Showing posts with label discharge. Show all posts
Showing posts with label discharge. Show all posts

Thursday, January 18, 2024

Bankruptcy - Judgments can live for a long long time.

People should not be lulled into a false sense of finality because creditor has not pursued collection on an old, and mostly forgotten, judgment. Judgments in Pennsylvania can be collectible for years. 

Image courtesy of hywards
 at FreeDigitalPhotos.net

Over the last few weeks, I have received calls from potential clients because a creditor with an old judgment has frozen a bank account with the intent to garnish the money in the client's account. One judgment was entered December 2004 and the Writ of Execution was issued in December 2023. The people I spoke with about this issue were shocked the creditors and judgments came back for collection after being so quiet for so many years. I get a sense creditors are starting to ramp up after this long COVID collections break. Debtors should not assume a judgment debt just "went away." A bankruptcy case may help you deal with these old and dormant debts.

If you want assistance, legal representation, or just want to know more about Mark Medvesky or our firm Medvesky Law Office, LLC at http://www.medveskylaw.com/

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

Sunday, January 16, 2022

Things do not seems to be getting any better... Is it time to clean the slate by filing for bankruptcy protection?

Image courtesy of jscreationzs
at FreeDigitalPhotos.net
 Here are some of the current headlines:

"How sky-high inflation is evaporating Americans' savings, imposing 'cruelest tax' on
the poor"
 ABC News

"Rising prices put American families in deeper debt" FOX Business News, which states in the body:

"... According to a recent study from NerdWallet, Inc. the average U.S. household owes $155,622, with American households holding $15.23 trillion in debt nationwide. That figure is up 6.2% from a year ago..."

"The Fed Has Signaled Rate Hikes for 2022. Here's How That Could Impact Consumers" the ascent, which states in the body:

"... Once the Federal Reserve raises its rates, we could see credit card interest rates follow suit. That would be bad news for consumers who rack up balances during the holiday, or who carry existing balances into the new year..." 

"Get ready for the climb. Here’s what history says about stock-market returns during Fed rate-hike cycles. MarketWatch, which states in the body:

"...To be sure, it is harder to see the market producing outperformance during a period in which the economy experiences 1970s-style inflation. Right now, it feels unlikely that bullish investors will get a whiff of double-digit returns based on the way stocks are shaping up so far in 2022. The Dow is down 1.2%, the S&P 500 is off 2.2%, while the Nasdaq Composite is down a whopping 4.8% thus far in January..."

So, people are exhausting their savings, paying more for the essential goods, accruing more debt, and interest rates on current credit card debt is set to rise. Along with all this economic news, the federal stimulus money has ended. If you are just keeping your head above water now, you may start feeling like you are trying to bail out the Titanic in a few months. 

On top of all this, your retirement accounts (401(K)'s, IRA's, 403b's, etc.) will probably see a rough ride as well. This is not the time to withdraw retirement savings. I would argue it in never time to withdraw retirement savings if you are not retired. 

This may be the time to start the year with a clean slate? If this is the case, talk to a bankruptcy attorney about options.

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 www.whhmlaw.com.

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

Tuesday, January 4, 2022

Thinking about bankruptcy? This is not the time to pay back your family or friends...

Times are tough ... inflation is raging, stimulus ended, and interest rates about to increase. Many people have not fared well through the Covid-19 pandemic. Also, some people relied on family and friends for help to make ends meet. The natural desire is to pay back friends and family first.

Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net
If a person does so, it could cause problems later if that person needs to file for bankruptcy protection. Bankruptcy laws do not allow a debtor to treat one unsecure creditor different from another. Believe it or not, according to the law, owing a family member money is the same as owing a credit card company money. You cannot pay one creditor (your family) over another (credit card company). That can be called a "preference."

It may also be considered a "fraudulent conveyance." When you pay money to a friend or family member, an "insider", to avoid paying another creditor like a credit card company, a court could find this a "fraudulent conveyance." As a result, a Trustee can look to recover the payments from your family and friends. Don't get caught in this situation; talk to a bankruptcy attorney.

