Category Archives: Debt Collection

Tricky Short Sale Deficiency Judgments

Short Sale KeysTricky Short Sale Deficiency Judgments

By Attorney Ginger Kelly

Agreeing to a short sale may seem like the best way to avoid foreclosure in many situations, but what happens to the money owed, after the short sale?

Quite often homeowners think short sales are the perfect solution to a difficult situation, the silver bullet, so to speak. The bank agrees to accept a sale price for less than the mortgage amount and presto, foreclosure averted!  But the problem with this is, a year or so after a short sale is completed, the mortgage lender can (and often will) seek a deficiency judgment against the former homeowner.

What is a Short Sale?

A short sale is when you sell your home for less than the total debt balance remaining on the mortgage. The sale price is “short” of the full debt amount. The short sale process involves the mortgage lender agreeing to accept the sale proceeds and release the lien on the property and then, the proceeds of the sale pay off a portion of the mortgage balance. Short sales are one way for borrowers to avoid foreclosure.

What is a Deficiency Judgment?

A deficiency is when a foreclosure sale doesn’t produce enough funds to pay the mortgage debt in full. The amount of the deficiency is the difference between the amount of the mortgage debt and the foreclosure sale price. A deficiency judgment is a judgment that the lender may obtain from a Judge, giving the lender the right to collect the deficiency from the borrower.

In a short sale situation, for example, if a homeowner sells their home in a short sale for $200,000, and the amount owed on the mortgage was $250,000, then $50,000 would be the deficiency amount. The lender could get a judgment from a Court Judge for the amount left owing and then some. This includes not only the $50,000 deficiency, but interest, other costs and sometimes attorney’s fees.

Deficiency Judgments in Massachusetts and Why are They So “Tricky?” 

Massachusetts is one of those states where a lender is permitted to seek a personal judgment against a borrower after a short sale to recover the deficiency amount. The tricky part comes in when, in general, once the lender gets a deficiency judgment against a borrower, the lender may collect this amount by using things such as a wage garnishment, bank account levy or by placing liens on titled property, like automobiles and motorcycles.

In Massachusetts, after a short sale, the lender can choose to do one of the following two things about the deficiency:

  1. The lender may choose to forgive the deficiency amount and issue to the borrower a Form 1099-C (Cancellation of Debt), which reports the deficiency as taxable income to the IRS. If this happens, the borrower (former homeowner) will have to pay taxes on the additional income this brings in the year they receive the 1099-C.  For most people, who were struggling to pay their mortgage, this causes tremendous hardship.
  2. The lender may choose not to forgive that part of the debt that has not been covered by the sales price and keep the right to file a court action to obtain a deficiency judgment.

If you are a homeowner and are thinking about negotiating a short sale with your mortgage lender in Massachusetts, it is very important to negotiate with your lender before you agree to a sale, to have the deficiency forgiven.

How Can I Avoid a Deficiency Judgment Following a Short Sale?

There are at least four ways to avoid having to pay back the deficiency.

  1. Negotiate a Waiver of the Lender’s Right to Seek a Deficiency Judgment

When a homeowner finds it necessary to sell their home in a short sale, it is important to try to negotiate with the mortgage lender and ask them to approve not only the short sale, but to a waiver of the right to seek a deficiency judgment. If your lender agrees, this provision must be included in the short sale agreement.  That means, always get the waiver in writing.  The short sale agreement must expressly state that the transaction is in full satisfaction of the debt and/or that the lender waives its right to the deficiency.

  1. Make a Settlement Offer

The second option homeowners have is, if the mortgage lender does not agree to waive the deficiency, the homeowner can offer to settle the deficiency for a smaller amount. Many lenders agree to accept a smaller amount because collecting a deficiency is expensive and typically takes a long period of time.  It’s easier for lenders to accept a reduced lump sum, rather than going through the expensive and lengthy legal process to try to collect.  A homeowner can also negotiate to repay the reduced deficiency debt in installments, over time.

  1. Hope the Lender Won’t Sue for the Deficiency

If the homeowner was not successful in negotiating a waiver of deficiency or a reduced deficiency payment plan, the mortgage lender will likely call and send collection letters stating that the deficiency amount is owed. Collection letters typically come from a lawyer’s office or a collection agency.  However, without taking the homeowner (borrower) to court and getting an actual deficiency judgment, the lender cannot levy any bank accounts, garnish wages, or place judgment liens on other property the borrower may own.

To get a deficiency judgment, the lender must file an expensive lawsuit. Many borrowers, who are forced to complete a short sale of their homes to avoid a foreclosure, are judgment proof.  This means that they don’t have much money, wages or other property (assets) that a creditor can take to pay off the judgment. If a borrower can’t afford to pay the deficiency, there is a possibility that a mortgage lender won’t even bother filing a lawsuit against them.

  1. Declare Bankruptcy

The other possibility is to file for bankruptcy to eliminate the debt.  A Chapter 7 bankruptcy would totally discharge the deficiency relieving the borrower of the entire debt. A Chapter 13 bankruptcy will require a payment plan for 3 or 5 years to pay a portion of the total amount owed. Bankruptcy may also be the most pro-active way to alleviate the tax problem before the lender issues a 1099-C.  Income taxes are not typically discharged in Bankruptcy unless they are very old and a borrower can’t retroactively discharge a recent 1099-C tax debt.

On the other hand, if taxes or the deficiency are all the borrower owes, bankruptcy may not be the best option.  However, Bankruptcy may be something to consider when the borrower is facing a lot of debt they can’t pay, or when a borrower needs to eliminate the possibility facing a tax burden they simply can not afford to pay in the future.  To find out more about whether or not Bankruptcy is really the easy way out, click here.

September 14, 2017

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The Law Office of Ginger B. Kelly is now accepting new clients.  Call and schedule your first appointment.  We are a small law office offering your first confidential consultation, absolutely free of charge.

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ABOUT ME:  Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture.

To find out more, visit, www.attorneykelly.com, visit us at Ginger B. Kelly on Facebook or feel free to call us at (508) 784-1444.

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NOTICE:  Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet.  Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other.  We cannot stress enough, if you need personal legal advice, always see your attorney.  Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice.  Seek legal advice and representation from your own personal attorney.

Copyright © 2017, by Ginger B. Kelly, Esq., all rights reserved.

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Filed under Bankruptcy, Chapter 7, Debt, Debt Collection, Deficiency Debt, Financial, Financial Planning, Foreclosure, Law, Lawsuits, Legal, Massachusetts, Massachusetts law, Mortgages, practical stuff, Short Sale, Uncategorized

Bankruptcy, the Easy Way Out. Really?

chapter-7-bankruptcy-lawyer-chicago-illinois-790x300

By Ginger B. Kelly, Esq. Posted: May 16, 2017

In 2013 there were over a million bankruptcy filings.  In 2014, there were slightly less than a million.  Based on these filing numbers, something like 1 out of every 200 adults in the US file for bankruptcy (uscourts.gov). That’s a lot of people turning to bankruptcy.  Based on these figures, it appears as if bankruptcy seems like an easy way out, or is it?  Let’s consider a few things before making this assumption, like the implications of a filing and how bankruptcy compares to other debt relief options.

Is Bankruptcy Really the Easy Way Out?

Basically, a typical Chapter 7 bankruptcy (total liquidation) filing involves three basic steps.

#1.  Paperwork: To begin any bankruptcy case, a series of forms outlining your debts, assets, income, expenses, and related information need to be filed.  This is not like your ordinary tax return.  There are multiple papers that need to be filed. It’s a ton of paperwork.

#2. Trustee Meeting: After the petition, the schedules and all the paperwork has been filed, a court hearing date for a 341 Trustee Meeting will be scheduled.  The Trustee Meeting (also known as the Meeting of the Creditors), the bankruptcy trustee will ask you many questions.  In Massachusetts, you will be given notice that the meeting is recorded.  Most of the questions confirm the information in your paperwork.  The Trustee may ask you about how your debts and assets will be handled. For most Chapter 7 filers, the Trustee Meeting goes rather quickly, about 15 minutes or so.

#3.  Discharge – After the Trustee Meeting, assuming nothing goes wrong, there are no issues or complications, most of your debts will be discharged.  A few debts that will not be discharged are Student Loans, some IRS Tax Debt and a few other things.  Now the person filing Chapter 7 can begin their fresh start.

But wait…

Those three steps are an over-simplification of the process.  There is a lot more to it.  Many other important legal considerations must be dealt with, in a typical Chapter 7 bankruptcy case. This is why most people consult with a lawyer before beginning or considering any Chapter 7 or Chapter 13 bankruptcy case.

Even when the case is closed, there’s a lot to consider.  Credit card debts, medical debts, payday loans and most other unsecured debts, are gone, but other debts like student loans may not ever go away.  Secured debts, like car loans and home mortgages can also go away.  But if a person whats to keep their home or car or both, they will need to reaffirm those debts and continue making those payments.  Sometimes, a reaffirmation hearing is required.

So why is Bankruptcy complicated?

Primarily, there are two big potential problems, maybe more.

#1.  Valuable property at Risk.  Because a bankruptcy trustee will evaluate both debts and assets, to determine if some debt could be repaid by liquidating (selling) your assets, a filer runs the risk of losing some important assets.

For most people, the two primary things they don’t want to lose are automobiles and real estate.  These two assets are the easiest to sell.  If the value of a filer’s home or car (or both) is much greater than the loan you used to buy it, that property could potentially be sold to repay creditors.

For more on how this works, and on the exemption laws that protect your property in bankruptcy, see this article, Should I Choose Massachusetts or Federal Bankruptcy Exemptions.

#2.  Effect on credit scores. The other issues most people worry about when it comes to filing for bankruptcy is how this affects credit scores.  Everyone knows any bankruptcy will have a serious impact on a FICO score for several years.  The degree of impact depends upon how good or bad a filer’s credit is the day they file their petition.  The better the credit the more significant the drop will be.  If a filer’s credit was shot to begin with, or on the low side, (which is true for most people who file for bankruptcy), the effect will be significant, but less than a filer with good credit.

To sum it all up, when a person files for bankruptcy, they can expect that obtaining loans right away won’t be so easy.  Often, credit cards and even car loans are available, but typically at very high rates of interest.  However, when a filer sticks to a reasonable budget, and pays their bills on time, they will be off to a fresh start and better credit over time.

Alternatives to Bankruptcy.

