Monday, December 29, 2014

Who's paying for college?

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College tuition is a hot topic. Many people talk about how high the cost but do they talk to their children?  What do their children think about tuition and who should foot the bill? This month in NJ, a college student sued her parent for her tuition to Temple. (see When I discussed the case in my business law class, I had one 24 y/o student who absolutely believed parents owed a college education to their kids. Fortunately, Pennsylvania does not recognize a child's right to have his/her college paid for by their parents.

I think the NJ case (actually cases) are still the extreme but that doesn't mean the topic should not be discussed. This article offers four topics to consider when planning someone's college education: The topic I believe most important is to discuss with your child who is going to pay what for college. The article points out: "Some children expect their parents to pick up the tab for college, but they could be in for a rude awakening. A Fidelity survey found that 'parents expect their children to pay for more than one-third of college costs, but only 57% of those parents shared that information with their children.'"

If you are looking forward to college in some way, take a quick look at this article. It gives you food for thought and a little planning now can help keep you out of an office like mine in the future.

Learn more about my firm Medvesky Law Office, LLC at

Sunday, December 28, 2014

Did you know a short sale of your home could create income for you? ... but not this year ...

Congress extends protection for Homeowners in short sales of their primary residence in 2014 ... 2015 still in question. People forced to sell their homes in short sales in 2014 get a tax break. Congress extended the break earlier in December. Before the housing bubble bursting, people who were forced to sell their homes in a short sale were issued a 1099-C reporting income for the seller. The income was the difference between what was owed and what the house sold for. The tax code considers the amount forgiven at the sale as income to the sellers.

Image courtesy of ratch0013

So if a couple owns a house with a mortgage of $300,000 and they sell it in a short sale for $225,000, the tax code sees that as a benefit of $75,000 and tax it as income. The mortgage will issue the couple a 1099-C for $75,000 and the couple will be required to add it as income on their tax return. This can significantly increase their tax obligation.

Congress has extended a law preventing the IRS from taxing this reduction of debt through 2014. That means anyone who sold their home in a short sale in 2014 will not pay income tax on the amount forgiven. It is not clear if Congress will extend it into 2015. Reports state Congress discuss extending it for two years but the final bill only extended it through 2014. That means anyone having problems in the new year will be betting on or hoping for an extension in 2015. This problem can be avoided in Bankruptcy. I'll explain that in another blog.

Learn more about my firm Medvesky Law Office, LLC at

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Friday, December 26, 2014

I'm not sure I find these all that Weird ...

Image courtesy of Stuart Miles at
I was drawn to an article titled: "4 of the Weirdest Reasons People Have Gone Into Debt" I thought it might help people understand how crazy it can get. The author lists:

"1. The Child Spoiler Client
  2. The Dream Wedding Client
  3. The “Don’t Tell My Spouse I Have Debt” Client
  4. The House Flipper Client."

These reasons don't seem so weird to me; though the cases she uses are a little extreme. While the author's explanation of the events that caused her clients to go into debt show some questionable choices, it is easy to understand how the events could unfold as they did.

Many people over-spend on their minor children and bail out their adult children (a topic in my next blog). We all want the best for our children and sometimes we are not practical about it. The dream wedding ... this is a reflection, I think, on our society. Who has been to a formal wedding recently and thought, "WOW! this was so simply done and I'm sure it was done at a reasonable price." Credit has been too easy for us and we have allowed the prices of everything from weddings to college to be driven up to a ridiculous price point. It is hard to balance reasonableness with what has become the norm.

The spouse with secret debt is not new either. I remember an entire "I Love Lucy" episode where Lucy ordered a dress, I think, on store credit without Ricky knowing about it. Secret debt was the basis for the humor of the plot. I had one bankruptcy client who bought a house without her husband knowing. She did it for another family member because he was going to lose the home and it work for awhile. Her intentions were all good but the results were bad.

Finally, the House Flipper should be no shock. People try and fail at businesses all the time. Many people go through several businesses learning before they get it right... it happens.

My point here is normal people do create debt they cannot handle alone. We all need to be more realistic and practical with our finances. But we all make decisions and sometimes they are bad. Some decisions are bad from the start ... and sometimes, they turn out to bad for some other reason. But that doesn't mean you should do nothing and suffer this alone.

