I have found in my practice that this is one of the hardest things for clients to consider doing. We all get emotionally attached to our home, often because that is where our children were raised or it is family property. It is very difficult to consider letting your home go back, but it is often the economically sound thing to do for your future.

I would also add that in our area of Kentucky, we have many folks that have financed a manufactured or mobile home and land together and owe much more than the manufactured or mobile home is worth, even factoring in the value of the land. Manufactured or mobile homes most often depreciate in value, thus never allowing folks to build up equity in them. In these cases, surrendering the manufactured or mobile home is often the wisest thing to do. A home can be surrendered to the bank or mortgage holder in Chapter 7 Bankruptcy and the debt owing on the home is then discharged, or eliminated.

Almost every week, we have folks come into the office and they find that their paychecks or bank accounts are being garnished and they were not aware they had even been sued. Unfortunately, in Kentucky, it is possible for a creditor to sue you and, even if you are never served with the lawsuit papers, obtain a judgment against you. This is done through the process of a Warning Order Attorney being appointed by the court to notify you of the lawsuit. If the warning order attorney reports to the court they have attempted to locate you, but can’t, then the creditor may be able to have the court enter a judgment against you. Also, if you don’t respond to court papers that are, in fact, served on you, the creditor can also obtain a default judgment against you and begin garnishment of your paycheck and bank account without your knowledge.

If garnishment has started, it is important to immediately call an attorney to see what your rights are. You may want to consider bankruptcy as an option. The filing of bankruptcy will stop any and all garnishments and, in the case of chapter 7 bankruptcy, discharge the remaining debt owed to that creditor.

The answer is that they generally can keep their refunds, depending, of course, on how large the refund is. The general bankruptcy exemptions available under the federal bankruptcy exemptions (which we can use in Kentucky) are usually large enough to protect most tax refunds from being lost to the trustee. You can also use your tax refund to pay the fees and costs for the bankruptcy.

Also, if you are thinking about filing bankruptcy, and are going to use your tax refund to pay off a debt to a family member or creditor prior to filing bankruptcy, you should consult with a bankruptcy attorney before doing that. There are provisions in the bankruptcy law which may allow the trustee to take that money back from the family member or creditor should you then file bankruptcy after paying them. Alternatively, if you just keep the refund and don’t pay any of it to anyone, then the refund may be able to be protected with the exemptions as outlined above, and as we said above, used to pay the fees and costs for the bankruptcy.

Car and truck lots that finance the purchase of car or truck are very common and do have to be listed as a creditor in your bankruptcy and the vehicle you purchased does have to be listed as an asset. If you have such a vehicle loan, be sure and tell your bankruptcy attorney about the loan. If you are current on the loan, and you are filing Chapter 7 bankruptcy, you can very likely reaffirm the loan and keep paying the car lot and keep the vehicle. You also have the option of surrendering the vehicle back to the car lot and owing them nothing in a Chapter 7 bankruptcy. If you are filing Chapter 13 bankruptcy, you can surrender the vehicle, keep the vehicle and keep paying for it outside the Chapter 13 plan, or put the debt on the vehicle inside the plan and keep the vehicle. The details, paperwork and title of the purchase and the vehicle need to be provided to your bankruptcy attorney immediately. There are issues that could arise that your attorney can check that could affect your ability to keep the vehicle if you are filing Chapter 7, even if you wanted to keep paying for it and are current on the payments.

So, yes, the debt to the car or truck lot MUST be listed in any type of bankruptcy that you file and your attorney can guide you as to the best option for you in keeping the vehicle or letting it go.

Care Credit is a credit card account, or line of credit, offered through GE Capital that doctor and dentist offices are offering to their patients, with or without health insurance, to pay for the uninsured costs up front. Once the patient signs up and is approved for the credit, then Care Credit pays the health care provider their charges and the patient then begins making payments on the account, typically on a monthly basis.

If the patient files bankruptcy, then the debt to Care Credit is required to be listed in the bankruptcy as an unsecured debt. In Chapter 7, this typically means that the debt to Care Credit is discharged. Since Care Credit has paid the health care provider, there would typically not be any debt to the health care provider to list in the bankruptcy petition, unless there were any other amounts owed to the provider once they were paid by health insurance and Care One. If the patient files Chapter 13 bankruptcy, then Care Credit would be listed as an unsecured creditor and paid back whatever percentage that unsecured creditors are being paid through the patients Chapter 13 plan. As our health care world changes, we expect to see more creditors such as Care One and more questions from clients on how this debt would be affected by bankruptcy.