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 www.whhmlaw.com.

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


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 FreeDigitalPhotos.net
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 www.whhmlaw.com.

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

Sunday, February 4, 2018

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
    

Saturday, December 31, 2016

Experiencing financial hardship? What assets should you use first in case bankruptcy happens?

Image by Stuart Miles at FreeDigitalPhotos.net
When people find themselves in tight financial times, one of the things they start to do is liquidate assets ... they start selling things and cashing in investments. While that can make sense, people should plan how they use the assets they have available. Many times selling things just isn't enough.

So, why does it matter what a person sells? It matters because some assets can be protected in a bankruptcy and others cannot. So if a people cannot prevent bankruptcy with the property they own, I suggest it is better to save the things that can be protected in the bankruptcy.

The main asset and easiest asset to tap is usually a retirement account. Retirement accounts can be substantial. The problem with withdrawing money early is the cost to do it. First a person probably needs to pay the taxes on the money. Then they must pay a penalty. Usually, a person who withdraws $4,000 from his or her retirement account keeps only about $2,200 in cash. The rest is consumed by taxes and penalties. In bankruptcy, this money is usually 100% safe.

Some equity in homes can be protected. Investment  property may not be safe from the trustee. This is an area of consideration as a source funding people use. Home equity loans and second mortgages take equity out of your home. Once you use your property as collateral for a loan, it will probably need to be paid. By maxing out your home, a person uses value he or she could have protected in bankruptcy.

The recent event that caused me to consider this topic was a recent consultation. I met with a woman who started having financial trouble a couple years ago after a major illness, which resulted in temporary disability and long term limitations on her ability to work. When she entered her financial downturn, she had a decent retirement fund, a home and a rental property with several apartments and a commercial space.

Like many people, the first asset she liquidated was her retirement fund. She spent that down to zero. Then she worked looked into a home equity loan and mortgage modification. That wasn't working and she was in fear of foreclosure. Meanwhile, her rental property was earning enough to pay for itself and  even giving a small return.

If I could have met with her before she started doing anything, I think I would have reserved the retirement money, discussed the potential sale of the home, and explore the possibility of moving into an apartment in the rental property making it her home. That may have been a complete solution ... and maybe not.

I do not know if this would have worked. My point is, I did not get the impression this option or any other options were considered. Dealing with debt can be complex. Planning earlier may be able to help to minimize the damage.

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

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

Sunday, July 24, 2016

Bankruptcy and equity in your home Part 3 (final): I have too much equity in my home ... now what?

Image courtesy of Mister GC at FreeDigitalPhotos.net
So now you are a debtor that owns more of your home than can be exempted (protected) under chapter 7 bankruptcy; what do you do? Usually when this happens, the first thing people tell me is "I tried to get a home equity loan to pay my debt ... but my credit is so bad now, I cannot get a loan." The client wanted to use their equity to pay down their unsecured credit.

This is the time to consider filing for bankruptcy protection under Chapter 13. This is the way a debtors can protect their equity in their homes. So, of course, this is my recommendation. I'll usually say, "we could probably protect your home under chapter 13 with a payment plan."

Debtors continuously surprise me with the immediate response of "I'm not sure I want to do that." Think about it. They were usually willing to take a loan against their home, pay interest on the new debt and pay off the credit cards. Chapter 13 offers the opportunity to not take out new debt, pay mortgage arrears without additional penalties, discharge credit card  debt not paid during the chapter 13 payment plan, and not have to make payment for longer than 5 years. Obviously, that is an over simplification of the process but  worth the conversation. In many instances, chapter 13 can be better than a home equity loan.

My point is people, debtor with homes in trouble, should be open to chapter 13 as an option to chapter 7 bankruptcy. I always explore chapter 7 as the first option but it isn't always available. Chapter 13 is a viable option. Think of it as a second mortgage managed by the court instead of a financial institution.