Some people may be able to use the advice in the article or take advantage of services like that offered by the author of the article referenced above. Sometimes people let it go too long or it grows too fast that they need the services of a bankruptcy attorney. But know you are not alone and you are not "weird." You may have made mistakes and you need to face them. It is really that simple to start.

Learn more about my firm Medvesky Law Office, LLC at

#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania

Tuesday, December 23, 2014

Happy Holidays!

I truly want to wish everyone a festive but peaceful Holiday Season. Merry Christmas to my family and Christian friends, students, and clients. I realize Chanukah is almost complete but I hope it was/is a time of peace for the people I know celebrating their Jewish faith. For those anticipating the celebration of Kwanzaa, I also wish you a peaceful and joyous celebration. For those traditions I am not aware of, please excuse my ignorance. I want to thank everyone for the support they have given us here at the firm. Without your trust, we could not survive as a firm. I am wishing us all a Peaceful and Prosperous New Year.

Thursday, December 11, 2014

Rebuilding credit after Bankruptcy...

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We all know it is hard to live in this day and age without credit. Also, it is an import aspect of putting your life back together and moving forward. One of the things I recommend my clients do after discharge is to find a secure credit card. A secured credit card is one where the borrower deposits cash with a creditor and the creditor gives the borrower a credit card with a limit connected to the deposit.

The following article further explains what to look for in a secured card. "The Best Credit Cards After Bankruptcy" explains you need to find a card that reports to the credit agencies so a positive credit history develops and why interest rates are less important. The article also identifies a couple good cards to consider and links to other articles for more information. This is one way to start to get back on track after filing a bankruptcy.

Learn more about my firm Medvesky Law Office, LLC at

#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania

Sunday, December 7, 2014

Bankruptcy - not perfect but still necessary - steps to try to make it better

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Debt reporting after Bankruptcy can still be a problem. Reports are showing many of the big banks are failing to update credit reporting. As a result, bad debt is being reported after it has been discharged in bankruptcy. It may be because there is no profit in it for a bank to sink resources into monitoring discharged debt. Or it could be as disconcerting as the banks want to try and make debtors suffer further for dumping the debt. Many people think it is the latter but there are steps you can take to try to minimize the impact before returning to court.

 “Judge Robert D. Drain of the federal bankruptcy court in White Plains said in one opinion that debt buyers know that a bank “will refuse to correct the credit report to reflect the obligor’s bankruptcy discharge, which means that the debtor will feel significant added pressure to obtain a ‘clean’ report by paying the debt,” according to court documents.” Debts Canceled by Bankruptcy Still Mar Consumer Credit Scores  (this article discusses the problem further).

 This practice has caught the attention of Federal Authorities. “Now lawyers with the United States Trustee Program, an arm of the Justice Department, are investigating JPMorgan Chase, Bank of America, Citigroup and Synchrony Financial, formerly known as GE Capital Retail Finance, suspecting the banks of violating federal bankruptcy law by ignoring the discharge injunction, say people briefed on the investigations.” Reports the NYT’s article cited above and further reported in  - Feds Investigating Banks’ and Debt Buyers’ Treatment of Bankruptcy Account

As the articles indicate, fighting this reporting in court can be tough and time consuming. I think there are a couple things people can do to lessen the blow of this reporting while the Federal Government works to resolve this issue. First, debtors need to hold their bankruptcy discharge paperwork like they would their birth certificate or a divorce decree. Next they can check their credit reports about a year after their bankruptcy to see what is still being reported. If some of the debts are incorrectly reported, challenge them with the agency. If that doesn’t work, add a comment to the report for the incorrectly reported debt including discharge date and docket number.

Finally, be ready to answer creditors' questions about incorrect debt reporting. For larger loans, like a mortgage, many creditors will ask the borrower about reported information. Have a copy of the discharge ready and answer the questions. Don’t let it throw you off. An explanation coupled with a positive current credit history may go a long way. A creditor may or may not accept the explanation but it is worth a shot. These are steps you might try before you go back into court again.

Learn more about my firm Medvesky Law Office, LLC at

#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania