Usually my posts here have a message or a lesson imbedded. This one doesn’t, unless readers can help me find it. But it was a prickly case that resolved well, for unanticipated reasons.  Perhaps, there’s a lesson lurking somewhere here. The clients were well above median income:  a high tech engineer and a stay at home mom with two children under 9. The major creditor was the contractor whose remodel of their house caused them ultimately to lose the house.  Rumor said the contractor’s partnership broke up over the botched project as well. Net, net, net, emotions ran high. After an unsuccessful attempt at a Chapter 13 case, we dismissed and filed Chapter 7.  The intent was to let the house go.  But the secured debt on the house was an available deduction on B-22, in 7 anyway. Enter the UST who brought a motion to dismiss under §707(b)(3).  She had a laundry list of disputed expenses, including appropriate care for two children with learning differences and sports and music lessons.  She also seemed offended at a mother who wasn’t in the workforce. The hearings on the issue extended over months, with the judge apparently leaning our way, but looking for  deeper record on some of the issues. The frustrating thing for me was that there seemed to be no settlement possibilities available.  Chapter 13 wasn’t affordable since we relied on the mortgage interest deduction on the house-to-be-surrendered to avoid monthly disposable income.  It seemed to be a win or lose confrontation. When up popped the issue of some stock options that we thought the trustee had abandoned.  The trustee reversed himself and said, “no, those are mine”. I ended up saying halleluiah.  Because with the prospect of an asset in a case heretofore a no asset case, the UST withdrew the motion to dismiss. The loss of the stock options was far less expensive than funding a Chapter 13 plan without the home mortgage payment deduction.  We had a perverse sort of settlement of the abuse motion. Is there a takeaway? The outcome had lead me to wonder whether leaving some money on the table, some asset for creditors, in a case where the 707 issues lurk might not be a cheaper way out of such disputes. Make a preferential payment.  Leave unexempted cash.  Put the UST to a decision about whether they want to dismiss an asset case in a fight over income. What do you think? Image courtesy of Graham Binns  If you are in the Northern District of California, consider joining me for a 2 hour exploration of community property issues in bankruptcy cases July 12 5-7 at the Computer History Museum in Mt. View.  We’ll look at all the strange and wonderful things that happen when married people, or formerly married people, file bankruptcy.  Sign up info. Like This Article? You'll Love These! Means Test Income And The Annual Bonus Means Test: Getting Business Income Correct Use All Channels to Educate Bankruptcy Debtors

Once parties to a legal dispute have entered a settlement agreement, the Defendant may jeopardize the Plaintiff’s ultimate recovery under the agreement by filing for bankruptcy. In order to reduce the risk associated with Defendant’s bankruptcy, the Plaintiff’s lawyer may: (1) Structure the payments so that they do not exceed $5,475 in one 90-day period, as this is the threshold for some preference actions under 11 USC 547. (2) Try to structure the settlement so that most of the payments are made by third parties, or get a third party to guarantee Defendant’s payments. (3) Get the Defendant to represent that, as of the formation of the settlement agreement, they/he/she are/is financially solvent. (4) As soon as possible, take a security interest in Defendant’s (preferably non-exempt) property. (5) Be careful about including broad language releasing all claims in the settlement agreement. Include language in the agreement conditioning the release on Plaintiff’s ability to reap the full economic value promised in the agreement. (6) Beware of novation, which occurs where a settlement agreement converts otherwise non-dischargeable debt, such as that for willful and malicious injury to person or property, into a dischargeable contract debt. In cases where non-dischargeable debt is being settled, have the Defendant specifically admit to the specific charges or other facts that make the underlying obligation non-dischargeable. Anyone with questions regarding bankruptcy-proofing settlement agreements should contact Jim Shenwick.