Yes. All of the debts have to be scheduled, with the name and address of the creditors. This is so that they can receive notice of the bankruptcy, and get their fair share of any money that is paid to creditors. Sometimes debtors think that they should omit a creditor because they want to continue to pay the debt. This would violate the law, and it is unnecessary, because a debtor can always choose to pay a debt voluntarily, even though the debt has been discharged and there is no legal obligation to make payment. However, creditors are usually prohibited from taking any action to collect discharged debts.

Although bankruptcy cases can be complex, many of the procedures and cases are routine. Before filing a bankruptcy case, you or your attorney should analyze your eligibility for different forms of debt relief available under the Bankruptcy Code and which form of relief is most beneficial to you. Be sure you understand the relief you can obtain and its limitations.

To file a bankruptcy case, documents called a Petition, Schedules, and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly and filed with the bankruptcy court. You will have to pay a filing fee to the bankruptcy court.

Once your case is filed, you will have to attend a first meeting of creditors where you will be questioned under oath by a court official called a “trustee”. At this meeting you may also be questioned by your creditors.

If you choose to file a Chapter 7 case, you may be asked to reaffirm a debt. You may want help deciding whether to do so. A creditor is not permitted to coerce you into reaffirming debts.

If you choose to file a Chapter 13 case in which you repay your creditors what you can afford over a 3 to 5 year period, your attorney will help you in preparing your Chapter 13 plan and with the confirmation hearing on your plan which will be before a Federal Bankruptcy Judge.

If you select another type of relief under the Bankruptcy Code other than chapter 7 or chapter 13, you will want to find out what should be done from someone familiar with that type of relief.

Your bankruptcy case may also involve litigation. You are generally permitted to represent yourself in litigation in bankruptcy court. BE AWARE – Only an attorney can give you legal advice and can represent you in court.

The New York Times has an article out today that discusses the recent trend of medical offices offering to patients the option of paying for their procedures in advance with a medical credit card. These cards, or accounts, are being offered to pay the portion of the care not covered by health insurance, or even for folks without health insurance or who have no coverage for that particular procedure.

There are many different companies that offer these cards, or accounts, but the one that we see most often with clients is the CareCredit, a unit of General Electric Finance.

If a patient does sign up, the medical provider is paid by the finance company, then the patient pays back the finance company over time, often at very high interest rates.

These accounts are treated in bankruptcy as an unsecured creditor and may be a debt that can be discharged.

Yes. All of the debts have to be scheduled, with the name and address of the creditors. This is so that they can receive notice of the bankruptcy, and get their fair share of any money that is paid to creditors. Sometimes debtors think that they should omit a creditor because they want to continue to pay the debt. This would violate the law, and it is unnecessary, because a debtor can always choose to pay a debt voluntarily, even though the debt has been discharged and there is no legal obligation to make payment. However, creditors are usually prohibited from taking any action to collect discharged debts.

A reaffirmation agreement is an agreement by a debtor and a creditor about how to treat a particular debt that would otherwise be discharged in the debtor’s bankruptcy. Usually, the debt is secured by collateral that the creditor could repossess or foreclose on. In the reaffirmation agreement, the debtor agrees to pay some or all of debt, usually, according to schedule. In exchange, the creditor agrees not to repossess or foreclose on collateral that secures the debt, as long as the debtor makes the agreed-upon payments. A valid reaffirmation agreement puts the debtor under a legal obligation to pay back the entire amount agreed upon, even if this is more than the value of the collateral that the debtor is keeping. So if the debtor defaults in the payments required under the reaffirmation agreement, the creditor can repossess or foreclose, and then seek a personal judgment against the debtor if the sale of the collateral does not satisfy the debt.

However, in order for a reaffirmation agreement to be valid, several requirements must be met, including the following: (1) the agreement has to be entered into before the debtor receives a discharge; (2) the agreement has to be filed with the court, the bankruptcy court has to make a finding that the reaffirmation agreement is done knowingly and does not create a serious problem for the debtor. The agreement must be voluntary; no one can force either the debtor or a creditor to enter into a reaffirmation. Finally, debtors are given the right to change their minds: a debtor may cancel any reaffirmation agreement within 60 days after the agreement is filed with the court, or any time before discharge, whichever is later.

If any of the requirements for a reaffirmation have not been complied with, the agreement may not be binding. In that event, the debtor would have no personal obligation to make payments under the agreement.

