Atlanta Bankruptcy Attorneys
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By Jonathan on
This morning, I came across an interesting blog by a gentleman who is currently going through a Chapter 13 and is describing his experiences preparing as he goes through his case. It appears that he tried a debt counseling program that did not work and now has made the decision to go through Chapter 13.
I am not sure where he lives, but his Chapter 13 diary blog warrants a look. And if you have your own experiences to share, please leave a comment or send me an email.
By Jonathan on
One of the biggest changes in the new bankruptcy law has to do with the new approved budget figures now being used by the Bankruptcy Courts. Previously, when I prepared a budget for a case filing, I spoke to my client, reviewed the budget shown on his questionnaire, tweaked it to get rid of any obvious problems and filed it. As long as we were reasonable, there generally were no problems.
It does not work that way anymore. Now, the definition of what is “reasonable” comes from the IRS. These are the same IRS figures that are used in “Offer in Compromise” situations where the IRS is considering a reduction in tax debt. In other words, the IRS standards are not particularly generous.
You can review the IRS standards at the U.S. Trustee’s web site or the web site for the Clerk of Bankruptcy Court, Northern District of Georgia. You will notice that there are three different categories of approved budget figures:
– a national standard for allowable living expenses (food, clothing, personal care)
– a local standard based on the county where you live for housing and utilities
– a regional standard for transportation – Georgia is in the “south census” region
In addition the approved standards are updated approximately every 6 months, so before you file, ask your lawyer if the budget numbers are changing anytime soon.
All of these budget numbers are built into the computer program we use to prepare your bankruptcy. The issues, of couse, arise when you are spending money for “unapproved” purposes, such as paying your child’s private school tuition or college tuition, paying for a child or parent’s car, paying for a home business, etc.
The Chapter 7 and Chapter 13 trustees are filing objections based on these budget figures and are leaving it to the Judges to figure out what is a reasonable deviation.
By Jonathan on
I recently worked on a case that demonstrated the need for Chapter 13 attorneys to remain alert when dealing with county property taxes and Chapter 13 debtors.
In this case, my client was both delinquent in his payment of county property taxes and his taxes were not being escrowed by the mortgage company. Because of the delinquency, I included the county tax commissioner as a creditor in the case. Because my client’s county property taxes were not being escrowed, I allocated approximately $300 per month as a monthly tax escrow so that he would be able to pay the tax bill later this year.
The county tax commissioner filed a proof of claim that included the delinquent tax debt for 2005 as well as anticipated property tax debt for 2006. I filed a Motion to Disallow Claim on the grounds that the 2006 tax debt had not yet come due and because we were already allocating for this tax obligation in the budget.
The county attorney called me and explained that under Georgia law, your county property tax debt comes due on January 1 in the exact amount of the previous year’s tax. This tax obligation is subject to change based on updated tax rolls but it exists as of January 1. So, in my case, his position is that the county acted correctly in filing a proof of claim for both 2005 and 2006.
I discussed this issue with my client and we decided to withdraw our objection to the county’s proof of claim, and we will amend our budget to get rid of the 2006 monthly allocation. On January 1, 2007, however, I will need to re-amend the budget to add a monthly tax escrow allocation as he will have to pay 2007 directly.
Interestingly, this issue would not have arisen if there had been no delinquency for 2005 as I would not have listed the county as a creditor, although arguably every property owner is automatically delinquent as of January 1. My sense is that the mortgage company escrow departments as well as county tax commissioner’s offices are probably fine with the existing escrow system as it would be a logistical nightmare to convince escrow departments not to escrow for the current calendar year. However, if you pay your property taxes directly or if you do list the county tax commissioner as a creditor be aware of this proof of claim issue so that you do not double pay.
By Jonathan on
I wanted to get an opinion on whether I can file or not. I spoke with another attorney who stated that I needed to wait for awhile because I have recently used my credit cards. I was hoping to get a second opinion from you as the sooner I can file, the better.
