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Inform Yourself: Bankruptcy Law Blog

Our blog gives information and insight into bankruptcy law from a local Atlanta Bankruptcy Attorney

Our Atlanta Bankruptcy Blog

If you are seeking information and insight into bankruptcy law in the state of Georgia, you have come to the right place. As an Atlanta Bankruptcy Lawyer, one of my primary goals is to inform the public and empower my clients through knowledge. You cannot make good decisions about finances without ensuring that they are informed decisions. In order to help Atlanta area residents gain knowledge and make informed decisions, I started writing a bankruptcy blog. Since July of 2012 Cherney Law Firm, LLC has been posting informative blog entries and helpful reviews on news articles, current events, and other areas relative to bankruptcy. It is vitally important for you to educate yourself on your financial situation and how bankruptcy may or may not be the best option for you, so be sure to check back soon for new posts. Similarly, feel free to browse my firm’s website and review all of the informative pages for helpful facts, or call my firm today for a free initial consultation.

How to Find and Fix Common Errors on Your Credit Report

  • February 27, 2020
  • Credit Report
  • Comments : Comments Off on How to Find and Fix Common Errors on Your Credit Report

If you are having issues with debt and considering a bankruptcy filing, there is something that you can do to ensure that the process goes as smoothly as possible

Having an accurate credit report will be very important when you meet with an attorney and discuss your bankruptcy options. There are times when errors occur on one or all of your credit reports. These errors can lower your credit score and also list creditors that should have been removed. The first step to take is to obtain a free copy of your credit report from each of the 3 major reporting companies (which are Equifax, Experian, and Transunion). Go to www.annualcreditreport.com and request your (free) annual reports. Next, go through your reports very carefully to verify that the information is 100% correct. If it is not, then you can dispute the errors with the credit reporting company AND with the company that is reporting incorrect information.

There are certain credit reporting errors that are seen more often than others

Errors regarding your personal information are common. Make sure that your entire name and current home address and phone number are correct. Look at all your listed accounts to make sure that they all belong to you, not to someone else with a similar name to you. If you have ever been the victim of identity theft, make sure that there are no accounts that were opened due to fraud by this theft.

In regards to each specific account listed on your report, make sure that the balances are current and correct. Also verify that the correct credit limits are listed for credit card accounts. This makes a difference in relation to your credit score.

Account status is the next area to take a look at

There are several items to be aware of here. Make sure each debt is only listed once and that any accounts that have been closed are reported as such. If any of your closed accounts are still reported as open, be sure to dispute this. Also, check to see that if you are an authorized user of an account (and not the account owner), that this is reflected properly on your report. Dispute any error that lists you as the owner of the account if you are not.

Other common account status errors include: accounts incorrectly reported as late or delinquent; incorrect date of last payment; incorrect date opened; incorrect date of first late payment/delinquency (if applicable). One other possible error is an account that appears more than once with different creditors.

If you discover any error on any of your reports, gather any supporting documentation that proves that there is a mistake. Then contact the credit agency or agencies that have misinformation, along with contacting the creditor/bank/company that provided the misinformation. This will ensure that your credit report is fully accurate and go a long way in improving your current and future financial situation.

Tax Season: Bankruptcy and Income Tax Refunds

Tax season is upon us, and many people think about a fresh financial start this time of year

When it comes to filing yearly taxes, it is an opportunity to assess current goals and whether current financial strategies are working efficiently. If you have filed a Chapter 13 case and are having trouble making your current plan payments, you may want to consider a conversion from a Chapter 13 Bankruptcy to a Chapter 7 Bankruptcy.

The main benefit of converting from a Chapter 13 Bankruptcy to a Chapter 7 Bankruptcy is that you will no longer have a monthly trustee payment

You can use your income tax refund to bring any outstanding secured obligations current with the lender (e.g. vehicle, mortgage). You will only have one case filed with the same case number, even if you convert from a Chapter 13 to a Chapter 7. Only one bankruptcy filing will show on your credit, rather than having a dismissed Chapter 13 case and a later filed Chapter 7.

Another major benefit of converting your case from Chapter 13 to Chapter 7 is that you can add any debts incurred after you filed your Chapter 13 case. If you incurred new debt during your Chapter 13 that is making it difficult to make your Chapter 13 payments, then a conversion can help alleviate this problem. Some examples of new debt can include new medical bills, or an unexpected, costly home repair.

In order to convert your case from Chapter 13 to Chapter 7, a notice will need to be filed with the Court

There are certain conditions that need to be met. Your bankruptcy attorney will discuss these with you.

With a Chapter 7, there is no monthly payment plan like there is with a Chapter 13. You will still have the automatic stay in effect during the length of your case. However, the Trustee may sell any non-exempt assets that you have in order to pay your creditors. This is known as liquidation.

Once a Chapter 7 case is finished, you receive a discharge of all debts that were part of your case. This occurs in a much shorter time period than for a Chapter 13 case, since there is no repayment plan. In many instances, converting your case from a Chapter 13 to Chapter 7 may be less costly than filing for a Chapter 13 and then having to file a separate Chapter 7 if your Chapter 13 case was dismissed.

An experienced bankruptcy attorney will assess your case to make sure conversion makes sense for you. There can be major benefits to converting your case from a Chapter 13 to a Chapter 7, but it is critical to understand all the implications.

Wage Garnishments and Bankruptcy

If you are considering filing either a Chapter 7 or Chapter 13 Bankruptcy, it is important to understand what happens to any current wage garnishment that you may have. A wage garnishment is a court order that enables a creditor to take money out of your paycheck. Once a wage garnishment starts, it is difficult to stop. Bankruptcy is an effective method to stop a wage garnishment. For most types of debts, either a Chapter 7 or a Chapter 13 filing will immediately stop a wage garnishment. Many people consider filing bankruptcy solely because of a wage garnishment.

There are many different types of wage garnishments

Some of the most common types include: child support, alimony, income tax debt, student loan debt (federal and private) and judgment creditors (such as banks and credit card companies). Each type of wage garnishment has different rules that apply, and these rules are affected differently by a bankruptcy filing. Most of these rules are specific to your state of residency.
Each type of wage garnishment has different rules that apply, and these rules are affected differently by a bankruptcy filing. Most of these rules are specific to your state of residency.

A bankruptcy filing, whether a Chapter 7 or Chapter 13, puts an immediate stop to most wage garnishments

This is called the “automatic stay.” This stays in place for the duration of your bankruptcy case (or until further order of the bankruptcy court), which can last up to 5 years, depending on the type of bankruptcy that you file. A Chapter 7 will generally eliminate the debt completely.

A Chapter 13 may require you to pay the debt back, or a portion thereof, pursuant to a Chapter 13 plan. No matter the chapter of bankruptcy, once you receive a discharge, you will no longer have any of your wages garnished for that particular discharged debt.

Another thing to realize is that if you are unable to pay current debts and obligations, filing for bankruptcy may prevent a wage garnishment from ever starting in the first place. Meeting with a qualified bankruptcy attorney can help you assess your situation to see if this would be a good idea for you. An attorney can help to determine the options that best suit your needs, and help guide you through the process for the best possible outcome.

The Bankruptcy Means Test

The Bankruptcy Means Test operates in two ways:

  1. It will determine if you qualify for Chapter 7 Bankruptcy; and/or
  2. If you do not qualify for Chapter 7 Bankruptcy, the means test establishes what you are required to pay your creditors in a Chapter 13 Bankruptcy.

What is the Means Test?

The means test is based on income and was established as part of the amendments to the Bankruptcy Code, and enacted by Congress in 2005 (BAPCPA). The means test takes into consideration the individual’s income for the six months preceding the month prior to filing.

If your income is less than the median income level, then you are presumptively eligible to file a Chapter 7 Bankruptcy

In Georgia, the current median income for a family size of 4 people is $85,763.00. For a family of 2, it is $63,850.00. If your income exceeds the median income level, you may likely be required to file a Chapter 13 Bankruptcy.

A majority of the deductions that are taken on the means test are standardized. Some of the actual deductions that can be taken are: income taxes, health insurance, mandatory retirement accounts, court-ordered domestic support and care for an elderly/ill/disabled household member.

Talk to a Bankruptcy Attorney

A qualified bankruptcy attorney will work with you to determine your eligibility for a Chapter 7 Bankruptcy, and will explain the pros and cons of Chapter 7 Bankruptcy versus other alternatives. Your attorney will help you complete and submit 2 forms: Chapter 7 Statement of Your Current Income and the Chapter 7 Means Test Calculation Form. Even if you do qualify for a Chapter 7 under the means test, there are additional considerations as to whether a Chapter 7 is the best choice for you, your family and your current financial situation.

If I am Married, Can I Still File Bankruptcy Individually?

Many people wonder if it is possible to file for bankruptcy without their spouse being part of the bankruptcy. This article will answer this question.

There are several key things to consider when filing for bankruptcy if you are married

First, a married person can either file bankruptcy along with his/her spouse or file individually. Usually, married couples file together when they have joint debts. However, one spouse can file by him/herself if desired. If both spouses want to file for bankruptcy, it is best to file jointly. This way, you pay only one filing fee and one attorney fee.

If preventing a bankruptcy from appearing on your spouse’s credit report is important, then you may consider filing individually.

Second, if there are joint debt(s) (i.e. debt(s) in both spouse’s name(s)), and only one spouse files for bankruptcy, then the creditor is not barred from pursuing payment, or collecting the debt from the non-filing spouse.

Third, the issue of income of the non-filing spouse is just as important as the income of the filing spouse. Provided both spouses live in the same home, both incomes count. This will be determined by the Means Test. The Means Test does two things: 1) it determines the individual’s eligibility for Chapter 7; and 2) if he or she is not eligible for Chapter 7, the Means Test establishes what they may be required to pay back to their creditors in Chapter 13.

If the total income falls below the median income level in the state where the bankruptcy is filed, then Chapter 7 is an option

This would eliminate completely eliminate all debt that is not reaffirmed. If the total income is above the median income level in the state where the bankruptcy is filed, then the only bankruptcy option is Chapter 13. This requires repayment of some or all the debt over a period of up to five years.

Several other factors that you and your attorney will discuss to determine whether or not to file jointly include:

  1. the amount of property you own
  2. the type and amount of joint debts
  3. the exemption laws of the state in which you file.

Since filing for bankruptcy individually can still have consequences for your spouse, it is very important to meet with a qualified attorney to make sure you are making the correct choice for the both of you.

Will I Lose My Home if I File for Bankruptcy?

The short answer to this question is no, you will not lose your house

There is no requirement in the Federal Bankruptcy Code that requires you to surrender your home. How relevant your home is in a Bankruptcy proceeding depends on the chapter of Bankruptcy that you file.

Chapter 13 Bankruptcy

Filing a Chapter 13 Bankruptcy can do a number of helpful things; regarding your home, you can stop a foreclosure proceeding and/or bring all of your mortgage arrears current through the Chapter 13 Plan that you, your attorney, and the Chapter 13 Trustee agree upon.

With a Chapter 13 Bankruptcy Plan, you will be making a monthly payment to a Trustee. This payment will include any past due amounts owed to your mortgage company. You must also continue making your regular mortgage payment and keep your ongoing mortgage payments current. It is important to make your Trustee payments for the entire duration of your plan (usually 3-5 years) and to not miss any of your regular monthly mortgage payments.

Chapter 7 Bankruptcy

Filing a Chapter 7 Bankruptcy only puts your home at risk if you are delinquent on the payment to the mortgage company and/or there is equity in your home. In a Bankruptcy proceeding, there is only equity if your home’s value exceeds the amount owed, plus your allowable exemptions. The exemptions are specific to the state in which you file. If your home is not exempt, then it can be sold by the Chapter 7 Trustee. The money made from this sale is used to pay your creditors.

A qualified Bankruptcy attorney will determine all of the necessary qualifications for you, and make sure that your case proceeds smoothly.

Preparing for a 341 Meeting of Creditors


Upon filing a Chapter 13 Bankruptcy petition with the U.S. Federal Court, your case will be assigned by the Court to a specific Trustee that will oversee, and administer your case. Once a Trustee is assigned to your case, a Creditor Meeting under Section 341 of the Bankruptcy Code will be scheduled by the clerk of the court. The clerk will then send a notice of the time and place of this meeting to you and all your creditors.

You must appear at this meeting and answer questions from the Trustee about your petition.

Your creditors do not usually attend this meeting. The Trustee will ask you a series of questions related to your bankruptcy petition, schedules and relate documents that were filed with the court. This meeting is fairly quick. Your attorney will attend this meeting with you but cannot respond to the questions for you. You will answer these questions under oath, so it is imperative that you are honest.

Once the 341 Meeting is underway, some of the questions asked may include the following:

  1. Did you read and sign all the documents related to your case?
  2. Is all the information in these documents true and correct?
  3. Are all your creditors listed, including friends or relatives to whom you owe money?
  4. What is your reason for filing for bankruptcy?
  5. Are all your assets listed on your petition, including any and all bank accounts of any kind, real property in any country, and any and all personal property (jewelry, art, collectibles, vehicles, etc.)?
  6. Do you have any mortgages or other real estate interests?
  7. Have you ever filed Bankruptcy before?
  8. What is your job?
    1. Are you paid hourly or are you salaried, and what is this amount?
      b. How often are you paid?
    2. Do you have any alimony or child support obligations?
  9. Do you own any businesses?
  10. Are you the beneficiary of or the trustee of any trust?
  11. Are you going to receive any inheritance upon someone’s death?
  12. Are you entitled to the life insurance proceeds of anyone?
  13. Do you have any ongoing lawsuits against someone else?

The specific questions will generally vary by jurisdiction. Your attorney will go over all of the specifics with you prior to your hearing. When scheduled a 341 meeting, it is best to have an experienced bankruptcy attorney walk you through the process and represent you on the day of your meeting. Call attorney Matthew Cherney to schedule a consultation today.

How Bankruptcy Can Help With Back Taxes


If you owe back taxes (federal, state, or local), this can be a tremendous stress. Many people inquire as to whether filing bankruptcy can help deal with their tax debt. While every situation is different and needs to be assessed by a qualified bankruptcy attorney, there are ways in which a bankruptcy filing may help you with your back taxes.

If you owe money for back taxes, the IRS or State Revenue Department can garnish your wages or your bank account. Filing a bankruptcy will stop a tax garnishment. This is what is known as the automatic stay, which requires all creditors (including the taxing authorities) to immediately cease collection action. What happens to your taxes next depends on the chapter of bankruptcy you are filing.

Chapter 7 Bankruptcy

Certain taxes are dischargeable in a Chapter 7 bankruptcy. Here are the general rules regarding dischargeability of taxes in Chapter 7 Bankruptcy.

The Three-Year Rule

The tax return was due at least three years ago. Most returns are due on April 15 for the previous tax year. If the taxes were due from a return filed on April 15, 2017, they would be eligible for discharge (provided all other criteria are met) after April 15, 2020.  Do not forget to take extensions into consideration. This means that the three year rule applies to the extension date.

The Two-Year Rule

You must have filed the return at least two years before you filed your bankruptcy case. If you don’t file a return, sometimes the IRS will file one for you. Many bankruptcy courts do not consider that a return for purposes of fulfilling this rule.

The 240 Day Rule

The taxes must have been assessed at least 240 days prior to filing Chapter 7. When the taxing authority enters the liability on its records, they have “assessed” it. This doesn’t necessarily happen the minute you file your return. It could take weeks or months. In some cases, the taxing authority will audit your return and assess additional taxes years after the return is filed. This period could be tolled or extended if you filed an offer in compromise with the IRS or if you filed a bankruptcy case during that period that was discharged or dismissed.

Chapter 13 Bankruptcy

If you cannot discharge your income tax liability in Chapter 7, you can certainly treat the income tax liability in Chapter 13 Bankruptcy Plan of Reorganization. This means that you can propose to pay back the tax liability over a period of up to five years. The Chapter 13 will also stop future interest and penalties from accruing on the amount outstanding.

Your attorney will determine which taxes are and are not dischargeable in Chapter 7.

Representation in a Bankruptcy Case


You have 2 options when it comes to representation in your bankruptcy case:

  1. Hire an attorney to represent you OR
  2. Represent yourself (this is called “pro se”).

There are many complicated issues that arise in a bankruptcy proceeding, and an attorney can effectively navigate these complexities for you.

A recent Federal Bankruptcy Court filing report showed that only 61% of Chapter 7 pro se bankruptcy cases end up with a positive outcome (an order of discharge) versus 99% of Chapter 7 cases filed with an attorney. While there are several reasons for this, the most important thing to understand is that every single case filed must, with no exceptions, follow the strictly regulated Federal Bankruptcy Code, in addition to following any and all local/state procedures. If these rules are not properly followed, the case may be dismissed.

Some of the more common mistakes made by people filing for bankruptcy without an attorney:

  1. Incorrectly filing for a Chapter 7 instead of a Chapter 13 (or vice versa);
  2. Failing to apply the Chapter 7 Means Test correctly;
  3. Failing to timely file necessary documents with the court;
  4.  Claiming an inaccurate number of property exemptions;
  5. Making mistakes regarding reaffirmation agreements (i.e. vehicles);
  6. Responding to a creditor’s objections incorrectly;
  7. Misunderstanding the terms of documents filed with the court;

Any one of these mistakes may be enough for the court to dismiss your case, denying a discharge in your case, or possibly cause you to lose property that you own. While it is true that there are fees involved when you hire an attorney to represent you, there are also fees if filing pro se.

There are rules in the Bankruptcy Code as to attorney fees, and these fees are always approved by the court

In the long run, if a case is filed pro se and is then dismissed, the restrictions imposed on you by the court are serious. It is possible that a judge may not allow you to file another case for a number of months or years. If your case is dismissed, then you automatically lose all of the important protections you received upon your case filing, including protection from foreclosure and repossession.

DEBT CONSOLIDATION: CHAPTER 13 VS. DEBT CONSOLIDATION PROGRAM


It is important to understand the difference between a Debt Consolidation/Counseling Program and Chapter 13 Bankruptcy

There are many advantages to filing a Chapter 13 Bankruptcy. The number one reason is the simple fact that a Chapter 13 Bankruptcy plan has the power of the Federal Bankruptcy Code to oversee it. The Bankruptcy Code protects you immediately upon filing your bankruptcy case. This does not occur when consolidating your debt with a debt consolidation program (perhaps offered by a bank or counseling service). The following advantages apply once you file a Chapter 13:

  1. You have immediate relief by a Court Order to any and all of your current debt collectors. 1) You have immediate relief by a Court Order to any and all of your current debt collectors. All collection action against you is ordered by the court to stop—this is called the Automatic Stay. This collection activity includes (but is not limited to): foreclosure, wage garnishment, vehicle repossession, lawsuits from creditors and creditor harassment.
  2. You can include the following types of debt in a Chapter 13, but not in a debt consolidation program: car payments, mortgage arrears, child support arrears, and tax debt.
  3. Bankruptcy law is Federal law, as opposed to a debt consolidation program. The Court has the power to tell your creditors what to do and when to do it, and to impose punishments when these orders are not followed. With debt consolidation, your creditors can voluntarily opt out at any time.
  4. A Chapter 13 Plan typically lasts for 3-5 years. With a debt consolidation plan, the repayment plan could drag on indefinitely.
  5. There are no interest or late fees paid to creditors in a Chapter 13 plan.
  6. Your attorney is obligated to represent your best interests. With a debt consolidation program, you do not have someone to ensure that you are well represented.
  7. With the power of the Bankruptcy Code, you can prioritize which creditors are paid first, and you are not penalized for given preferential treatment to your home mortgage or car finance company. This is not the case with debt consolidation programs.

While filing bankruptcy may not be right for everyone, you owe it to yourself to see if it is right for you.