Sunday, March 22, 2020

Corona virus, finances, bankruptcy ... Part 2 ... Government Assistance

Image courtesy of Stuart Miles at
We will make it through this. There is relief available to help people get back on track. Government programs are starting to ramp up but, remember, they have their limitations. Additional help may be needed.

As the crisis worsens, Federal and Local governments are attempting to offer financial relief to the public. One of the actions I have seen in the news is a Federal Government program. Federal regulators announced a Freddie Mac and Fannie Mae federal mortgage relief plan that can give up to a yearlong break on mortgage payments. The announcement is new and I am not sure many details are available. The article (linked above) indicates:
"Under the plan, people who have suffered a loss of income can qualify to make reduced payments or be granted a complete pause in payments."
Homeowners need to follow the plan and have responsibilities too:
 "'That forbearance is up to 12 months, depending on their particular situation,' says Mark Calabria, director of the Federal Housing Finance Agency, which oversees Fannie and Freddie.
Homeowners can't just stop paying their mortgage. 'They need to contact their servicer — that is the lender that they send the check to every month,' he says. 'That lender will work with them to be able to work out a payment plan. Obviously, we hope to get them back on their feet as soon as possible.'"
And here is the keys homeowners need to keep in mind:
  • Not all mortgage loans are Freddie Mac and Fannie Mae backed loans;
  • A homeowner must "qualify" for this program, which will probably be easy at first and, I suspect, harder as we recover; and
  • This is not a forgiveness program, everyone will ultimately need to make up all payments they missed at some point. 
So my point? There may be help and temporary relief out there for homeowners but they need to understand what it is, how it works now, and pay attention to how it changes as we exit this crisis. Keep in mind, if a mortgage payment is $1,500/month and the homeowner has to skip 3 months due to lay-offs or other loss of income, the outstanding balance due in month four will be $6,000. The amount owed does not change. The critical issue is how will catch up payments work? I do not think we have an answer. From what I have read so far, it seems it will be up to the bank and homeowner to negotiate.

Many of us will have no choice but to use this assistance. So, use this relief as necessary. I recommend people try to use only what they need. I know that is easier said than done. If people find themselves missing more payments than they can afford to pay back in the time the bank wants to allow, bankruptcy laws may be the additional help they need. Chapter 13 is set up to let people catch up their mortgage payments over 5 years if needed. Keep in mind, there is other help available beyond the temporary measures being offered now. 

If you want assistance, legal representation, or just want to know more about me, Mark M. Medvesky, or Wells, Hoffman, Holloway & Medvesky LLP, check out our website at

Other Links:

Freddie Covid-19 Response
Fannie Mae Covid-19 Approach Mortgage lenders offer help to borrowers affected by coronavirus - Programs to freeze foreclosures and evictions

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Sunday, March 15, 2020

Corona virus, finances, bankruptcy ... Part 1 ... Budget and 401(K)

I hope this blog makes sense. Like anyone reading this during this time, my head is spinning. I am thinking about keeping people, clients and employees, coming into my office safe; how I keep my office going to the extent I can;  my kids are home from school for at least the next two weeks; and just the uncertainty for the near future. So, if my thoughts are not clear here, I apologize now.

Image courtesy of Ambro
Whether you believe the events and precautions surrounding the Corona virus are necessary actions or just mass hysteria, the fact is people are probably going to suffer financially as well as medically as a result of this pandemic. 

I think about those families that are just on the edge of becoming financially healthy. The economy was growing and the job rates showed signs of joblessness dropping across all communities. Now, faced with the uncertainty of the effect on the economy; schools and daycare closed in my state; the temporary loss of income; and the dramatic loss in the markets, I sense there will be a renewed sense of desperation among families who are on the financial edge.

If a person was struggling financially before this pandemic, it probably isn't going to get better during this crisis. If people felt themselves climbing out of a hole, they may feel their progress is starting to stall. Don't let this crisis take all you have earned over the last few years. This may be the time to consider (or reconsider) filing for bankruptcy protection. 

During the time of financial crisis, many people reach into their retirement accounts to make ends meet. Most times, emptying a 401(k) plan is not the answer. I work with people who spent down their retirements funds or never saved and now are trying to live on Social Security alone. Considering how many clients I have filing for bankruptcy whose only income is social security, I cannot stress it enough, I believe people should file for bankruptcy before using retirement money for debts. In most case, retirement accounts are protected in bankruptcy. 

During this time, people need to examine their budget. I recommend people prioritize payments. People need a place to live. If a person does not want to move, I would argue rent or mortgage holds the highest priority. Not only do people need a place to live, rent or mortgage is usually their largest bill making it harder to catch up after missing one, two or three payments. 

After paying for your home, utilities, food. car, and transportation are competing for your money. These may not be everyone's priorities but, I would argue, everyone should review their payments and set their priorities. Skipping important payments to pay lesser bills can make a bad situation worse. 