A Chapter 13 Bankruptcy can last anywhere fromm 36 to 60 months.  Three to five years is a considerable amount of time and a lot of things can change.  There are a number of issues that may affect your bankruptcy.  Some of the most common changes that need to be addressed are:1. Change in Income.  Over the course of your bankruptcy you may find that you change jobs, become employed when you previously were not, or get a promotion or pay raise.  Any change in income should be reported to your attorney, regardless of whether it is a pay increase or decrease.  You attorney may advise that you need to amend certain schedules and/or amend your Chapter 13 repayment plan. 2. A need to replace a vehicle arises.  Your vehicle may break down, or perhaps it is just time to replace your current vehicle.  If possible you should speak with your attorney before a new vehicle is an absolute necessity.  The steps your attorney will need to take depend on the situation.  If you are purchasing a new vehicle outright, free and clear of loans, you may need to explain where the funds for the vehicle came from.  If you want to purchase a vehicle with a loan your attorney will need to file a motion to incur debt.  You will have to show that you can afford your plan payment and the vehicle.  A motion has to be filed with the court and you must allow at least 21 days for objections.  If there are not any objections your attorney will file an order with the court allowing the purchase of a vehicle.  If your previous vehcile was being paid through your chapter 13 repayment plan you and your attorney may need to amend your plan to reflect the changes.3. If you become entitled to receive a lump sum of money or property.  You could become entitled to receive money for a variety of reasons, including an inheritance, proceeds from a lawsuit or settlement, cashing out a 401k.  This list is not all inclusive.  If you receive a sum of money for ANY reason you should contact your attorney.  Generally, if you receive a sum of money while in a Chapter 13 that will have to be turned over to the trustee to be distributed to your creditors.  Generally, this will be added to your plan base and may mean that you are paying off more of your creditors.This is not an all inclusive list.  If something changes while you are in a bankruptcy you should contact your attorney.  If you have questions, or would like to schedule a consultation, please contact a St. Louis Bankruptcy Attorney Today.

<p>A Chapter 13 Bankruptcy can last anywhere fromm 36 to 60 months.&nbsp; Three to five years is a considerable amount of time and a lot of things can change.&nbsp; There are a number of issues that may affect your bankruptcy.&nbsp; Some of the most common changes that need to be addressed are:</p><p>1. Change in Income.&nbsp; Over the course of your bankruptcy you may find that you change jobs, become employed when you previously were not, or get a promotion or pay raise.&nbsp; Any change in income should be reported to your attorney, regardless of whether it is a pay increase or decrease.&nbsp; You attorney may advise that you need to amend certain schedules and/or amend your Chapter 13 repayment plan.&nbsp;</p><p>2. A need to replace a vehicle arises.&nbsp; Your vehicle may break down, or perhaps it is just time to replace your current vehicle.&nbsp; If possible you should speak with your attorney before a new vehicle is an absolute necessity.&nbsp; The steps your attorney will need to take depend on the situation.&nbsp; If you are purchasing a new vehicle outright, free and clear of loans, you may need to explain where the funds for the vehicle came from.&nbsp; If you want to purchase a vehicle with a loan your attorney will need to file a motion to incur debt.&nbsp; You will have to show that you can afford your plan payment and the vehicle.&nbsp; A motion has to be filed with the court and you must allow at least 21 days for objections.&nbsp; If there are not any objections your attorney will file an order with the court allowing the purchase of a vehicle.&nbsp; If your previous vehcile was being paid through your chapter 13 repayment plan you and your attorney may need to amend your plan to reflect the changes.</p><p>3. If you become entitled to receive a lump sum of money or property.&nbsp; You could become entitled to receive money for a variety of reasons, including an inheritance, proceeds from a lawsuit or settlement, cashing out a 401k.&nbsp; This list is not all inclusive.&nbsp; If you receive a sum of money for ANY reason you should contact your attorney.&nbsp; Generally, if you receive a sum of money while in a Chapter 13 that will have to be turned over to the trustee to be distributed to your creditors.&nbsp; Generally, this will be added to your plan base and may mean that you are paying off more of your creditors.</p><p>This is not an all inclusive list.&nbsp; If something changes while you are in a bankruptcy you should contact your attorney.&nbsp; If you have questions, or would like to schedule a consultation, please contact a St. Louis Bankruptcy Attorney Today.</p>

When an inexperienced Chapter 13 practitioner asks how much a plan has to propose to pay, I envision the Carnac the Magnificent routine from the Johnny Carson show. Carnak, in turban and robes, puts the sealed envelope with the question to his forehead, provides an answer, then opens the envelope to read the question.  The results were uniformly hilarious. Not so when a bankruptcy lawyer answers the question without facts. What says the code? The Bankruptcy Code tells us what the plan must provide and what it may provide.  The baseline for your plan lies in the statute. a) The plan— (1) shall provide for the submission of all or such portion of future earnings or other future income of the debtor to the supervision and control of the trustee as is necessary for the execution of the plan; (2) shall provide for the full payment, in deferred cash payments, of all claims entitled to priority under section 507 of this title… (3) if the plan classifies claims, shall provide the same treatment for each claim within a particular class…1322(a) But the Code doesn’t supply all of the answers. What are the client goals? A Chapter 13 plan only exists to further the client’s financial reorganization.  Tell me what drove the selection of Chapter 13 over Chapter 7 and I have some clues as to how much money it takes. Is the debtor trying to pay taxes?  Then tell me what the priority taxes total. Is the debtor trying to cure mortgage arrears?  How much are the arrears? Does the debtor have non exempt property he wants to keep?  Walk me through the liquidation analysis. How much are the unpaid attorneys fees?  The avoidable transfers? More like juggling Drafting a Chapter 13 plan that works is akin to juggling, or a balancing act.  You’ve got to get enough money into the plan to do meet your goals, all the while proving that the debtor has enough real world income to do the trick. I’ve come to appreciate a printing calculator, amortization tables, and step plans. The power of Chapter 13 for the client makes it worthwhile to do the math. Image courtesy of Wikipedia. Coming to Mt. View in July:  Yours, Mine & Ours  Community Property in Bankruptcy  http://bit.ly/M3WrCQ Like This Article? You'll Love These! The Chapter 13 Plan Light Bulb Moment Differing Dollars In Chapter 13 Plan vs. Claim Learn the Bankruptcy Lingo