It’s been said that bankruptcy is sort of the “ultimate weapon” of debt relief.  But this means that bankruptcy should only be used when other options fail.  A discharge of debt via bankruptcy is only available once every seven or more years; bankruptcy is not something a person should try first.  Some people work with credit management companies to reduce debt, but I do not recommend this in most cases.  Others try asking family for help or they find another source of income, like a second job.  Adjusting one’s budget is always a good plan.  Do this before considering filing for bankruptcy.

Next Steps…

For those who have tried every option and have no realistic alternatives, then it’s time to schedule a consultation with a bankruptcy lawyer. Your first consultation should not cost a dime and it’s a good time to find out if bankruptcy will work in your situation.  When you meet with your lawyer, be sure to ask a few important questions.

  • Based on my income and job situation, do I qualify for bankruptcy?
  • Can I get rid of all my debts in bankruptcy?
  • Is property I own (bring a list of a few big items) unprotected or at risk?

A quick consultation with a good lawyer will help you understand a few things bankruptcy can do to help and what the risks would likely be or whether or not there are better options.

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The Law Office of Ginger B. Kelly is now accepting new clients.  Call and schedule your first appointment.  We are a small law office offering your first confidential consultation, absolutely free of charge.

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ABOUT ME:  Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture.

To find out more, visit, www.attorneykelly.com, visit us at Ginger B. Kelly on Facebook or feel free to call us at (508) 784-1444.

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NOTICE:  Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet.  Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other.  We cannot stress enough, if you need personal legal advice, always see your attorney.  Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice.  Seek legal advice and representation from your own personal attorney.

Copyright © 2017, by Ginger B. Kelly, Esq., all rights reserved.

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Filed under Bankruptcy, Debt, Debt Collection, Filing, Massachusetts, Massachusetts law, practical stuff, Rhode Island, Student Loan Debt, Uncategorized

Handle Student Loan Debt like a Boss

Gan Golan

“You snooze, you lose applies in every aspect of eliminating student loan debt.” ~Attorney Kelly

by Ginger B. Kelly, Esq.   Posted: March 9, 2017

We’ve all heard about, read about, or experienced it, crushing student debt.  Student loan debt can be quite paralyzing, overwhelming and downright horrifying.

That’s the bad news. The good news is, with good budgeting and planning, this beast like most others can be tamed. Dealing proactively with student loan debt is a far better plan than dealing with the nasty consequences of doing nothing and facing wage garnishment.  Wage garnishments are not pretty, believe me.

These are absolutely some of the best tips out there if you want to handle your student loan debt like a boss. Follow these, like a road map and find the light at the end of the dark student debt tunnel.

Get Over It, Get Your Paperwork Together and Pick Up the Phone 

The experts say, there is a time to cry, a time to grieve, and then there is a time to pull yourself up by the boot strings and get over it.  Getting over what grieves or worries you involves action. Ignoring this worrisome ‘ginormous’ problem won’t make it go away. Being proactive is what you do. It’s simple. Start by having your last tax return or your last W-2 ready, in hand, just in case. Then, call your student loan service provider or creditor.  Find out your best options. Write them down. If you need time to make a decision, take the time to think things through.   

Be upfront and honest. Transparency is the best policy. Tell your loan servicer or creditor your situation. This will help them explain to you, better, your different options for repayment. There are a lot of legit options to look into, like forbearance, deferment, and, in some special situations, even debt forgiveness.

Not asking about these things means living in fear. Fear, in this context, brings nothing but trouble. It’s easy to ask about the interest, the length of time to repay and things that may impact your budget. Oh yes – always draft a simple updated budget, an easy to create, yet amazing empowerment tool. This will help with your discussions, ideas and planning.

For most folks facing serious trouble, like unemployment, underemployment, long or short term disability, the best piece of advice I can offer is to look into an Income Based Repayment Plan (IBR). Oftentimes, an IBR results in a zero dollar or very small bottom line payment. An IBR is based on your current income and family size. Check this out. Save the deferments and forbearance plans, for real issues like an injury, death or serious problems. Use the IBR when you are facing underemployment or unemployment issues, long term.

Discovering Repayment Options Online is “easy-peasy”

With the number of tools out there to use, there is no better time than now to find out what your repayment amount will be. One helpful online tool that comes to mind is the Department of Education Federal Student Loan Repayment Plan Estimator.  Use it.

Calculate different repayment plans.  Find out what plans include debt forgiveness if you still owe a balance after paying on your loan for 10 to 25 years. It’s easy-peasy and actually, many of my clients, family and friends use this tool.  It’s amazing. You can do this.

Frugal is the New ‘Thing’ 

OK, hundreds of thousands of people understand, the job market is tough.  This is a fact.  Moving right along, there are work-a-rounds to get through this. Try a legit side hustle, part-time gig or freelance work, like Uber, Summer Pizza Delivery, Coaching, Home Sitting, Garden Center or Nursery work. Try selling extra stuff, collectibles or homemade things on eBay, Etsy or at a flea market. Then, (this is the best part) you can usually save money, even big bucks, by decreasing spending.

Decreasing spending gets easier and easier the more you try it and the more you know.  Create, rather than consume. Save, rather than spend. It’s fun and it’s better for our family, environment and our communities. Websites like the Frugal Girl or Minimalist Mom are good tools to help along the way.

My friend Andy Prescot writes a great blog called, The Art of Being Cheap.  We learned how to reduce our mobile phone bill over $100 per month.  We have saved well over $3600 the past three years, based on Andy’s good tips regarding an inexpensive, but excellent, mobile phone service plan and provider.  Andy also has more good tips on fugal things like how buy a refrigerator, start an Uber business part-time or whether or not to take a 401(k) loan.