If a person cannot make ends meet after taking these steps, this may be the time to consider bankruptcy. Think about it as part of your crisis plan. This can be part of the actions to keep a family financially healthy during this global pandemic.

If you want assistance, legal representation, or just want to know more about me, Mark M. Medvesky, or Wells, Hoffman, Holloway & Medvesky LLP, check out our website at

 #bankruptcy Chapter7 #Chapter13 #MontgomeryCounty #lawfirm #BucksCounty #Pennsylvania

Sunday, August 11, 2019

USCIS Forms Update Notice

From the USCIS Bulletin:

USCIS Forms Update Notice 

Update to Form I-693, Report of Medical Examination and Vaccination RecordNew Edition Dated 07/15/19

Update to Form I-601, Application for Waiver of Grounds of InadmissibilityNew Edition Dated 07/03/19

Update to Form I-821, Application for Temporary Protected StatusNew Edition Dated 07/03/19

It is important to check for the most recent forms. For more information on USCIS and its programs, you can visit or you can follow USCIS on Twitter (@uscis), YouTube (/uscis), Facebook(/uscis), and Instagram (@uscis)."

If you want to know more about Mark Medvesky or Wells, Hoffman, Holloway & Medvesky LLP, check out our website at

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Tuesday, July 9, 2019

Quick Tip: Bankruptcy - plan to start using all cash again

When my clients come into my office to talk about bankruptcy, many of them are paying the minimum on their credit cards and then placing all their living costs on the cards. It is a vicious cycle that needs to stop for obvious reasons.

Image courtesy of zdiviv at
One reason to stop using credit cards is the bankruptcy code. Some charges made close to the time of filing bankruptcy may not be discharged. The bankruptcy code states "consumer debts owed to a single creditor (over a certain amount) ... for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title ... and ... cash advances (over a certain amount) ...  that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable ..." While I find many credit charges do not meet the presumptions defined above, no one wants to chance going through bankruptcy and not have the debt discharged.

Another reason more practical is the cards go away. Once someone files bankruptcy, the cards are gone. If a client is using credit cards, I suggest it is easier to move off the credit cards with a plan than abruptly losing them. I know this sounds easier than it is but it warrants consideration.

For these reasons, people thinking about bankruptcy should consider when they will start paying cash for living expenses and leave the cards behind.

If you want assistance, legal representation, or just want to know more about me, Mark M. Medvesky, or Wells, Hoffman, Holloway & Medvesky LLP, check out our website at

 #bankruptcy Chapter7 #Chapter13 #MontgomeryCounty #lawfirm #BucksCounty #Pennsylvania

Sunday, February 17, 2019

Small business owners in bankruptcy

It is one thing to get in over your head while you have a stint of unemployment or under-employment, a medical issue, or a ugly divorce. Once the condition that created the need for bankruptcy passes, the bankruptcy case can be pretty straight forward. Once you add a debtor who is self employed or owns a small business of some sort, you have a whole new set of issues.

One of the first questions is, who owns the property or assets; the company or the debtor. I discussed this issue in Bankruptcy - who is the debtor? what is protected?

Image courtesy of  imagerymajestic at
Another question is income and bookkeeping. Unless a debtor issues himself or herself a regular paycheck, his or her income will generally be measured by the gross proceeds of the business less actual business expenses. Accurate bookkeeping is essential to establish a debtor's/business owner's income.

Also remember the company is probably an asset. How much is it worth? Does it have inventory, accounts receivable, assignable contracts, or equipment? Is it an interest that can be sold to another business owner? Most times an interest is a small business has little or no value because the debtor is the business; however, the value of business needs to be considered.

Is the debtor planning to continue the business or has it ceased operation? If the debtor is planning to continue operating the business, he or she will have to plan to operate without credit for some time. If the owner is using credit at the time this process starts, a plan to move the business off credit needs to be discussed. 

What about complaints from customers and vendors? Usually, these complaints and debts can be discharged as long as the debtor did not commit fraud. Bookkeeping and records management become even more important under these circumstances. 

If customers and/or complaint to the US Trustee, the trustee's litigation branch may conduct a more thorough examination of the case than otherwise conducted. Then, a certification to a list of income and expenses may not be enough. The trustee's office may request bank records, receipts, credit card statements and other business record. Assuming these documents support the bankruptcy schedules and no evidence of fraud exist. the debtor should receive a discharge. Record keeping is key.

These are some of the issues for self employed and small business owners. Added considerations should be made in preparing a bankruptcy case.

If you want assistance, legal representation, or just want to know more about Mark Medvesky or our firm of Wells, Hoffman, Holloway & Medvesky LLP, check out our website at

#bankruptcy #Chapter7 #Chapter13 #MontgomeryCounty #lawfirm #BucksCounty #Pennsylvania