Most debtors do not like to spread around the fact that they owe any money. Your debt is a matter which is between you and the person to whom you owe money. One of the common debt collection tactics is threatening to tell others about your debt. There are however, rules to protect you and [...]

When filing for bankruptcy a petition must be filed.  If the debtor has an attorney the attorney generally fills out the petition based on information provided by the client.  The attorney will then meet with the client to have the individual(s) review and sign the petition.  While the attorney does fill this out, the debtor(s) are responsible for the information.  It is very important that the individual is open and honest with the attorney.  It is also very important that the debtor carefully reviews the petition to make sure that all information is accurate and disclosed.  If a debtor is unsure of whether an asset should be disclosed it is always better to discuss the matter with an attorney who can give proper legal advice.  The debtor will also attend a creditors meeting.  The bankruptcy trustee will ask if all information is accurate and all assets and debts have been disclosed.  If there is anything missing this is the debtor's opportunity to disclose the information.  If information is disclosed at the creditors meeting the schedules filed with the bankruptcy petition will likely need to be amended to reflect that information.In the event that a debtor does not disclose all information on the bankruptcy petition a number of things can happen. Failing to disclose information is considered fraud.  Bankruptcy proceedings are federal matters, and are subject to investigation by the United States Trustee and the Federal Bureau of Investigation.  Fraud, or attempted fraud, is punishable by fines and/or incarceration in a federal prison.If a debtor fails to disclose creditors that creditor may not be discharged as they did not receive notice and did not have an opportunity to be heard at the creditors  meeting.  If a debtor realizes that a creditor was omitted the debtor should amend his/her schedules to reflect that information as soon as possible.If a debtor fails to disclose assets a number of things can happen.  Depending on the asset the schedules can be amended.  If a debtor fails to disclose an asset the trustee can object to exemptions being applied.  If the asset is large, or worth any sum of money, the trustee can hold the case open or require the debtor to convert their case.  At this time the debtor may be able to pay the trustee for the property, but if that is not an option, may be required to turn over the property.  Once a Chapter 7 case is determined to have assets the debtor may not be able to voluntarily dismiss the bankruptcy proceeding. If you have questions about this, or would like to schedule a consultation, contact a St. Louis Bankruptcy Attorney Today.

<p>When filing for bankruptcy a petition must be filed.&nbsp; If the debtor has an attorney the attorney generally fills out the petition based on information provided by the client.&nbsp; The attorney will then meet with the client to have the individual(s) review and sign the petition.&nbsp; While the attorney does fill this out, the debtor(s) are responsible for the information.&nbsp; It is very important that the individual is open and honest with the attorney.&nbsp; It is also very important that the debtor carefully reviews the petition to make sure that all information is accurate and disclosed.&nbsp; If a debtor is unsure of whether an asset should be disclosed it is always better to discuss the matter with an attorney who can give proper legal advice.&nbsp; The debtor will also attend a creditors meeting.&nbsp; The bankruptcy trustee will ask if all information is accurate and all assets and debts have been disclosed.&nbsp; If there is anything missing this is the debtor's opportunity to disclose the information.&nbsp; If information is disclosed at the creditors meeting the schedules filed with the bankruptcy petition will likely need to be amended to reflect that information.</p><p>In the event that a debtor does not disclose all information on the bankruptcy petition a number of things can happen. Failing to disclose information is considered fraud.&nbsp; Bankruptcy proceedings are federal matters, and are subject to investigation by the United States Trustee and the Federal Bureau of Investigation.&nbsp; Fraud, or attempted fraud, is punishable by fines and/or incarceration in a federal prison.</p><p>If a debtor fails to disclose creditors that creditor may not be discharged as they did not receive notice and did not have an opportunity to be heard at the creditors&nbsp; meeting.&nbsp; If a debtor realizes that a creditor was omitted the debtor should amend his/her schedules to reflect that information as soon as possible.</p><p>If a debtor fails to disclose assets a number of things can happen.&nbsp; Depending on the asset the schedules can be amended.&nbsp; If a debtor fails to disclose an asset the trustee can object to exemptions being applied.&nbsp; If the asset is large, or worth any sum of money, the trustee can hold the case open or require the debtor to convert their case.&nbsp; At this time the debtor may be able to pay the trustee for the property, but if that is not an option, may be required to turn over the property.&nbsp; Once a Chapter 7 case is determined to have assets the debtor may not be able to voluntarily dismiss the bankruptcy proceeding.&nbsp;</p><p>If you have questions about this, or would like to schedule a consultation, contact a <a title="Completing and Filing a Bankruptcy Petition" href="http://www.lickerlawfirm.com">St. Louis Bankruptcy Attorney </a>Today.</p>

