Credit after bankruptcy ... One of the most common questions

One of the most common questions I receive from clients is, "When will my credit come back?" I always try to assure my clients rebuilding credit can be done with a little effort and discipline. I also blogged about it in the articles at the links below:

Bankruptcy - mortgages and rebuilding credit - a brief conversation with a banker ...

Bankruptcy - Rebuilding your credit after filing

But the question continues to come up and I found this article. I thought people might want to hear this from someone else:

"Bouncing Back From Bankruptcy - Sooner Than You Think" 

@ thestreet.com by Brian O'Connell, published May 8, 2018 

Image courtesy of Master isolated images at
FreeDigitalPhotos.net

 "Bankruptcy afflicts over a million Americans on a yearly basis, and going under financially is widely viewed as a nightmare scenario. That isn't necessarily the case, as a new Lending Tree report shows.

In fact, more than 40% of Americans have a credit score of over 640 one year after filing for bankruptcy, 65% of bankrupt Americans see the same score (at least) three years after a bankruptcy..."

The article goes on to list actions a person can take to rebuild credit. There is life after bankruptcy.

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 www.whhmlaw.com.

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

Current photo ID - needed for bankruptcy

"Current photo ID please," sound pretty simple, right? That is one of the first questions asked by the trustee as he or she starts the creditors meeting. It is required. Not hard, right? Something we generally take for granted and do not really use often.

This can be a show stopper for the creditors meeting. I had a client who pled guilty to a DUI between the time he spoke to me to start his bankruptcy and the time I filed it. In Pennsylvania, the state requires the driver to physically surrender his/her license at the time of sentencing. 

So my client surrendered his driver's license and didn't mention it until I reminded him to bring it to the meeting. I asked about other photo ID. He had an expired passport. The assigned trustee would not accept the expired passport as ID. 

I recommended my client go to DMV to get a photo ID (again a PA thing). He laminated his social security card so the DMV would not issue a photo ID.  When he went to the local Social Security office to get a social security new card, the representative could not issue a new card without a current photo ID. He finally worked it out.

We had to continue the creditors meeting three times. One more continuance request would have generated a motion to dismiss the case from the trustee. The moral to this story is every detail is important. 

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 www.whhmlaw.com.

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

Quick Tip: Call your attorney .... whenever you receive a notice from the bankruptcy court

Image courtesy of vectorolie 
at FreeDigitalPhotos.net

Court notices come in basically two forms in a bankruptcy case. Many notices come through e-mail and the rules require many notices to be sent through regular mail. After any case commences, notices are rarely "served" like you see in the movies. While both of these forms can be convenient, they are not infallible. 

So many things can happen to an e-mail ... spam filters, mail box rules, information overload and missed, computer glitches. Mail takes time and can get lost. Missing notices are rare but do happen. If a client receives anything from a creditor's attorney or the court, he or she should contact his or her attorney as soon as possible. 

This is even more important in Chapter 13 cases. Chapter 13 cases take years to complete and many issues can occur without your attorney's knowledge. People can help their case by helping and working with their attorneys. 

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 www.whhmlaw.com.

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

$350 million in loan forgiveness up for grabs - Article from Yahoo Finance

Everyone knows student loans present a huge challenge. It is compounded when a person suffers extended unemployment or under employment, major medical issues, and/or a family break up. These are the issues that can send a person into bankruptcy. Unfortunately, bankruptcy rarely helps with student loans (see my blog Bankruptcy Discharge of student loans - Brunner Test)

Generally, the best first stop is the Department of Education website to check out the forgiveness programs available. The DOE recently announced guidelines for a new program:

"There’s $350 million in loan forgiveness up for grabs: how you can get those funds" 

by Jeanie Ahn, Senior Producer/Reporter, Yahoo Finance, June 1, 2018

"If you have a job in public service and you’re saddled with student loans – and have previously been denied loan forgiveness – a new program from the Department of Education may be your last resort.  

Last week, the DOE allocated $350 million in additional student loan forgiveness through a new program, Temporary Expanded Public Service Loan Forgiveness, or TEPSLF."

The guidelines are pretty tight but it may be worth a look if you are in public service. If these programs will not work for a person, bankruptcy may help. In many cases, bankruptcy can free up enough income to make the student loan payments bearable. 

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 www.whhmlaw.com.

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

Chapter 13 - make sure you have an accurate budget...