Many of these websites are excellent. The top 25 frugal bloggers for 2016 can be found, here.

Challenge yourself to do at least 3 new things this month to save money.  My three favorites are find new mobile phone provider and plan, make home-made pizza (rather than go out to eat) and how to service and repair my car.  It’s absolutely a blast and empowering.  However, I’m warning you now, frugal is contagious. You’ll get hooked. Your friends will get hooked. Seriously, frugal is a thing.

Ask your Boss, Like a Boss

A growing trend in the last few years has been for employers to offer student loan repayment assistance to employees as a benefit. Unlike tuition reimbursement (which has been around for years), student loan repayment assistance is a relatively new idea, a concept that’s gaining a lot of traction these days.

Last year alone, according to a recent study, 3% of companies offered some type of assistance program to help employees pay down their student debt and one thing’s for sure, this number is growing and growing strong.

If you are looking for a new job or are a new hire, negotiate. Most workers don’t negotiate, yet employers report that they are willing to pay more. Use this to your advantage. Some employers are now offering student loan repayment as a benefit.

There are tons of articles designed to help with this. Daily Worth, US News and Thrive powered by ADP are all helpful websites. Find out what you need to know about this new perk.  Work it to your advantage.

If a raise or bonus is in your future, ask your current employer or HR department about ways they can help you reduce your current student loan debt. Perhaps they can apply a new raise or bonus to your existing debt repayment plan.     

Find Experienced Help or Seek a Vetted Lawyer, FREE!

There are a few different professionals can help. Financial advisers are available if they are certified and affiliated with a reputable bank.  Oftentimes a certified public accountant (CPA) is full of free and helpful information.  Towns and cities quite often offer free credit and financial counseling services.  Check with your local library.  Go online.  Look into your local town or government website.

The Charlton Town Website, is here. On the clubs and organization page is a list of places you can go to get help. Quite often, places like the Lions Club, Food Banks, Veteran’s groups and Business Associations are networks of helping hands, ready to offer assistance if you ask.

Librarians are a treasure. The Charlton Public Library link is here.  Ask your local librarian when or where there is a class on debt, financial management or student loan debt assistance. If they don’t know, they will find out for you. Quite often sofa.org has classes held at local libraries. Ask your librarian about this. Be persistent.

If your situation involves a little bit more than, “I hate my loan servicer and don’t know what to do about it,” an experienced student loan lawyer or debtor defense lawyer is probably your best bet. Here’s how…

  1. Lawyers can give you guidance regarding your legal rights and options.
  2. Lawyers can represent you in negotiating with your student loan creditor, services or debt collection agency.
  3. They can help you figure out the best way to work out delinquencies and defaults, or to apply for a discharge.
  4. They protect you from unfair debt collection practices or debt collector abuse.
  5. Lawyers manage credit disputes.
  6. Lawyers advocate and go to court for you, managing legal matters like student loan-related issues, collections lawsuits or cases involving schools or agencies for legal violations and causing harm.
  7. In Massachusetts, an experienced Massachusetts lawyer can sometimes get you money awards for violations of things like the FDCPA and Massachusetts law.

If you’re dealing with delinquency or default, considering filing for bankruptcy or applying for a disability discharge, a debtor defense/bankruptcy/student loan lawyer is the best way to fly.

 Why a Lawyer, Why Not DIY?

Since every person is different, and every situation is different, whether or not you should contact a student loan lawyer really depends on your specific circumstances.  In reality, you may or may not need a student loan lawyer.

There are really very few things that inherently require you to hire a lawyer.  Even filing for bankruptcy or defending against a collections lawsuit can be done ‘pro se,’ (pronounced, “pro-say”) meaning without legal representation or Do It Yourself (DIY).

While hiring a student loan or bankruptcy lawyer may not be required, a lawyer may be incredibly useful, especially if you’re feeling overwhelmed, you’re not sure of your legal options, you’ve been sued, or you’re dealing with a complex legal issue.

In other words, debtor defense and student loan lawyers can take a difficult, seemingly hopeless or complex situation and make it easy for you by offering steps and solutions to give you back your life and your ability to move forward.

Some lawyers, like myself, are successful at getting clients extra cha-ching, based on the mistakes and bad behavior of some debt collectors and creditors.

The Final Word

Before hiring a lawyer, talk to your student loan creditor or servicer and exhaust your options.  After using up all your options, get help immediately.  Like I said earlier, yes there is a ray of hope.  You can do this.  Check out lawyer websites in your area.  Pick up the phone.  Call a lawyer. I suggest that you find at least three local lawyers and comparison shop.  Ask each one of them if they offer a free consultation.  Then, schedule appointments on your own time.

For the unemployed or underemployed, quite often legal aid lawyers in your local area offer free or reduced fee services. In Worcester County the legal aid website is called Community Legal Aid.  Free is good. Free is frugal. Frugal is a new thing, remember?

Think of these tips as being your job.  It’s your job to save money and work toward the positive things in life.  In a sense, saving money and working toward the positive is powerful and self-soothing.  Do this. Do it now. Regain control of your new life. Feel liberated and pleased with your own good efforts. Empowerment feels good.  Empower yourself like a boss.