On a side note, if you read some of my earlier blogs, you know I have written entries against using equity in your home to pay off unsecured debt. But there are times it may be wise to use proceeds from the sale of your home as you are down sizing. I have a client now who down-sized and thought she would pay off her smaller new home instead of her debt. She thought it would guarantee her a place to live as she aged. But the debt just grew and she never got it under control. Now she is in a chapter 13 case because she had too much equity. In hind sight, she may have been better off paying down the unsecured debt and getting a small mortgage. Again, just something to consider.

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 www.whhmlaw.com or call us a 215-660-3170 and schedule an appointment.

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

Friday, August 7, 2015

Bankruptcy - Secured Debt, Unsecured Debt, Priority Debt ... should I care?

When planning a bankruptcy, debtors need to understand the type of debt they have. Usually, debtors have a combination of debts. Most debtors have unsecured debt and some type of secured debt. Some debtors have government debt like taxes, which is classified as priority unsecured debt.  Finally, many people have students loans. The type of debt you have can influence whether you file bankruptcy and what chapter of bankruptcy you might use.

Image courtesy of David Castillo Dominici
at FreeDigitalPhotos.net
Unsecured debt is most commonly with credit card debt, medical bills, personal loans, and debt like that. This is the easiest debt to handle in bankruptcy. Generally, all unsecured debt is discharged in and the debtor is released from paying the debt.

Secured debt is your mortgage and auto loan. This is the type of debt a person has given a property interest, a lien, to the creditor in a specific piece of property like a car, an appliance, or a home. These debts are generally not discharged when you keep the property. If the debtor wants to keep a car for instance, the debtor must be able to pay the loan in full. If the debtor cannot pay the loan and gives up the property, then the amount owed above the value of the property becomes unsecured and can be discharged.

Priority unsecured debt has limitations on discharge-ability. This takes some analysis to determine whether the back taxes can be discharged. Discharging this type of debt is determined by several factors  including when it was access, for what purpose, the taxing authority itself, etc.

Students loans are considered unsecure debt but extremely difficult to discharge. The bankruptcy law distinguishes student loans from other unsecured debt and requires a person to prove "Undue Hardship" before the courts can discharge a student loan. The courts imposed such a high threshold to meet the "Undue Hardship" test that it is nearly for the average debtor to meet the burden.

As a result, the way different type of debt is treated will influence if you file bankruptcy and whether it will be under chapter 7 or 13. If a person has mostly unsecure debt (and make makes the "means test), he or she would probably want to file under chapter 7. People who have secured debt, want to keep the property and is behind on payments will probably need to file under chapter 13. Any combination of debt between these two examples requires a person to sit down with a bankruptcy attorney to help them decide what the benefits and drawbacks are on filing for bankruptcy.

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

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

Sunday, June 7, 2015

"So what happens when they foreclose on my house?"

In previous blogs, I discussed ways to avoid mortgage foreclosure and settle the matter before a court action. But what happens when a homeowner cannot avoid a mortgage foreclosure or wants to take advantage of the time a foreclosure action takes to complete? In Pennsylvania, the mortgage company has to go through several steps before it can foreclose on a home.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net
First, a homeowner must fall behind a couple months on his or her mortgage payment. Once someone falls behind, the bank will send notice to the homeowner that it intends to proceed with foreclosure unless the homeowner acts. There are a couple options and they will be identified in the notice. If the homeowner does nothing or is unsuccessful in exercising the options available, the bank will file a complaint in foreclosure.

In many counties in PA, the court requires the homeowner and the mortgage company to attempt to settle the matter even after the complaint is filed. If the parties cannot work out a solution, the mortgage company is permitted to move forward with the foreclosure. The homeowner has 20 days to answer the complaint, Then the mortgage company can send a notice it intends to request a default judgment because the complaint wasn't answered.