Many people go to extreme measure to avoid filing for bankruptcy.  There are a number of alternatives that people may consider that can actually be worse in the long run than filing for bankruptcy.  Below are a few examples.1. Debt Consolidation Options.  There are a number of companies that will offer to consolidate your credit cards and help to improve your credit.  Be very cautious here and ask them to explain the entire process to you.  Many of the places will tell you to stop making your payments to creditors and direct your payment amounts to the company instead.  They will then hold onto this money until it reaches a certain amount and then will negotiate your debt down, sometimes only paying cents on the dollar of what you owe.  This can have a number of negative implications.  First, your credit will continue to worsen as your bills go unpaid for months.  Second, the fees that some of these companies charge are exhorbitant. Third, the difference between what you owe and what they will pay your creditors will be considered taxable income to you.  Finally, this is a service that you do not need to pay for.  You could hold on to your own money and negotiate the debt down yourself.2. Charge Off of Accounts.  Many times debtors are relieved when companies charge off an account or mark it as uncollectable.  An important thing to note is that this does not mean that the creditor does not have a legal right to collect.  Often times the original creditor will sell the account to another party and that third party may start to harass you about the debt.  Also, as mentioned above, any amount charged off is considered "discharge of indebtedness" and is taxable income.  For example, if you owe 10,000 to your credit card and they settle for 2,000 the 8,000 written off should be reported on your tax returns the following year.  You will be taxed on this money as you are taxed on your income, which may mean that you owe taxes you didn't expect to owe. 3. Ignoring the problem.  Creditors will not usually disappear and may even start contacting you at work or contacting your friends and family members. Ignoring the problem will not make it any better.If you have questions, or would like to schedule a free consultation, contact a St. Louis Bankruptcy Attorney Today.

<p>Many people go to extreme measure to avoid filing for bankruptcy.&nbsp; There are a number of alternatives that people may consider that can actually be worse in the long run than filing for <a title="Chapter 7 Bankruptcy" href="http://www.lickerlawfirm.com/library/chapter-7-bankruptcy2.cfm">bankruptcy</a>.&nbsp; Below are a few examples.</p><p>1. Debt Consolidation Options.&nbsp; There are a number of companies that will offer to consolidate your credit cards and help to improve your credit.&nbsp; Be very cautious here and ask them to explain the entire process to you.&nbsp; Many of the places will tell you to stop making your payments to creditors and direct your payment amounts to the company instead.&nbsp; They will then hold onto this money until it reaches a certain amount and then will negotiate your debt down, sometimes only paying cents on the dollar of what you owe.&nbsp; This can have a number of negative implications.&nbsp; First, your credit will continue to worsen as your bills go unpaid for months.&nbsp; Second, the fees that some of these companies charge are exhorbitant. Third, the difference between what you owe and what they will pay your creditors will be considered taxable income to you.&nbsp; Finally, this is a service that you do not need to pay for.&nbsp; You could hold on to your own money and negotiate the debt down yourself.</p><p>2. Charge Off of Accounts.&nbsp; Many times debtors are relieved when companies charge off an account or mark it as uncollectable.&nbsp; An important thing to note is that this does not mean that the creditor does not have a legal right to collect.&nbsp; Often times the original creditor will sell the account to another party and that third party may start to harass you about the debt.&nbsp; Also, as mentioned above, any amount charged off is considered "discharge of indebtedness" and is taxable income.&nbsp; For example, if you owe 10,000 to your credit card and they settle for 2,000 the 8,000 written off should be reported on your tax returns the following year.&nbsp; You will be taxed on this money as you are taxed on your income, which may mean that you owe taxes you didn't expect to owe.&nbsp;</p><p>3. Ignoring the problem.&nbsp; Creditors will not usually disappear and may even start contacting you at work or contacting your friends and family members. Ignoring the problem will not make it any better.</p><p>If you have questions, or would like to schedule a free consultation, contact a <a title="St. Louis Bankruptcy Attorney" href="lickerlawfirm.com">St. Louis Bankruptcy Attorney</a> Today.</p>