The area of student loan forbearance and forgiveness can be confusing and misleading if you rely on the internet to research your options. Thankfully, the new Consumer Financial Protection Bureau, also known as the CFPB, in Washington, DC offers a website to begin the process of dealing with student loans that are not current.

The site, which can be accessed by clicking here, can cut through some of the confusing material and misleading information that you may find on the internet. As a government agency, the CFPB was set up with a specific mandate to help the average consumer deal with all the confusing myriad of options out there in the financial world. The CFPB was the brainchild of Senator Elizabeth Warren, who at the time was a professor at Harvard Law School, and a long time advocate of consumer rights for the public. This site can be a starting point for research and my message would be to not give up, as most of the time the student loan lenders, be they government or private, will offer you better options and terms than you currently have if you can demonstrate a financial need.

The area of student loan forbearance and forgiveness can be confusing and misleading if you rely on the internet to research your options.

Thankfully, the new Consumer Financial Protection Bureau, also known as the CFPB, in Washington, DC offers a website to begin the process of dealing with student loans that are not current.

The site: http://www.consumerfinance.gov/askcfpb/627/what-are-my-options-if-im-worried-about-not-being-able-make-payments-my-federal-student-loans.html can cut through some of the confusing material and misleading information that you may find on the internet. As a government agency, the CFPB was set up with a specific mandate to help the average consumer deal with all the confusing myriad of options out there in the financial world. The CFPB was the brainchild of Senator Elizabeth Warren, who at the time was a professor at Harvard Law School, and a long time advocate of consumer rights for the public.

This site can be a starting point for research and my message would be to not give up, as most of the time the student loan lenders, be they government or private, will offer you better options and terms than you currently have if you can demonstrate a financial need.

All Chapter 13 cases have a Trustee. He is responsible for the overall administration of your case. In all cases in the Western District of Kentucky, the Trustee is William W. Lawrence. He has many active files in addition to yours.

The Trustee’s duties are found in the Bankruptcy Code. They include at a minimum, reviewing the bankruptcy petitions to ensure that they are complete and accurate; determining the ability of debtor(s) to make payments and whether all Chapter 13 plans will be successful as proposed; conducting the first meeting of creditors and appearing at other hearings in your case; monitoring the progress of your case; collecting your payments and paying creditors

according to the plan; recovering improper payments made before your filing; providing information about your case to those who are authorized and have a need to know; and most importantly, assisting you in the performance of your plan.

Remember: the Trustee cannot give you any legal advice. If you need legal advice you need to contact your attorney.

It’s not always the most expensive bankruptcy lawyers that are the best or the cheapest that are the worst. In most areas, the prices for filing bankruptcy are determined by the market. The filing fees and credit counseling fees are set fees. The attorney fee, in most cases can vary. (The exception is Chapter 13 where, in most jurisdictions, the price is set by the judges)

One of the most important things to look for, other than price, is the experience of the lawyer. How many bankruptcy cases do they usually handle per month? How many cases have they filed in the last year ?

Is the lawyer a member of any bankruptcy attorney professional associations. The National Association of Consumer Bankruptcy Attorneys is the largest professional association of consumer bankruptcy attorneys representing folks filing bankruptcy. If a lawyer is a member, chances are good that they stay current on the law and ways to help you.

Also, there is national board certification for consumer bankruptcy attorneys done by the American Board of Certification. To become board certified and remain board certified, attorneys are required to pass thorough written examinations testing their knowledge of bankruptcy law and must certify that they maintain continuing education far over and above the minimum required by each state, in bankruptcy continuing education. Also, the attorneys are required to have been involved in a minimum level of cases for the period of certification. In other words, they must remain competent in bankruptcy law in practice and experience.

By clicking on the links above to both organizations, you can go to their sites and both sites have attorney finder options to help you select an attorney in your area that is a member.

Debtors in Chapter 7 are required to give up “nonexempt” property that they own at the time of the filing; they are allowed to keep both “exempt” property that they own at the time of filing and any property that they receive a right to own after the bankruptcy filing. Exempt property is property that, according to the law, is necessary for the debtors’ support and the support of their dependents. In Kentucky, either Federal or State exemptions are available for you to use. If all of a debtor’s property is exempt, then the debtor does not have to give up any property in Chapter 7, but may still obtain a discharge.

As long a debtor has a right to payment at the time of the bankruptcy filing—from a tax refund, a lawsuit, or some other source—that right to payment is property that must be given to the Chapter 7 trustee unless it is exempt, even though the debtor has not yet received any money. Thus, a debtor may have to turn over all or a portion of a tax refund to the trustee that is received, and a debtor may not be entitled to all or a portion of the settlement of a personal injury action that is entered into after the bankruptcy is filed.

For example, what if I have some emergency?

It is important for you not to miss any payments to the Trustee. When you file your Chapter 13, you get the benefit of prohibiting your creditors from taking any action against you. In exchange for that relief, you must complete your obligations under the plan. One of those obligations is making your payments to the Trustee on time as required. If you miss payments, the Trustee cannot pay your creditors as called for by your plan and the Trustee will be obligated to file papers with the Bankruptcy Court asking that your case be dismissed. If your case is dismissed, your creditors will be notified and they may resume collection against you.

If there is a serious change in your circumstances, you should notify your attorney as soon as possible, even before you miss a payment. Your attorney can reevaluate your financial situation and, if appropriate, modify your plan to reflect the changed circumstances. This process can take several weeks, so be sure to contact your attorney immediately if you foresee any problems with your payments.

Although bankruptcy cases can be complex, many of the procedures and cases are routine. Before filing a bankruptcy case, you or your attorney should analyze your eligibility for different forms of debt relief available under the Bankruptcy Code and which form of relief is most beneficial to you. Be sure you understand the relief you can obtain and its limitations. To file a bankruptcy case, documents called a Petition, Schedules, and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly and filed with the bankruptcy court. You will have to pay a filing fee to the bankruptcy court. Once your case is filed, you will have to attend a first meeting of creditors where you will be questioned under oath by a court official called a “trustee”. At this meeting you may also be questioned by your creditors. If you choose to file a Chapter 7 case, you may be asked to reaffirm a debt. You may want help deciding whether to do so. A creditor is not permitted to coerce you into reaffirming debts. If you choose to file a Chapter 13 case in which you repay your creditors what you can afford over a 3 to 5 year period, you may also want help with preparing your Chapter 13 plan and with the confirmation hearing on your plan which will be before a Federal Bankruptcy Judge. If you select another type of relief under the Bankruptcy Code other than chapter 7 or chapter 13, you will want to find out what should be done from someone familiar with that type of relief.

So, the US Supreme Court has just ruled, in the case below, that the federal Defense of Marriage Act (aka DOMA) is unconstitutional … now, if a same sex couple is legally married in a state that recognizes same sex marriage, they can file a joint bankruptcy petition in any state in the union. The law is ever-changing.

Click here for to read the opinion by the US Supreme Court.

The Court opined that DOMA is unconstitutional as a deprivation of the equal liberty of persons that is protected by the Fifth Amendment.

“DOMA singles out a class of persons deemed by a State entitled to recognition and protection to enhance their own liberty.”

It really depends! The Casey Anthony bankruptcy case and state court lawsuits against her provide an insight.

For almost all situations, a temporary hold, or Stay, is put in place when you file bankruptcy of any type which prevents any court suit from continuing immediately.

If you are filing bankruptcy, and surrendering real estate, foreclosures against that real estate can start or continue when relief from the stay is granted by the bankruptcy judge.

If you are filing bankruptcy and have other types of law suits pending against you, it may be possible for that lawsuit to continue after relief from stay is granted, to see what type of judgment or award is entered. There are specific types of judgments or awards that can not be discharged, or wiped out, in bankruptcy. This appears to be what is happening in the Casey Anthony bankruptcy. Her lawyers seem to be arguing against allowing the state court lawsuits against her to continue.

Always be certain to share with your attorney information about ALL lawsuits that you are a part of when you file bankruptcy or even that arise during your bankruptcy.

Under US bankruptcy law, the following notice is required to be given to folks that we meet with to discuss bankruptcy. You will notice that the law reminds you that you can represent yourself in bankruptcy court. Abraham Lincoln had it right – “He who represents himself has a fool for a client”. In all matters in bankruptcy court, big and small, we always recommend an attorney be hired. Is it because we want to be paid ? No. Is it because we want folks to be protected. A resounding Yes ! Consult with an attorney of your choosing today if you are considering bankruptcy. Remember, bankruptcy is in a court of law and there are individuals and creditors whose interest is adverse to yours. You need someone on your side looking out for your interests !

IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN ATTORNEY ORBANKRUPTCY PETITION PREPARER

• If you decide to seek bankruptcy relief, you should be advised that you can represent yourself in all matters connected with the bankruptcy.

• If you decide to seek bankruptcy relief, you should be advised that you can hire an attorney to represent you.

• If you decide to seek bankruptcy relief, you should be advised that in some areas you may hire a bankruptcy petition preparer who is not an attorney.

THE LAW REQUIRES AN ATTORNEY TO GIVE YOU A WRITTEN CONTRACT SPECIFYING WHAT THE ATTORNEY WILL DO FOR YOU AND HOW MUCH IT WILL COST. ASK TO SEE THIS CONTRACT BEFORE YOU HIRE AN ATTORNEY.

Although bankruptcy cases can be complex, many of the procedures and cases are routine. Before filing a bankruptcy case, you or your attorney should analyze your eligibility for different forms of debt relief available under the Bankruptcy Code and which form of relief is most beneficial to you. Be sure you understand the relief you can obtain and its limitations.

To file a bankruptcy case, documents called a Petition, Schedules, and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly and filed with the bankruptcy court. You will have to pay a filing fee to the bankruptcy court.

Once your case is filed, you will have to attend a first meeting of creditors where you will be questioned under oath by a court official called a “trustee”. At this meeting you may also be questioned by your creditors.

If you choose to file a Chapter 7 case, you may be asked to reaffirm a debt. You may want help deciding whether to do so. A creditor is not permitted to coerce you into reaffirming debts.

If you choose to file a Chapter 13 case in which you repay your creditors what you can afford over a 3 to 5 year period, you may also want help with preparing your Chapter 13 plan and with the confirmation hearing on your plan which will be before a Federal Bankruptcy Judge.

If you select another type of relief under the Bankruptcy Code other than chapter 7 or chapter 13, you will want to find out what should be done from someone familiar with that type of relief.

Your bankruptcy case may also involve litigation. You are generally permitted to represent yourself in litigation in bankruptcy court. BE AWARE – Only an attorney can give you legal advice and can represent you in court.

Whenever a debtor’s application for credit is denied, the credit issuer is required to give the debtor, on request, a copy of any credit report that was used in making the decision. Otherwise, debtors can obtain their credit reports from the major credit bureaus. These reports are free once (1) a year at www.annualcreditreport.com . If there are errors in a report, such as an incorrect social security number or the listing of a debt that is not owed, the debtor should make a request for correction in writing to the bureau, enclosing copies of any documents that would establish the correct facts.

A mandatory debtor education program is required in connection with Chapter 7 and Chapter 13 cases that can help debtors understand how to re-establish and maintain good credit. Also, after discharge in Chapter 7 or 13, debtors may be able to obtain a “secured” credit card, which requires that the debtor deposit funds with the credit card issuer. This provides the opportunity to show responsible use of credit, which is a major factor in any issuer’s credit decisions. (Other major factors are length of employment and length of residency.)

For individuals who cannot pay their debts—called “debtors”— bankruptcy has two main purposes:

First, bankruptcy operates to give the people who are owed money— the creditors — a fair share of the money that the debtors can afford to pay back.

Second, bankruptcy operates to give the debtors a fresh start, by canceling many of their debts, through an order of the court called a “discharge.”

There are two different ways in which bankruptcy for consumer debtors can provide for payments to creditors and a discharge for debtors—Chapter 7 and Chapter 13.

An excellent article from the website JD Supra about Small Business Bankruptcy and debts.

It is very important to always give complete information to your bankruptcy attorney about who is responsible for the debt of your business. For example, did you personally sign and guarantee the debt, or did you just sign the debt as a representative of your business ? Also, it will be very important for your attorney to know the type of your business, for example, is it a corporation, LLC partnership, sole proprietership, or some other type.

If you did not save the notes or other documents you signed with the bank or other lender, you will probably want to got get those to bring to your attorney to review when you meet with them.

Also, any contracts or other agreements you have with vendors will be important to provide your attorney.

Taxes are another type of debt that you may be personally liable for even though they were incurred in the course of a business.

A careful review of all of these issues and more will result in a better determination of your options.

The agency newly created by Congress to help us understand the complexities of financial products, The Consumer Financial Protection Bureau (CFPB), issued their report yesterday on why the credit score you purchase may be different from the credit score the bank uses. The report can be found here and the CFPB press release announcing the report can be found here.

We have all known for years that these discrepancies exist, and now, for the first time, the reasons are explained to us.

The report is fairly lengthy, but is a good explanation of the differences between the credit report a bank or financial institution “pulls” on you and a credit report that you obtain yourself over the internet or by mail.

This knowledge can help you understand why a bank or financial institution may take adverse action on your loans or lending capacity, even when you think your credit score that you had obtained doesn’t warrant that adverse action.