If the homeowner still does nothing, a judgment in foreclosure will be granted to the mortgage. The judgment has to be sent to the sheriff's office to schedule the sale of the home. It will take time to schedule the sale. Up to the actual sale, the homeowner can save his or her home. They can work with the bank to make a payment and reinstate the mortgage. It is usually a large sum of money but it will put the homeowner back on track. If the homeowner cannot afford a lump sum payment, he or she can still file for bankruptcy under chapter 13 to protect the home and pay up the mortgage over time.

If the homeowner continues to do nothing, the home is sold by the sheriff. Once the home is sold, there is little chance of saving the home. But that does not mean the homeowner is forced out of the home the day of the sale. The property must be transferred to the new owner and then the homeowner will receive notice to vacate the property.

Even if the mortgage company takes every step as quickly as permitted by law, it is hard to complete the process in less than six months. In most case it will take close to a year to complete and some mortgage companies will allow this to drag out well over a year.

Some homeowners will not be able to work out an agreement with the mortgage company to save the home. Others may take advantage of the time it take to finalize a foreclosure. The time a home is in foreclosure, the mortgage company will not usually accept payment. The homeowner stays in the home rent free. This can be a time for the owner to save money before he or she needs to start paying rent again.

It is a long process to complete a mortgage foreclosure in PA even if a homeowner chooses to do nothing to save the home or is unsuccessful in using the various methods to save his or her home. If a person cannot save his or her home, he or she should consider using the time to save money.

Related blog entries:

Even in Chapter 7 Bankruptcy, returning your house to the bank isn't like taking a sweater back to the store

Market Watch - "... zombie foreclosures ..." up in New Jersey and "Philadelphia (5,405)"

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

Deed in lieu of foreclosure - You take the house and we're square ... right?

If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out our website at www.medveskylaw.com.

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

Wednesday, April 29, 2015

Bankruptcy - Rebuilding your credit after filing

One of the tips I give my clients about building credit after bankruptcy is to look for a secured credit card to start building credit. They need to find a card that reports to the credit reporting companies. A secured card is one where the card hold deposited money with the card issuer as collateral for the purchases made with the card. These cards are limited so the next step is to move to standard credit cards.

Here is a short article that offers suggestions on ways to get to the next step: How to Upgrade Your Secured Credit Card. This article discusses the following steps to try:

Image courtesy of Master isolated images
at FreeDigitalPhotos.net
1. Make Sure You Pay All of Your Bills on Time

2. Pay off Your Balance (of your secured card)

3. Track Your Progress (check your credit score regularly to ensure it is going up)

4. Wait a Year (using a secured card)

5. Contact Your Secured Card Issuer (about upgrading to a traditional card)

6. Speak with Your Retail Bank (about a traditional card)

7. Apply for Cards Offered to Those with “Fair” or “Average” Credit
 
It won't happen over night but you can help the process move forward. For a few more details, check out the article.
 
If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out my website at www.medveskylaw.com.

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

Saturday, April 25, 2015

A new phase of Medvesky Law Office LLC

A new phase of Medvesky Law Office LLC is opening. It is with mixed emotions I write this. Doug Wortman has taken a position with another firm. I met Doug in 1993 when I joined the 913th Airlift Wing at Willow Grove (the intel shop). We connected again as he was graduating law school and I was planning to open Medvesky Law. He joined me as at the open of the office. Recently, he was offered a great opportunity. I appreciate the help he gave me as we opened the office and his absence will be noticed. I wish him the best of luck in his new position.


If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out my website at www.medveskylaw.com.

 #Montgomery_County #law_firm #Bucks_County #Pennsylvania

Tuesday, April 14, 2015

Bankruptcy - What do Trustees do, why are they so picky, and how do I make it easier?

Every consumer debtor who successfully makes it through bankruptcy has to meet and testify in front of a trustee. Trustees are court appointed attorneys who oversee the administration of bankruptcy cases. They look through the debtors petitions, schedules, and supporting documents. Their job is to determine if a debtor has assets or is hiding assets that should be used to pay creditors.

Image courtesy of saphatthachat at FreeDigitalPhotos.net
In order to do their job, trustees pour through information found in numerous sources. They
review all the documents provided by law looking for signs of assets in documents like bank statements. They check public databases like the state's corporation registration and county recorder of deeds looking for ownership interests. They do it themselves or hire paralegals just for this purpose. When trustees find things outside the bankruptcy filing that should have been included, they are required to ask questions about those inconsistencies. It also causes them to become suspect and encourages them to dig deeper.

I can say, as a bankruptcy attorney, the last thing we want to happen is to learn new information about our client's finances at the creditor's meeting from the trustee because the client forgot or failed to tell us. This can cause a relatively straight forward proceeding that usually takes about 20 minutes to blossom into an hour long interrogation. I watched a case unfold like that at a creditors meeting last week.

I was in the meeting room waiting for my client's case to be called. My client was a little nervous; as most clients are. I suggested we sit closer to a meeting that was starting so he could hear some of the questions he would be asked. The case called before us was an older couple. The man was in a mobility scooter. For some reason, I thought, "oh this looks likes an easy case."

After a few standard questions, I heard the trustee ask about a parcel of real estate. I heard the man try to explain it wasn't his. After a few minutes of back-and-forth between the trustee and the man, the trustee said "well wouldn't you agree if your name is the only name on the deed, that it is your property?" It took about another 15-minute to discuss the rent being collected from that property. Then the trustee went into two businesses he found that were not listed in the schedules. The debtors' attorney did not seem to have a clue about these undeclared assets. What should have been a 15 - 20 minute interview turned into an hour ordeal.

The way to avoid this happening to you is to be open and honest with your attorney. The only way your attorney can help you through bankruptcy is for him or her to know and understand your finances. Everything discovered above could be innocent and may have no impact on the bankruptcy at all. The property could be mortgage with no equity; the rent could be just enough to maintain the property; and the businesses could be losing money or not operating at all. But all of that information needs to be disclosed and set out in the schedules. If the trustee would have had this information, that meeting could have been just like any other well documented bankruptcy case.

But what happened instead, with the case I discussed above, the trustee ended the meeting and the attorney walked out with a page full of questions to be answered. What is even worse, by not informing their attorney of these assets, the debtors may have placed their assets at risk of being taken. If the assets are not eligible to be exempted, the trustee could take them, sell them and distribute the proceeds among the creditors as is his job to do. They are at risk because once the debtors filed for bankruptcy they cannot withdraw it without permission from the court.

Until the case is completed and the debtors are discharged, it is the responsibility of the trustee to administer the case. Trustees diligently investigate the debtors and work to determine what, if any, is left for the creditors. The best way to avoid problems is to make sure your attorney has a full understanding of your financial picture. This allows your attorney to determine if bankruptcy is right for you and to present the full and complete case to the trustee and the court.

If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out our website at www.medveskylaw.com.

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

Monday, April 13, 2015

Do you know how long it will take you to pay off your credit card?

Image courtesy of hywards at FreeDigitalPhotos.net
Anyone who uses credit cards, and that is most of us, know that if you pay near the minimum, the debt never seems to go down. If you look at the payment schedule, you will see it will take years to pay off the debt with minimum payments while never adding anything to the card during the pay-off period.

I found an article to talk about the strategies to work on paying down your credit card debt: "How Long Does It Take to Pay Off $10,000 of Credit Card Debt?". It discusses a couple ways to work on your debt and definitely worth a try. Understand, these strategies will take time and, for many, most of their disposable income. If you read this article and think, "I don't have the disposable income to do this," you may want to consider bankruptcy.