Image courtesy of punsayaporn 
at FreeDigitalPhotos.net

Debtors can use chapter 13 protection to get back on track with mortgages or protect other assets they would lose in a chapter 7 bankruptcy case. In some instances, a debtor cannot use chapter 7 and must file for chapter 13 protection if he or she wants bankruptcy protection. When debtors file a chapter 13 case, they are agreeing to pay their disposable to the trustee for distribution to creditors. As a result, debtors really need to understand what their living expenses truly are and how much they really have left over as disposable income.

There are several different calculations a debtor must complete to determine what the minimum payment they must make to the trustee (see Bankruptcy Chapter 13 - How much will my monthly payment be? parts 1 through 4). Once debtors have that figure, I find they make two mistakes. The first mistake or calculated risk is stretching their budget to meet the minimum payment. They list expenses less than their actual expenditures figuring they will cut their budget further then they already have at that point.

The second mistake is they just flat out underestimate how much they need to spend on their monthly bills. Debtors build their budgets from their head. They don't think to look at their check registers, bank statements or have been dealing with cash and did not keep records. 

Not being realistic about finances or misunderstanding cash flow can cause a debtor to fail in completing a chapter 13 bankruptcy case. The debtor's budget is the foundation of a solid payment plan. Debtors need to be realistic about their needs and expenditures. They also need to know and understand their needs.

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 www.whhmlaw.com.

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

Can Bankruptcy be good for your health?

I saw this report while watching the news this morning. I thought it was worth sharing. 

Image courtesy of Ambro
at FreeDigitalPhotos.net

A Fox 29 report - "Financial expert on how credit card debt could be hurting your health"

The reports states the average household in the US has over $6K in credit card debt. The story talks about the health impact debt has on people and gives tips on how to get out of debt. But happens when those tips don't work. This is the purpose of bankruptcy law. There is a way to get back on track.

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 www.whhmlaw.com.

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

Bankruptcy Chapter 13 - How much will my monthly payment be? (Final - Part 4)

This is the fourth and final part of this blog series. In Part 1, I explained the first step in determining the amount of the monthly chapter 13 payment is to determine what a debtor must pay. In Part 2, I explained the second step is to determine what debts must be paid in full through the plan. In Part 3, I explained the next step is to complete the Disposable Income analysis, which is referred to as the "Means" Test. Finally, a review of the debtors' budget to determine if the debtors' actual disposable is sufficient to meet the minimum required payment. 

Getting back to John and Jane Smith; what do we know so far? We know they have $18,000 of property they cannot exempt or protect from creditors. That means they have to pay a minimum of $18,000 into the plan to protect their property. We also know they have $26,000 in secure and priority debt that must be paid through the plan. That means as long as the Smiths can pay their secure and priority debt, they will pay enough through the plan to protect their property that is not exempt.

We also know the means test shows the Smiths must pay a 60 month plan and should have at least $375 per month disposable income. The sum of $375/month for 60 months equals $22,500 total into the plan. This is not sufficient to meet the full debt of $26,000. The next step is to determine if the Smiths can pay at least $26,000.

John and Jane Smith need to figure out their budget. They must add together all their income no matter the source. Once you have the total gross income calculated, they will deduct everything they pay out; taxes, mortgage, utilities, auto loans, education, entertainment, etc. ... everything. Whatever is left is the Smiths' actual disposable income. In this case,  John and Jane Smith found they have $475 a month left after paying all their bills. That will be the plan payment.  The sum of $475/month for 60 moths equals $28,500 total into the plan. That is enough pay the mortgage company $19,000 to cover the arrears, late fees and attorneys costs; the IRS $7,000 in back taxes; and unsecure creditors $2,500. This is a plan that can work.

This allows the Smiths to file for Chapter 13 protection proposing a plan paying $475/month for 60 months. After the case is filed, the plan may need to be adjusted as creditors file proofs of claims. Creditors have a period of time to make claims against the bankruptcy estate. Once that period passes, the plan can be amended to adjust to any underestimated; unexpected, or unclaimed debts. 

In a side note, if the Smiths' budget would have shown they only had $400/month of disposable income, the Smiths would not be fully protected by filing for Chapter 13 protection. The full sum would have been $24,000 and not enough to pay the required sum of $26,000.

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 www.whhmlaw.com.

