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Credit Counseling on Day of Filing Now Okay

By Jonathan on December 20, 2010

Earlier this month, Congress presented to the president the Bankruptcy Technical Corrections Act of 2010. This bill contained a variety of spelling, grammatical and punctuation changes to the Bankruptcy Code. Among its substantive provisions was a change to Section 109(h), the Code section having to do with mandatory pre-filing credit counseling.

Until now, Section109(h) required that consumer debtors obtain credit counseling “during the 180-day period preceding the date of filing of the petition.” Some judges interpreted this language to mean that credit counseling must be obtained at least 1 day prior to the actual day of filing.

Congress has clarified this confusion (I never thought I would type those words, but I digress….). The Technical Corrections Act deletes the word “preceding” and replaces it with “ending on.” The Code section now provides that credit counseling must be obtained “during the 180-day period ending on the date of filing of the petition.”

I still would not advise that you wait until the day of or the day before filing to obtain your credit counseling certificate, but now you know that you can.

What is “Lien Stripping” and Can I Use it to Reduce my Mortgage Payments

By Jonathan on December 20, 2010

With the decline in Atlanta area housing values, a seldom used bankruptcy technique has taken on new life. The technique is called “lien stripping” and it arises from Bankruptcy Code Section 506(a) and (d). A lien strip allows a Chapter 13 debtor to use the power of the Bankruptcy Court to transform a secured second mortgage or home equity line of credit into an unsecured debt, thereby eliminating a monthly payment and reducing total debt by tens of thousands of dollars.

Here’s how it works: Let’s say that you own a home worth $250,000. Perhaps that home was worth $350,000 three or four years ago but its market value has dropped because of the recession. The balance on the first mortgage is $270,000 and the balance on the second mortgage is $45,000.

In this case, a Chapter 13 debtor can ask his bankruptcy judge to “strip away” the second mortgage debt since all of the value in your home is encumbered by your first mortgage. In other words, if you were to sell your house, the first mortgage lender would not be paid in full and the second mortgage lender would get nothing. The second mortgage lender is, therefore, unsecured. [Read more…] about What is “Lien Stripping” and Can I Use it to Reduce my Mortgage Payments

New Online Version of Popular “Two Page” Bankruptcy Information Form

By Jonathan on December 18, 2010

I have just released an on-line version of our popular “2 page” questionnaire, which you can access by clicking on the link. I have discovered that some of my potential clients do not want to fill out a 30 page questionnaire when they are not exactly sure that they want or need to file bankruptcy. If you want a quick and free case evaluation, fill out our 2 page questionnaire (it will take you about 5 minutes to fill out) and submit to me. I should have enough information to talk to you intelligently about the bankruptcy process and how it might affect you.

There are no “required” fields on the new online form and you need only click “submit” to send it to me.

How Much Cash can I Protect if I File for Bankruptcy?

By Jonathan on December 15, 2010

You may be wondering how much, if any, of your “stuff” that you can keep if you file a bankruptcy. Many people wrongly believe that you have to give up everything you own if you file for bankruptcy.

Nothing could be further from the truth. In almost every case we file, our clients give up nothing and lose nothing unless they choose to surrender a secured item (like a house or a vehicle) to eliminate the associated debt.

Believe it or not, you can shelter cash and funds in your bank account. Specifically, the Georgia exemption statute permits you to protect up to $11,200 in cash – double that to $22,400 if you file jointly with your spouse. If you have more, you can potentially keep most or all of your “cash on hand” by filing Chapter 13 instead of Chapter 7.

The amount of cash you can shelter depends on what other property you have and want to protect. It also depends on whether you file Chapter 7 or Chapter 13 – give our office a call at 770-393-4985 if you want to learn more about how much you can protect in a bankruptcy case.

Tiny, Hidden Credit Report Errors Can Lead to Bankruptcy

By Jonathan on December 12, 2010

The Wall Street Journal recently published a new story entitled Hidden Medical Debt Trips Up Homeowners. The report documented several cases in which small medical bills that had been turned over to collection resulted in a more than 50 point drop in a homeowner’s credit score.

In one situation, a homeowner attempted to refinance his mortgage, only to discover that two unpaid medical bills totaling less than $50 had caused his credit score to drop. As a result of the lowered credit score the refinancing bank demanded over $4,000 in closing costs.

In another situation, less than $500 of medical debt reported to a collection agency disqualified a homeowner from a favorable interest rate, which would have resulted in tens of thousands of extra interest charges.

In many of these situations, the consumer never knew about the unpaid medical debt – the provider simply turned the claim over to a collection agency which immediately reported it to the credit reporting agencies as delinquent debt.

According to the Journal, “otherwise well-qualified borrowers with good loan-to-value ratios and steady employment are increasingly finding it difficult to refinance because of medical billing mistakes marring their credit.”

If you or a loved one has been in the hospital, you probably know that a single visit can result in five, ten or even more bills from separate vendors – the hospital, the hospital pharmacist, the anesthesiologist, the ambulance service, etc. I do not find it surprising at all that a patient would not know about one or more bills. [Read more…] about Tiny, Hidden Credit Report Errors Can Lead to Bankruptcy

Can a Bankruptcy Help me Reduce my Child Support Payment?

By Jonathan on November 10, 2010

With more and more people facing layoffs or downsizing, we are speaking to more and more potential bankruptcy clients who are dealing with past due child support in addition to tax, credit card, medical and other debt. In some cases, the past due child support is five or ten years old and the “creditor” is a State child support enforcement agency. Does bankruptcy offer any relief?

As I noted in the web site article Child Support and Bankruptcy, the answer is generally “no.” Child support debt is a protected class of debt and the Bankruptcy Code will not allow you to discharge a current or past due child support obligation in a Chapter 7 or Chapter 13 case. The only time I ever see bankruptcy impact child support is when a custodial parent or child support enforcement office voluntarily agrees to accept monthly distributions from your Chapter 13 plan. If, however, the custodial parent says “no,” then you will most likely not see your Chapter 13 plan confirmed by the judge. [Read more…] about Can a Bankruptcy Help me Reduce my Child Support Payment?