If the ideas in the article seem out of your reach, read one of my previous blog entries: 
"Study [from the NY Federal Reserve Bank] shows Bankruptcy can give fresh start it promises". I have found in my practice, most people fully intended to pay their debts. Most of my clients have just hit hard times and they can no longer carry the debt they created. Above are two options to consider when you are having trouble with debt.

If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out our website at www.medveskylaw.com.

Previous Blog Entries:

Rebuilding credit after Bankruptcy...
http://medveskylaw.blogspot.com/2014/12/rebuilding-credit-after-bankruptcy.html

When will I be able to buy a new home after bankruptcy?
http://medveskylaw.blogspot.com/2014/10/when-will-i-be-able-to-buy-new-home.html

You can overcome bankruptcy...
http://medveskylaw.blogspot.com/2014/08/you-can-overcome-bankruptcy.html

Debt What?
http://medveskylaw.blogspot.com/2015/01/debt-what.html

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

Sunday, March 22, 2015

Bankruptcy - US Supreme Court looks at a major change in Chapter 7 bankruptcies.


UPDATE: The argument took place today, March 24, 2015. Commentary indicate the court did not really seem to lean one way or the other: "Argument analysis: Navigating between Scylla and Charybdis on underwater mortgages" - http://www.scotusblog.com/2015/03/argument-analysis-navigating-between-scylla-and-charybdis-on-underwater-mortgages/#more-226396

The court's decision will be released sometime this summer.

**********************************************************************************

The U.S. Supreme Court will hear oral arguments on March 24, 2015, in two cases to determine whether a chapter 7 debtor may strip off a second (or any junior) mortgage that is not secured by the home’s actual market value.

Image courtesy of renjith krishnan at FreeDigitalPhotos.net

In Bank of America, N.A. v. Toledo-Cardona, No. 14-163, the market value of the chapter 7 debtor’s home was $77,689.00.  The first mortgage owed to Quicken Loans had a balance of $135,703.00, and the second mortgage owed to Countrywide Bank had a balance of $32,000.00.

In Bank of America, N.A. v. Caulkett, 13-1421, the market value of the chapter 7 debtor’s home was $98,000.00, the Countrywide Financial first mortgage balance was $183,264.00, and the Countrywide Financial second mortgage balance was $47,855.00.

The lower court allowed the second liens to be discharged (stripped) as unsecured debt. If the court upholds these decisions by Eleventh Circuit U.S. Court of Appeals, it will be a major change for many Chapter 7 debtors. This could give more homeowners access to relief under Chapter 7 or finally close the door on this option in Chapter 7. Of course this should not impact a debtor's ability to strip liens in Chapter 13. It will be interesting to see the results in the next couple months.

If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out our website at www.medveskylaw.com.
 
#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania

NOTE: I found this info in a blog and a deeper explanation can be found here http://bit.ly/1xOVhjx

Tuesday, March 17, 2015

Changes to credit reporting are coming.

This month, the three major credit reporting agencies  - Equifax, Experian and Transunion - settled a case with New York. One of the greatest changes will be the dispute system. Anyone who has tried to correct their credit report knows how hard it have inaccurate information removed. This article explains some of the expected changes: "Your Biggest Credit Report Complaint May Be Getting Fixed".

The article explains three major changes are:


Image courtesy of Stuart Miles at FreeDigitalPhotos.net
"Changing the credit report dispute process would address one of the biggest consumer gripes with the credit reporting agencies — that it’s challenging to remove inaccurate, damaging information from credit reports."
...
"Medical debt will no longer be reported until 180 days after it was incurred, allowing consumers more time to resolve the bill with their healthcare providers and insurance companies."
...

"Small fines may no longer have the ability to wreck your credit."
 
Because the reporting agencies have three years to implement these changes, there are not a great deal of details on how these changes will be handled. The article linked above discussed a little more about the changes. If this interests you, the article is worth reading.
 
If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out our website at www.medveskylaw.com.
 
#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania
 


Monday, March 16, 2015

Bankruptcy - The gift that keeps on taking ...

