Posts Tagged ‘Financial Guide’

Debtors Strip Their Second Mortgage Without Having To File Chapter 13 Bankruptcy

Financial Guide | Posted by Kiara Withers
Apr 20 2011

Some people with minimal credit card debt file Chapter 13 bankruptcy primarily to strip a second mortgage. You may be able to accomplish the same result without filing bankruptcy now that banks are becoming somewhat more flexible to work out mortgage solutions on upside down property. I’ve heard of cases where a second mortgage company will substantially reduce a second mortgage balance and permit the debtor to pay off the settlement amount in installments. Here is one real example.

A couple had a first mortgage equal to or a little less than their house’s fair market value. They had a second mortgage of approximately $120,000. They were willing to let the house go if they had to pay both mortgages, but they wanted to keep the house if they could “strip” the second. They had about $15,000 of joint credit card debt. They wanted to avoid any bankruptcy if possible.

The couple stopped paying the second mortgage. They hired an attorney to defend any foreclosures and to negotiate with the second mortgage company. The attorney was able to reach a settlement with the second mortgage lender whereby the lender agreed to accept $15,000 as payment in full of the second mortgage. Furthermore, the second mortgage lender agreed to let the debtors pay the $15,000 settlement over three years in monthly installments. After payments were completed the second mortgage would be satisfied in full.

The couple “stripped” their second mortgage without having to go through Chapter 13 bankruptcy. I think the Read more…

Tags: 13 Bankruptcy, Chapter 13, Chapter 13 Bankruptcy, Financial Guide
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Reasonable Attorneys Fees For Chapter 7 Is Subject Of Bankruptcy Court Order

Financial Guide | Posted by Kiara Withers
Mar 23 2011

I have rarely discussed bankruptcy attorneys fees in this blog even though I know that fees are an important consideration for readers who are considering filing bankruptcy. I do not want this blog to be interpreted as an advertisement for my own fees in relation to those charged by other attorneys. However, I recently read two general discussions about bankruptcy attorneys fees which should be very helpful to prospective bankruptcy debtors, and therefore, warrant discussion.

First, I saw a blog post by North Carolina attorney Susanne Robicsek titled, “How Much Does It Cost To File Bankruptcy?” Her article is an excellent guide to comparison of bankruptcy fees charged by different attorney attorneys in your geographical area. Ms. Robicsek explains clearly why an attorney may charge more or less for your bankruptcy than others, and why some bankruptcy attorneys charge higher fees than other attorneys. She also discusses the alternative of do-it-yourself bankruptcy petitions to save money.

Those considering Chapter 7 bankruptcy would be most interested in a recent Memorandum Opinion issued by a bankruptcy judge in the Orlando Division which order presents an accurate overview of the bankruptcy fee market in central Florida. (Case No. 6: 10-bk-12174). The court found that most bankruptcy attorneys charge in the range of $1,250 to $2,500 for a typical chapter 7 case plus filing fees and other costs. For

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Tags: Attorneys Fees, Financial Guide
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Bankruptcy Estate Includes Future Lawsuit: Judicial Estoppel Dismisses Suit Not Listed In Bankruptcy Schedules.

Financial Guide | Posted by Kiara Withers
Feb 22 2011

When you file bankruptcy you are supposed to list any current lawsuits you have against anyone else, such as a medical malpractice suit, as well as any potential claim against a third party which claim may later result in you filing a lawsuit. Your lawsuits and claims are part of the bankruptcy estate. The trustee can either prosecute the lawsuit in your behalf or he can sell the claim or lawsuit and distribute proceeds to your creditors.

Frankly, some people do not list potential claims and possible future lawsuits. They figure they can file a lawsuit after the bankruptcy is over and that the trustee will not find out about it. One problem with this debtor strategy is that the person you later sue can dismiss the lawsuit because you did not list the claim in your bankruptcy.

I read a post in the Los Angeles Bankruptcy Law Monitor about a court which applied the theory of judicial estoppel to defend a lawsuit by a plaintiff who had recently filed bankruptcy and did not list the potential lawsuit as an asset. In laymen terms, judicial estoppel means you cannot take inconsistent positions in different judicial proceedings. You cannot tell the bankruptcy court you have no claims and then assert a claim in civil court soon thereafter. In this case, the court dismissed a lawsuit because the plaintiff’s recent bankruptcy asserted that the debtor had no claims or reasons to sue anyone.