–Aaron
Jonathan Ginsberg responds: Aaron, there are two potential problem areas you may face:
The first arises from Bankruptcy Code Section 523(a), which provides that there is a presumption of non-dischargeability for the following debts:
My experience has been that under the new law, most credit card lenders will be very quick to file an objection to discharge of debt if your recent debt falls into this category
Secondly, Section 523 also says that debts incurred under “false pretenses” or with a “false representation” may be non-dischargeable. This means that no matter when the (credit card) debt was incurred, the credit card company can challenge discharge if they can prove that you knew or should have known that you would not be able to pay the debt when you incurred it.
Ever since the October 17, 2005 effective date of the new law, I have seen a steady increase in the number of challenges by credit card companies. Most of these cases settle because debtors in bankruptcy do not have the funds to pay a lawyer to fight the discharge action.
So, I fall back on the same advice I have been giving my clients for almost 20 years:
By Jonathan on
I declared bankruptcy 3 years ago, and I am just now starting to get my finances in order. However, I just found out that my ex-wife will be declaring bankruptcy, and she has around $18,000 in credit card debt that she will be discharging.
After paying my bills and child support, I end up with $200 extra a month. There is no way I can pay the $18,000 credit card bills, and I can’t file bankruptcy for 3 – 4 more years. Can I stop the transfer of her $18,000 debt to my name (the credit cards have both our names from our marriage, and she assumed responsibility in the divorce papers).
–D
Jonathan Ginsberg responds: Your email raises several issues and the answer to your question is “it depends.”
My first question would be to ask why the joint credit card debts were not listed in your petition. The bankruptcy law requires that you list every debt in your name and all of these credit card debts should have appeared on your credit reports.
Realize that the credit card companies are not subject to your divorce agreement so nothing in that agreement binds them. Since she assumed responsibility anyway, it does not make sense that you did not list them. I cannot believe that any capable attorney would have told you not to list these debts.
In any case, one tactic here would be to move to reopen your bankruptcy case to add these debts. Realize, however, that reopening a case is discretionary by the judge. Also, there is case law which says that an unlisted debt can be discharged even if the creditor had notice when the case did not generate any assets to be sold and distributed to creditors. My thought is that you should try to reopen and hope for the best.
Secondly, the newest amendments to the Bankruptcy Code provide less protection for debtors attempting to discharge debts arising from a divorce. You may have an argument to object to her discharge or the discharge of these debts.
In a private email, I will send you the name of a friend and colleague who handles divorce related issues in bankruptcy cases.
Finally, you may want to speak with your divorce lawyer and/or my bankruptcy/divorce colleague to see if you have any argument for contempt of the Divorce Decree in Superior Court. Your ex-spouse is violating both the letter and the spirit of the divorce agreement and the trend in the law is moving away from allowing debtors to use bankruptcy to rid themselves of divorce related debt.
By Jonathan on
Legal publisher Lexis/Nexus has released its list of the top ten mistakes made by consumer bankruptcy lawyers in the post-October 17, 2005 era. Topping the list is failing to insure that the debtor has received pre-bankruptcy credit counseling. As discussed elsewhere on this blog, bankruptcy judges have been unwilling to waive the credit counseling requirement under most circumstances. A case filing without the certificate will be dismissed. For debtors filing on the eve of foreclosure, when credit counseling organizations have no space, this requirement can be a real problem.
The remainder of the problems discussed in the Lexis/Nexus report all deal with the burdensome filing and paperwork requirements of the new law. In reality, cases that are otherwise workable are being dismissed because debtors are having problems collecting necessary paperwork.
In my practice, I will not file a case until I have all the necessary paperwork in hand. This is causing delays in filing and I may be losing some business. But, given the aggressive posture of the U.S. Trustee on these document requirements, that is the way things must be.
Thanks to my colleague Milton Jones of College Park for noting this Lexis/Nexus report on his Paperless Law Office blog.
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