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The Law Office of Ginger B. Kelly is now accepting new clients.  Call and schedule your first appointment.  We are a small law office offering your first confidential consultation, absolutely free of charge.

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ABOUT ME:  Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture.

To find out more, visit, www.attorneykelly.com, visit us at Ginger B. Kelly on Facebook or feel free to call us at (508) 784-1444.

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NOTICE:  Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet.  Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other.  We cannot stress enough, if you need personal legal advice, always see your attorney.  Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice.  Seek legal advice and representation from your own personal attorney.

Copyright © 2015, 2016, 2017, by Ginger B. Kelly, Esq., all rights reserved.

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Filed under Bankruptcy, business law, Civil, civil law, Debt, Debt Collection, Financial, Hiring Counsel, Law, Legal, Massachusetts, News, practical stuff, Retirement Savings, Rhode Island, Student Loan Debt, Uncategorized

Documents Needed Prior to the 341 Trustee Meeting (aka Meeting of the Creditors)

documents-required

Just the other day I was driving to my own client’s 341 Trustee meeting in Worcester, Massachusetts and I thought, most people have no clue what documents are needed prior to most trustee meetings.  So, here is the short list.

The documents you will need are generally the same whether you are filing a Chapter 7 or Chapter 13 bankruptcy.  However, specific documentation requirements are something different in most every local jurisdiction.  Be sure to check your local rules or contact your attorney in your specific situation.  Your attorney can notify the trustee and find out what is needed.

Tax Returns

Minimally, and most importantly, your last year’s tax return is required to be delivered to the trustee minimally seven days prior to your 341 meeting.  Local rules and trustees vary on what is required prior to the meeting.  If you do not provide this to the trustee, prior to your meeting, your case could be dismissed.

Other than this, you will typically need to provide copies of your tax returns or tax transcripts for the last two years during your meeting.  I have found, over the years, that it is best if you sign your returns.  If you have tax returns that haven’t been filed, you will need to explain why you were not required to file.  If you did not have a valid reason for not filing, most trustees, especially in Chapter 13 cases, will require you to file your taxes and provide copies before concluding or approving your case.  Again, some trustees may require more tax returns while others may ask only for your most recent one.

Income

If you are an employee, you will need copies of pay stubs (also known as payment advances) for the six-month period prior to the bankruptcy.  You will also need your past two years W-2 forms.  If you collect Social Security or Social Security Disability Income, you will need your award letter.  If you are self-employed, you will probably need to provide a profit and loss statement for the same six-month period as well as business bank statements to verify the amounts on the statement. If you have income from other sources such as rental properties or unemployment, proof of this income is also required.

Real Estate

If you own real estate, a valuation of the property is required.  Generally, I recommend my client’s get a broker’s price opinion, or a full appraisal, but this depends upon the situation.  In some cases, this is not needed.  Mortgage statements showing current loan balances, deeds of trust, and proof of home insurance may also be required.

Vehicles

If you have titled vehicles, such as an automobile, you will be required to provide a recent copy of your vehicle registration.  I also recommend you have proof of insurance, and valuation information, such as a KBB (Kelly Blue Book) valuation (you can get this online). If you have a car loan, a recent loan statement showing how much you owe and what your monthly payment is, will be important.  For other titled property, such as boats or trucks, recent valuation may also be required.

Retirement Accounts and Other Bank Accounts

Recent bank account statements (checking and savings) and retirement account statements are usually very important to provide to the trustee.  Your attorney should have these.

Miscellaneous

If you have any other special circumstances, like child support or alimony, you will need to provide proof of these expenses.  Typically a copy of the judgment, order or agreement will be sufficient

Proof of Identification and Social Security Number   

This is very important.  When you go to your hearing with the trustee, you will be asked to show proof of identification.  So you must have these two things ready for the trustee at the beginning of your meeting.  Identification must be valid and include a recent photo.  Examples are a current state-issued ID card, a current driver’s license or valid passport.  You will also need to show proof of your social security number.  These documents are typically your state-issued social security card or employee-issued W-2 form.

That’s it. Now you are ready for your Meeting with the Trustee. If you have any questions or need any help, please give me a call. My direct line is 508-784-1014 (yes, this is the number that goes directly to me, personally).  I’ll be happy to set up your first free consultation, absolutely free.

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The Law Office of Ginger B. Kelly is now accepting new clients.  Call and schedule your first appointment.  We are a small law office offering your first confidential consultation, absolutely free of charge.

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ABOUT ME:  Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture.

To find out more, visit, www.attorneykelly.com, visit us at Ginger B. Kelly on Facebook or feel free to call us at (508) 784-1444.

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NOTICE:  Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet.  Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other.  We cannot stress enough, if you need personal legal advice, always see your attorney.  Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice.  Seek legal advice and representation from your own personal attorney.

Copyright © 2015, 2016, 2017, by Ginger B. Kelly, Esq., all rights reserved.

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Filed under Bankruptcy, Debt, Debt Collection, Filing, Financial, Law, Legal, Massachusetts, Massachusetts law, Uncategorized

The Domino Effect: Filing a First and Second Bankruptcy

domino-effect

By:  Ginger B. Kelly, Esq.

If anyone has played dominoes, they realize that one small mistake can cause an entire stack of dominoes to come crashing down.  The same is true for filing first and subsequent bankruptcies.  If a person has received a discharge or has filed for bankruptcy in the past, it’s important to know how soon they can file for bankruptcy again.  Time limitations for discharge under bankruptcy, after filing a prior bankruptcy in a Chapter 7 or Chapter 13 bankruptcy, may be tricky and are different under different circumstances and chapters.  This overview is intended to help potential filers make wise choices before the stack of dominoes collapses.

Technically, Time Limits Do Not Apply to Filings

In theory, there is no minimum time to wait before you can file for bankruptcy the second time around.  However, the dilemma with filing a second time is if a person files too soon after they received a discharge of their debts in a prior case, they can’t get another discharge. Filing too soon makes the second bankruptcy filing a waste of time and money.  This is why time frames apply to receiving a second discharge, not the filing of the case.

Filing Again Under the Same Chapter

If a person is filing under the same bankruptcy chapter, the time frames are different depending on whether they file successive Chapter 7 or Chapter 13 cases.

Filing Again Under Chapter 7

If the first discharge was under Chapter 7, a second discharge is not permitted under Chapter 7 again, until eight years from the date the first case was filed.

Filing Again Under Chapter 13

If the first discharge was under Chapter 13, a second discharge is not permitted under Chapter 13 again, until two years from the date the first case was filed.

The only issue with consecutive Chapter 13 bankruptcy cases filed too closely together is if the court refuses to confirm your Chapter 13 plan in the second case. Ordinarily, if the second plan is not confirmed a person can convert the bankruptcy to a Chapter 7.  However, in this set of circumstances, the rules for receiving a discharge under Chapter 7, after a discharge under Chapter 13 will prevent a person from getting a discharge in the converted case.  This is why converting a case from a Chapter 13 to a Chapter 7 too soon, isn’t a good idea in most situations.

Different Chapter Filings: Order Matters

If the second bankruptcy filing is under a different chapter then the first, order determines the time frame.

First, Chapter 13: Second, Chapter 7

If a person received their first discharge under Chapter 13, they cannot receive a discharge under any Chapter 7 case that is filed within six years from the date they filed the first Chapter 13.  Generally, the six-year waiting period exceptions are:

  •  if all the unsecured creditors were paid in full under the Chapter 13, or
  •  at least seventy percent of Chapter 13 claims were paid, the plan was proposed in good faith and the payments were the best effort possible.

First, Chapter 7:  Second, Chapter 13

If a person received a discharge under Chapter 7 first, they cannot receive a discharge under Chapter 13 filed within four years from the date the initial Chapter 7 was filed.

It’s a bit tricky if a person files the second case under Chapter 13, between four and eight years after they filed the first Chapter 7 when the court doesn’t approve the Chapter 13 plan.  If the Chapter 13 plan was not approved, “technically” a person could convert the case to a Chapter 7, but this isn’t a good idea because the rules for successive Chapter 7 discharges would kick in.  In this situation, if the time frame between subsequent filings is not eight years, a person will not receive a discharge in the converted case. If this happens, it is probably best to ask for a dismissal of the subsequent Chapter 13 case.

When a Second Filing May be Helpful, Even Without a Discharge

In certain situations, filing a Chapter 13 case immediately after getting a Chapter 7 discharge might be beneficial.  This is often referred to as a Chapter 20 bankruptcy.

In this situation, for example, a person wants the protection of the bankruptcy court while paying something like a tax debt or non-dischargeable priority debts, under a Chapter 13 plan. Whether or not they will benefit from this type of Chapter 20 bankruptcy depends on the circumstances and the case law in their jurisdiction.  But despite its benefits, a Chapter 20 has many drawbacks and can be subject to bad faith filing objections.  An experienced bankruptcy lawyer in your area would need to be consulted for advice on this topic.

First Case Not Discharged

If the first bankruptcy case did not result in a discharge, typically, a person can file for bankruptcy again with no limitations on the second discharge.

Discharge vs. Dismissal

First, it may be important to note that there is a big difference between a discharge and a dismissal.  A discharge is an order from the bankruptcy court releasing a person from their debts.  A dismissal from a bankruptcy court is an order removing the case from the docket, typically without a discharge.  

If a person successfully completes a case and obtains a discharge, they are no longer on the hook for debts discharged in the bankruptcy. However, if a case gets dismissed, the person who filed will lose the protection of the automatic stay and their creditors are free to come after them to collect their debts.

First Case Dismissal

If a bankruptcy case was dismissed, a person can file again unless the court orders otherwise.  If the case was dismissed for failure to obey a court order, failure to appear in the case, or voluntarily dismissed after a creditor filed a motion for relief from the bankruptcy stay, a 180-day waiting rule applies.  However, quite often there are different rules regarding the bankruptcy stay.  A stay is an automatic injunction that stops actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy.

First Case Discharge Denied

If the discharge was denied in the first case, a person typically may file again but will probably not be entitled to a discharge of the debts from the first case. This is another special circumstance where it is always smart to seek an experienced bankruptcy lawyer for advice.

The take-away from all of this is, as a general rule, if a person files for bankruptcy too soon after they received a previous bankruptcy discharge, they cannot receive another discharge.  Like a neat little stack of dominoes, the second case is very dependent upon the first.  The good news is, avoiding mistakes can be easy.  Consulting an experienced attorney is the first step.

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The Law Office of Ginger B. Kelly is now accepting new clients.  Call and schedule your first appointment.  We are a small law office offering your first confidential consultation, absolutely free of charge.

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ABOUT ME:  Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture.

To find out more, visit, www.attorneykelly.com, or call us at (508) 784-1444.

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NOTICE:  Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet.  Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other.  We cannot stress enough, if you need personal legal advice, always see your attorney.  Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice.  Seek legal advice and representation from your own personal attorney.

Copyright © 2015, 2016, 2017, by Ginger B. Kelly, Esq., all rights reserved.

 

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Filed under Bankruptcy, Debt, Debt Collection, Filing, Financial, Hiring Counsel, Uncategorized

Debt Collection and 7 Deadly Sins

seven-deadly-sins by Drew Fairweather

Every year thousands of consumers get sued by debt collectors.  Beating a debt collection lawsuit is easier than most people realize.  Most of the time, the biggest issues people face are their own shortcomings.  Legal strategies are great, but they serve no good when people are paralyzed by fear, anger, sloth, envy or a number of deadly sins regarding dealing with debt collectors.

 1. Sloth    

The number one mistake defendants make when they are sued for a debt is giving up.  Doing nothing is a form of sloth.

Failing to respond to a summons and complaint, is most certainly the number one reason why most people lose and have default legal Judgments entered against them.  On the other hand, responding to a lawsuit opens the door to many promising things, like stopping collections, wage garnishments or a levy (taking money from your bank account).

Even if you owe the collector money, a two-sentence response simply denying liability to the lawsuit filed in court will tilt the scales in your favor.  Always do your best to consult a lawyer, first.  Even so, filing a response to the lawsuit is called an “Answer,” with the Clerk of Court, is generally the easiest first step to take.   Check your timelines on this.  Some jurisdictions only allow 10 to 20 days to respond after service of process, which also means after the defendant receives a notice and summons.  Keep an Answer simple and to the point.  Never ever make an admission.

Ask your Clerk of Court questions about the forms used to file an Answer or how to file an Answer.   Typically, Clerks are super helpful but keep in mind that they are never allowed to give legal advice.

Give up sloth.  Put one foot in front of the other, seek legal help and file an Answer with the Court and your chances of winning increase exponentially!

2. Pride

Debtors who give up on Collections lawsuits almost always have regrets.   Life after answering the notice and complaint involves a little bit more than simply showing up.  But it’s not that difficult.  One of the things that must be done is to challenge the collector’s ability to sue.  However, a defendant can never challenge anything effectively when pride gets in the way.

Pride steps in and wreaks havoc with our positive energy.  Pride opens door to excuses as to why we can’t or don’t want to move forward.  Pride paves the way for doing nothing.

The term, “Standing” means the legal right to sue.  Some collectors, also known as debt buyers, or junk debt buyers, often buy debt for pennies on the dollar.  They try to file lawsuits (or sue) against debtors to collect money on the debt that they buy.  When asked, collectors must prove that they have the legal right to collect.  Without the legal right to sue, debt collectors lack standing.  Standing is typically shown by a transfer or assignment of the original, signed credit card agreement from the initial creditor to the debt collector or debt buyer.  Many don’t have a signed transfer agreement.  Many don’t have a signed, initial credit card agreement.  When when the collector doesn’t produce a proper assignment or agreement, or the document they produce is inaccurate or not an original, a defendant can ask for the case to be dismissed, because of “lack of standing.”

Asking the Court (Judge or Magistrate) to dismiss a case, based on lack of standing or lack of chain of custody of paperwork is usually pretty straightforward.  Your lawyer will help you.  Chain of custody means that the collector must prove that they are, in fact, the ones who were transferred the initial signed agreement.

On a few occasions, I’ve noticed judges look at the paperwork collectors provide and comment, “you must be joking.”  On the other hand, some judges look at the paperwork and think, “It’s all good.”  It’s not always easy to tell the results, at least in Massachusetts.  Every jurisdiction is a little different.  If challenges aren’t raised, like a challenge to standing, the lawsuit is lost, plain and simple.

In essence, even when the effort is made to attend a debt collection lawsuit, pride can strangle all positive energy and be a reason for making excuses for not demanding the debt collector show you why they have any legal authority to ask you to pay them money.

3. Greed.

I’ll never understand why defendants never challenge the amount owed on a debt. Seriously, greed is more common than most people realize.  Often human beings become so greedy with time and energy, they can’t even ask simple questions.  Challenge the accuracy of the calculations on the debt and combat being paralyzed by greed.

When your lawyer, or you, choose to challenge the accuracy of the debt, the Judge or Magistrate will require the debt collector to show the original signed documents and all the paperwork. This means that the paperwork must prove the balance of the debt, from the first day to the present.  Every defendant has a right to know how an amount allegedly owed is calculated and why.  Be vigilant and ask for accurate figures on the debt.

More often than not, debt collectors miss documents or miscalculate and are not accurate.  Because debts typically change hands multiple times, it is very likely there will be some errors in the figures and documents.  If there are errors in the case, a defendant may ask for the case to be dismissed.

In a 2015 news article, a former employee of a major creditor mentioned that as many as a quarter of the files showed incorrect amounts owed.  If the credit card issuers can’t provide accurate documentation, there’s an excellent chance you will win.

4. Wrath.

 Yes, debt collectors make us mad.  However, many people get so angry that they do nothing.  Anger (like most negative emotions) paralyzes us from doing the right thing.  It’s easy to change this negative emotion by talking to your lawyer and by making solid plans to challenge the lawsuit against you in a timely manner.  Don’t let wrath, or any other negative emotions kill positive energy.

In Massachusetts, in most cases with a few exceptions, creditors have a maximum of six years to collect on most credit card (revolving) debt.  Other states and jurisdictions are different.  Ask your lawyer about the Statute of Limitations in your jurisdiction.

The Statute of Limitations is an awesome defense to have in your legal defense tool box, so to speak.  Sometimes, collectors don’t stop collecting and taking people to court, even after the Statute of Limitations has run out.  The reason is because debt collectors are hoping and assuming people don’t want to be bothered and they won’t show up in Court.  This is true.  But defendants who raise the Statute of Limitations defense will typically win.  With a solid Statute of Limitations defense, the Court will recognize that the debt can no longer be collected upon and, like magic, a Court will dismiss a collections lawsuit.

It is important to know how to legally apply this handy dandy tool.  Also, paying or agreeing to pay on an old debt may start the Statute of Limitations clock ticking all over again.  Never pay on an old debt without first consulting a good lawyer.  If the Statute of Limitations has expired, and it is used properly and timely as a viable defense, a collector stands a good chance of losing.

Tame the wrath by fighting fairly and civilly.  Wrath turned around and channeled into controlled, positive, motivated beneficial action is a very good thing, indeed.

5. Gluttony.

 Plain and simple, most everyone has the right to take action against collectors, but they don’t.  This could simply be a matter of gluttony?  Perhaps.  Retaining paralyzing feelings of grief, powerlessness, becoming overly indulgent in thoughts that are self-critical, are negative negative feelings.  Self indulgence is a form of gluttony.  Gluttony is crippling. The negative energy of gluttony gets in the way of taking positive action.

There are rules and laws, under the Fair Debt Collection Practices Act (FDCPA) that may turn the tide in your favor and help you to turn gluttony into positive energy.  If you have consulted a good lawyer, chances are that you may be able to discuss the odds of getting a good money award from a debt collector if they violated any part of the FDCPA.  People who successfully sue for violations of the FDCPA may be entitled to receive from the collector, statutory damages of $1000, plus punitive and economic damages, and even attorney’s fees and costs.  Extra money is always a welcome bonus!  This is also a good reason to hire a good consumer defense and bankruptcy attorney who can help.

Pity and self-gluttony have no place if you want to win a lawsuit.  Snooze and you lose. This is the very thing debt collectors are counting on.

6. Lust.

Lust is a big one.  Have you ever been around someone who loves themselves so much, they think they can do things all by themselves, when they really need help?  It is very important to become a smart consumer and know when to find help.  Smart people tend to kick lust to the curb.  Call a professional to get the best results possible.  In other words, bring out the big guns.

Once a collector is notified that you are represented by an attorney, it’s usually all over.  Most collectors are more than anxious to settle a debt, out of court, rather than fight over it with a lawyer.  Hesitating hiring a lawyer will only serve to reduce your chances of winning, significantly.

Attorneys who regularly take these types of cases will typically offer a free consultation.  On some occasions, they may represent you for free if they think the collector has broken the law.  This is because the attorney will expect to collect their fees from the collector.  Most people don’t know this.

Lust has no place for winners.  Fighting a legal battle with expert help makes sense.

7. Envy  

Most people think Bankruptcy is for “those” people.  If you really believe that Bankruptcy is for those pitiful people who have no common sense or self control, or for people who want to take advantage of the system, guess again.  Bankruptcy laws are designed so that fraudulent claims are virtually non-existent.  Furthermore, some of the most successful people in our country legitimately and legally have filed successful Bankruptcy Petitions, for very good reasons.

Everyone makes mistakes and goes through struggles in life.  How people overcome and manage those struggles makes all the difference.  In the US today, we are lucky enough to have Bankruptcy law.  Think of Bankruptcy as a beneficial tool, a way to move forward, unlike envy that will hold most of us back.

Bankruptcy often is the best solution because it will not only give a person a fresh start, Bankruptcy will also stop all collections.  The day a Bankruptcy Petition is filed with the Court, a person will be protected from all collection efforts by something called an “automatic stay.”

See if Bankruptcy is an option suitable for you.  A good lawyer will be happy to guide you to make the very best decisions for you.

Tip:  Monitor your credit scores and credit reports from time to time to see where you stand.  You are entitled to one free annual credit report from all three major credit reporting agencies, each year.  Search on the Internet or ask your lawyer or certified public accountant (CPA) how to obtain a free credit report and do this, annually.

Being paralyzed by any of these deadly sins happens to the best of us.   Indulging in any one of these things will greatly reduce the odds in your favor.  Vigilance, by taking action now, is your best path to success.

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ABOUT ME:  Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture.

To find out more, visit, www.attorneykelly.squarespace.com or www.attorneykelly.wordpress.com, or call us at (508) 784-1444.

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NOTICE:  This is an Advertisement.  This post is not legal advice.  Consult your attorney.  Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet.  Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other.  We can not stress enough, if you need personal legal advice, always see your attorney.  Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice.  Seek legal advice and representation from your own personal attorney.

Copyright © 2016 by Ginger B. Kelly, Esq., all rights reserved.

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Filed under Bankruptcy, Civil, civil law, Debt, Debt Collection, Law, Lawsuits, Legal, Massachusetts, practical stuff, Trial