Tags: Bankruptcy Schedules, Financial Guide
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Debtor Wants To Pre-Pay Divorce With Non-Exempt Money Prior To Bankruptcy

Financial Guide | Posted by Kiara Withers
Feb 16 2011

A prospective client from Miami wants to file bankruptcy. He is in the process of getting divorced. He and his spouse each has an attorney. The spouses have a tentative oral agreement for the divorce which agreement includes payment of $100,000 of child support in equal payments over a four year time frame. The client’s principal asset is a money market account with $225,000. He asked me if he can pre- pay the child support in a lump sum to dispose of his cash and then file Chapter 7 bankruptcy. After all, he reasons, the child support is a priority debt in bankruptcy and would have to be paid before his unsecured creditors.

It’s ok to pay a priority debt , like taxes, before filing Chapter 7 bankruptcy, but the debt has to be owed at the time its paid. Generally, a debtor cannot pay a third party money for future debts not yet due. Payment without bona fide debt is a form of a fraudulent transfer.

I think this debtor could structure his divorce settlement to include an immediate obligation to pay his wife $100,000. If the spouses negotiate an arms length divorce agreement they may include, as one of the many negotiated rights and obligations, a current debt of $100,000 0wed to the spouse for alimony or support. The client would argue that his debt was due now, or as soon as the final divorce agreement is signed, and that there was consideration for his immediate payment because it was one of many negotiated terms in a divorce resolution. If Read more…

Tags: Financial Guide
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Bequest Through Parents’ Living Trust Protected In Bankruptcy

Financial Guide | Posted by Kiara Withers
Feb 11 2011

The bankruptcy law provides that any money a debtor receives by “bequest, devise, or inheritance” within the six months after a case is filed becomes part of the bankruptcy estate and is paid out to the creditors. I read about a bankruptcy cased decided late last year dealing with money a debtor received from a parent’s living trust after the parent died. The issues was whether a trust bequest is within the definition of a “bequest, devise or inheritance” so that the trustee can claim the money.

The bankruptcy court thoroughly analyzed and discussed the technical meaning of the terms bequest, devise, and inheritance under Florida law. Summarizing ,the court found that the terms bequest and devise mean the same thing, and that is, a testamentary disposition of real or personal property under a will. The term “I inheritance is not well defined under our laws, but the court found that its best meaning is the receipt of property form an ancestor under laws of intestacy.

A living trust is set up during the life of the parent (ancestor) and the parent, or trustmaker, gives the beneficiaries a contingent future interest while the trustmaker is alive. The court recognized that a typical living trust has a testamentary aspect and intent because it makes provisions for dispositions of property to children after the trustmaker’s death. However, the Read more…

Tags: Financial Guide
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Wachovia Bank Goes Wild: Freezes The Bank Account Of Bankruptcy Debtor’s Boss

Financial Guide | Posted by Kiara Withers
Jan 26 2011

One of my clients files Chapter 7 bankruptcy. The client is an accounts manager for a one doctor medical practice. The doctor gave the client signature authority on the office account at Wells Fargo Bank so the client could easily pay the office bills. The account is titled in the name of the boss’s medical corporation. All the money in the account is from the medical practice receipts; the debtor deposits none of her personal money in the account. The account is set up under the business’s tax ID number.

After the client filed personal bankruptcy Wells Fargo froze the account because the debtor had signature authority. The doctor cannot pay his business bills with his own money. My office called a manager at Wells Fargo Bank and wrote emails to Wells Fargo demanding they release the account freeze, but the bank ignored our calls and letters. Next, we wrote an email to the Chapter 7 trustee in the hope that he would contact Wells Fargo and get them to correct their error. The Chapter 7 trustee has done nothing. Perhaps the trustee is not interested in my client’s boss’s problem because money in the business account is not part of the debtors bankruptcy estate.

It appears that my client will have to file a motion with the court to release the account freeze and request sanctions. Either my cliernt or her boss may have to incur additional expense to remedy a problem clearly not their fault. Even if Read more…

Tags: Bankruptcy Debtors, Financial Guide
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