creditors are not required to stop contacting you until after you actually file with the court.  As a practical matter, once you have retained an attorney, you may tell your creditors that and provide your attorney's information.  At that point the creditor may choose to stop contacting you regarding the debt. It is important to note, that if you choose to reaffirm any type of debt, generally a vehicle or a house, and you are not able to remain current on those payments your creditors may contact you, try to collect, garnish your wages, repossess property, or put a lien on your home.  Reaffirming your debt basically means that you have choose to keep the property and the contract and you are obligated to pay in accordance with the terms of the original contract. If you have any questions, or would like to schedule an appointment, contact a St. Louis Bankruptcy Attorney today!

What if I do not know who my creditors are? If you do not know who your creditors are, there are a couple of things you can do:         1.       Run your credit report or have your attorney run it for you (usually a fee)        2.       Start holding onto bills, letters, etc. that you receive in the mail        3.       Get creditor info when collectors or creditors call. What information do I need to know about my creditors? The bankruptcy petition asks for certain information about your creditors. At a minimum, you need:         1.       Name of creditor         2.       Address        3.       Amount owed        4.       Date the debt was incurred        5.       Consideration (what the debt is from; i.e. medical bill, credit card, loan, etc.) Do I need to know the original creditor and the collection agencies? How do I know who has it when they get sold to a new collection agency all the time? This is something that you just want to do your best on. You want to list any creditor that you are aware of so list the original creditors information and any collection agency that you are aware was a holder of the debt. What if I find more creditors after the case is filed? Do I have to pay those creditors back? No you do not have to pay those creditors. As long as your bankruptcy case is still open, you can add creditors. However, there is a fee for this you want to do the best you can to list all of your creditors before the case is filed.