We all want and expect to pay our bills. When people first start getting behind on bills, they tend to look for ways to just get through the next month and expect everything will turn around. But one financial patch after another ... an unexpected expense here ... an indulgence there ... and then a major life event - divorce, medical emergency, unemployment - and serious intervention is required.

Image courtesy of cooldesign at FreeDigitalPhotos.net

But people still work to avoid bankruptcy. So they look to friends and family for a helping hand. No one want to see friends or family suffer. So family members jump in. Parents cash in savings and retirement accounts; co-sign loans; and friends pay bills. So what happens when the assistance fails and bankruptcy becomes the only option?

Recently, I've had a couple clients come in with large loans with their family and friends. One had a significant other cover living expenses for about $10,000 plus owed a brother and sister, combined over $13,000. Another had parents who took out a $40,000 mortgage on their home to assist with the debtor's bills. That is just two middle class clients with over $60,000 in debt to their middle class friends and family.

So, what happens to that debt? It gets discharged like all other unsecured debt. A person filing bankruptcy cannot choose to paid one creditor and not the others. That is called a preference and is not allowed by law. So along with Visa and MasterCard, the parents and significant other are discharged and the debt is wiped out. Even though the parents' debt is secured by their home, the debt between child and parent is unsecured.

Sometimes "help" isn't really helpful. While there are arguments that these losses were necessary, it may only prolong the inevitable. Before you lose your family's money or you "lend" money to someone to get them out of financial trouble, make sure it will end the problem and just kick the can down the road.

 If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out our website at www.medveskylaw.com.

Other articles and blogs:

The Best Ways to Loan Money to Friends and Family
http://www.credit.com/loans/loan-articles/the-best-ways-to-loan-money-to-friends-and-family/

Debt What?
http://medveskylaw.blogspot.com/2015/01/debt-what.html

Rebuilding credit after Bankruptcy...
http://medveskylaw.blogspot.com/2014/12/rebuilding-credit-after-bankruptcy.html

You can overcome bankruptcy ...
http://medveskylaw.blogspot.com/2014/08/you-can-overcome-bankruptcy.html

When will I be able to buy a new home after bankruptcy?
http://medveskylaw.blogspot.com/2014/10/when-will-i-be-able-to-buy-new-home.html

#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

Image courtesy of phanlop88
at FreeDigitalPhotos.net
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 http://nyti.ms/14sR1xP  (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 http://bit.ly/1xJDA7p.

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 http://www.medveskylaw.com/


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

Tuesday, November 25, 2014

School Loans are still hard (if not impossible) to discharge in Bankruptcy

Image courtesy of Stuart Miles at FreeDigitalPhotos.net
With all the talk in Congress about student loan debt and the idea of trying to lift the debt off the struggling former students, very little has been do to actually make it happen. Young people who come in to talk about bankruptcy are usually servicing a big chunk of school debt. While the bankruptcy code allows debtors to discharge school debt if it is causing a hardship, I haven't seen a case where the debt has reached that standard.

Parents need to keep in mind when they take out the school loans, they must meet the same standard to discharge the debt. This can become a real issue as the parents approach retirement age and their children default or fail to pay the loans the parents took or co-signed for. Parents and students need to be mindful of the loans they take.

Recently in Forbes (on-line) was an article that offered points to consider when taking school loans: "The 3 Biggest Mistakes People Make With Student Loans" http://onforb.es/1t3q1cK. It is short and gives some practical advice on school loans.

The 3 biggest mistakes, it states, are:


"Going To College "To Find Yourself"
...
Using That Student Loan Refund Check For Extracurricular Activities
...
Not Working To Minimize Student Loan Debt"


I know many parents feel compelled to pay for college as well. I always suggest to my clients that they let their children take the loans, if necessary and then, help pay them if the student successfully makes it through school. I've seen many times when kids who don't have any skin in the game goof off on their parents' money. This way, if the student blows school, it is on them to pay for their mistake.