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

Bankruptcy Discharge of student loans - Brunner Test

In Pennsylvania, the US Court of Appeals, 3rd Cir. has adopted the "Brunner" Test announced BRUNNER v. NEW YORK STATE HIGHER EDUCATION SERVICES CORP., 831 F.2d 395 (2d Cir. 1987). The opinion set up a three prong test. All three prongs must be met to establish "undue hardship" allowing student loans to be discharged in bankruptcy. The court in Brunner stated: 



Image courtesy of ddpavumba at FreeDigitalPhotos.net

"... As noted by the district court, there is very little appellate authority on the definition of 'undue hardship' in the context of 11 U.S.C. § 523(a) (8) (B). Based on legislative history and the decisions of other district and bankruptcy courts, the district court adopted a standard for "undue hardship" requiring a three-part showing: 

(1) that the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans; 

(2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and 

(3) that the debtor has made good faith efforts to repay the loans. For the reasons set forth in the district court's order, we adopt this analysis..." id. emphasis added.

Most commentary on this test discusses the Draconian effect of the application of this test (see this article). This test is near impossible for a younger healthy adult to meet. Also, attempting to prove "undue hardship"  in a case can be quite costly. For these reasons, most bankruptcy attorneys are cautious about trying to discharge school loans.
 
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 www.whhmlaw.com.

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

USCIS - Re-Registration Period Now Open for Salvadorans with Temporary Protected Status

Direct from USCIS  Bulletin:

" WASHINGTON—U.S. Citizenship and Immigration Services (USCIS) announced today that current beneficiaries of Temporary Protected Status (TPS) under El Salvador’s designation who want to maintain their status through the effective  termination date of Sept. 9, 2019, must re-register between Jan. 18, 2018, and March 19, 2018.

Re-registration procedures, including how to renew employment authorization documents, have been published in the Federal Register and on uscis.gov/tps.

All applicants must submit Form I-821, Application for Temporary Protected Status. Applicants may also request an Employment Authorization Document (EAD) by submitting a completed Form I-765, Application for Employment Authorization, at the time of filing Form I-821, or separately at a later date. Both forms are free for download on USCIS’ website at uscis.gov/tps.

USCIS will issue new EADs with a Sept. 9, 2019, expiration date to eligible Salvadoran TPS beneficiaries who timely re-register and apply for EADs. Given the timeframes involved with processing TPS re-registration applications, however, USCIS recognizes that not all re-registrants will receive new EADs before their current EADs expire on March 9, 2018. Accordingly, USCIS has automatically extended the validity of EADs issued and currently valid under the TPS designation of El Salvador for 180 days, through Sept. 5, 2018. 

On Jan. 8, Secretary of Homeland Security Kirstjen M. Nielsen determined that the statutory conditions supporting El Salvador’s TPS designation on the basis of an environmental disaster are no longer met. Secretary Nielsen made her decision to terminate TPS for El Salvador after reviewing country conditions and consulting with appropriate U.S. government agencies. To allow time for an orderly transition, she also delayed the effective date of the termination for 18 months from the current expiration date of March 9, 2018. As a result of the delayed effective date, El Salvador’s TPS designation will end on Sept. 9, 2019.   

Salvadorans with TPS may wish to consult with qualified immigration attorneys or practitioners about their eligibility for another immigration status or benefit, or whether there is any other action they may want to take regarding their individual immigration circumstances." 

For more information on USCIS and its programs, you can visit www.uscis.gov 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 www.medveskylaw.com.

#BucksCounty #Immigration #lawyer #lawyers, #MontgomeryCounty #Souderton #Law_Firm  #TPS

Bankruptcy Chapter 13 - How much will my monthly payment be? (Part 3)

This is the third part of a blog series. In Part 1, I explained the first step in determining the amount of the monthly chapter 13 payment. In Part 2, I explained the second step is to determine what debts must be paid in full through the plan. The next step is to complete the Disposable Income analysis, which is referred to as the "Means" Test.  

The means test uses a series of calculations using some local, regional and national statistics along with some actual allowable deductions from the debtors' gross income to determine what the debtors "should be able to pay" each month. This is will set the minimum monthly payment.

Also, it sets duration of the payment plan. If the calculations show the debtor's income is above the median income for the local population, the payment plan will probably be for 60 months. If the calculation show's the debtor's income is below the median income, the plan can be as short as 36 months providing the 36 payments can pay the amount of debt discussed in parts 1 and 2 of this series.

After completing the means test calculations for Jane and John, for this case, we determined their income is over the median income for their region and family size and the should have $375.00 disposable income for the plan. The plan will need to be 60 months.  

The means test is a complex analysis and really difficult to explain in detail. If you compare the minimum amount that needs to be paid ($26,000.00 see part 2) to the minimum amount required above ($375.00), you will find it is not enough to pay off the full debt.

The next step is to determine actual disposable income. In upcoming parts of this series I will discuss actual disposable income, the trustee's commission, and try to wrap all this with an estimated payment.

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 www.whhmlaw.com.

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