But the bottom-line here is bad decisions about school loans can haunt a family for decades. Congress has publicly spoken about the issue but nothing has really changed.

Learn more about my firm Medvesky Law Office, LLC at http://www.medveskylaw.com/

Friday, November 7, 2014

Bankruptcy and the Affordable Care Act ... any connection?

Image courtesy of Ambro at FreeDigitalPhotos.net
I have found through my career the primary reasons people are forced to file bankruptcy are medical bills, an ugly divorce, and prolonged periods of unemployment. Most of the time, I find it is a combination of these things. That doesn't mean I haven't found other reasons pushing people into bankruptcy but I have found them to be common reasons.

An assistant professor of Health Policy,  Department of Health Policy and Management at Columbia University wrote an article about the potential impact of the expansion of Medicaid through the Affordable Care Act on the rate of Bankruptcy filings - "Deaths and bankruptcies: What awaits states that don't expand Medicaid?" http://bit.ly/1tbXyBh. I'm not sure how much practical information will come from this discussion but it has caught my interest.

The researchers "... hypothesized that Medicaid coverage might allow some families to avoid bankruptcy. After all, one of the chief benefits of health insurance is that---when you really need health care---you don't have to pay for it. Perhaps, we thought, families given Medicaid coverage are less likely to get stuck with a big hospital bill, and so are less likely to end up in bankruptcy."

In the article, the author stated, "To test that hypothesis, we dug up data on the Medicaid expansions of the 1990s and early 2000s. We found that, in the years after states expanded Medicaid, fewer families declared bankruptcy. Every ten-percentage-point increase in Medicaid eligibility---typical of 1990s-era Medicaid expansions---led to an eight-percent reduction in bankruptcy rates."

Again, I agree one cause of bankruptcy can be a serious medical issue and high medical bills. It is unclear if the researchers drilled down into the dockets to see the types of debts listed in the schedules. I don't know if the researchers uncovered evidence the expansion actually reduced the number of bankruptcies with medical debt being discharged. I can see some correlation but I suspect the dramatic reduction was due to multiple factors.

The article seems to ignore the fact that the 1990's ushered in one of the longest periods of expansion in the US since WWII. The unemployment rate declined from a high of 7.5% to under 5% by the end of the decade. The second half of the decade saw growth of the GDP averaging over 4%. And I found one report that stated over 22 million jobs were created in the 1990's. The bottom-line is the economy really started to move in that decade after a sluggish start. It make sense that bankruptcy rates dropped through the 1990's for many reasons.

But my experience is explaining the cause of bankruptcy isn't this simple.  Most of the time debtors are good people who believe they will be able to get themselves out of the hole they are in and sometimes they do. Most of the time, they throw good money after bad. While I think real, affordable medical care could help many with less means, I don't believe people should look to the expansion of Medicaid to bail them out of their financial hole. If you even think you might be in over your head, talk to a bankruptcy attorney. The only thing you have to lose is your debt.

Monday, November 3, 2014

Market Watch - "... zombie foreclosures ..." up in New Jersey and "Philadelphia (5,405)"

Image courtesy of franky242 at FreeDigitalPhotos.net
"Zombie foreclosures rise in 16 states and 60 metro areas"
Market Watch http://on.mktw.net/1yMgaxb.
Even as the economy seems to be getting better, people are still leaving their homes before the foreclosure is complete. I know most clients are just trying to do the right thing and also trying to avoid additional embarrassment by leaving their homes before the sheriff shows up. But leaving your home could be a missed opportunity to help get you back on your feet. If you stay in the house and keep it in reasonable shape, you are helping the mortgage company to some degree and saving money for yourself.

Also, it helps limit new debt. As long as you "own" the house, you remain responsible for assessments, home owners' association fees and possibly other liabilities. Don't make a bad situation worse. It pays to plan your exit from your home during these trying financial times.



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