The Bishop case: The UST’s final conclusions and prayer in their complaint.

Continuing the Complaint against Upright Law in the case of In Re: Joyce Ellen Bishop, Case Number 16-20593 by the US Trustee in the US Bankruptcy Court for the Western District of New York (in Rochester).

You can read all of the parts (and by the time we are done there will be many) at this hub.

In the interest of full disclosure, I am an affiliate with Upright Law – I co-represent their (our) clients in the northern counties of the Eastern Division of the Southern District of Illinois

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After alleging facts, the Complaint fits those facts to the laws and rules the US Trustee alleges Upright violated: last time we read of Count 1 (claiming to be a nation-wide firm able to practice in New York – instead having the case initially handled by non-attorneys and non-New-York licensed attorneys), Count II for putting misleading information in their disclosure (attorney fee) statements and Count III for knowing they made many mistakes on the petition preparation which  taken as a whole, made a mess of the case!

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(the filed Complaint continues…)

COUNT IV – 11 U.S.C. § 105 AND INHERENT POWER

116) The allegations set forth are incorporated by reference.

117) Section 105(a) authorizes the court to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions” of the Bankruptcy Code and permits the court to “tak[e] any action or mak[e] any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.” 11 U.S.C. § 105(a).

118) In addition, federal courts have inherent power to regulate the conduct of attorneys and parties that appear before them. Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991). See also In re Hull v. Celanese Corporation, 513 F.2d 568, 571 (2d Cir. 1975) (holding the district court bears responsibility for supervision of the members of its bar); In re Chase, 372 B.R. 142, 153-54 (quoting Sakon v. Andreo, 119 F.3d 109, 113 (2d Cir. 1997); Rosario v. St. Luke’s Hospital Center (In re Goldstein), 430 F.3d 106, 110-11 (2d Cir. 2005) (the court has broad discretion in deciding what sanctions should be imposed)). Wharton v. Calderon, 127 F.3d 1201 (9th Cir. 1997) (holding that federal courts have inherent authority to regulate conduct of attorneys).

119) This Court may use section 105(a) and/or its inherent power to require Upright to award damages, as appropriate, and any further relief as the Court deems necessary to deter such misconduct and abuse from ever occurring in the future.

120) Cause exists for the court to use its inherent power and the authority granted to it under 11 U.S.C. § 105(a) to prohibit the Defendants from practicing before this court whether directly or indirectly through any companies in which they have any ownership interests or management authority. Cause also exists to sanction them monetarily.

121) The United States Trustee reserves the right to amend or supplement this pleading.

WHEREFORE, the United States Trustee, by counsel, requests that the court (i) cancel the debtor’s retainer agreement with Upright Law, LLC, and/or Law Solutions Chicago, LLC, and/or Allen Chern Law, and Jason Racki; (ii) enjoin the debt relief agency defendants from committing future violations of 11 U.S.C. § 526; (iii) impose appropriate civil penalties against the debt relief agency defendants; (iv) prohibit Jason Racki, Upright Law, LLC, Law Solutions Chicago, LLC, Allen Chern Law, and Allen Chern, from practicing before this court whether directly or indirectly; (v) to order damages and/or sanctions as may be warranted and (vi) take such other action as the Court deems necessary to deter such misconduct and similar schemes in the future.

(end of section reprinting the Complaint)

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Filed by Kathleen Dunivin Schmit of the US Trustee’s office (WILLIAM K. HARRINGTON )

United States Trustee for Region Two) on April 28, 2017.

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Next month I will examine the response by Upright to these allegations …

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About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

 

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

 

Whether you live in Mount Vernon, Salem, Centralia, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

 

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

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In Re Bishop: Civil Penalties requested

Continuing the Complaint against Upright Law in the case of In Re: Joyce Ellen Bishop, Case Number 16-20593 by the US Trustee in the US Bankruptcy Court for the Western District of New York (in Rochester).

You can read all of the parts (and by the time we are done there will be many) at this hub.

In the interest of full disclosure, I am an affiliate with Upright Law – I co-represent their (our) clients in the northern counties of the Eastern Division of the Southern District of Illinois

***

After alleging facts, the Complaint fits those facts to the laws and rules the US Trustee alleges Upright violated: last time we read of Count 1 (claiming to be a nation-wide firm able to practice in New York – instead having the case initially handled by non-attorneys and non-New-York licensed attorneys) and Count II for putting misleading information in their disclosure (attorney fee) statements.

***

(the filed Complaint continues…)

COUNT III – CIVIL PENALTIES UNDER 11 U.S.C. § 526(c)(5)(B)

104) The allegations set forth above are incorporated by reference.

Poor Quality of Schedules and Other Filed Pleadings are a Basis for Sanctions.

105) Rule 2017(a) provides: “on motion by any party in interest or on the court’s own initiative, the court after notice and a hearing may determine whether any payment of money or any transfer of property by the debtor, made directly or indirectly and in contemplation of the filing of a petition under the Code . . . to an attorney for services rendered or to be rendered is excessive.” Fed. R. Bankr. P. 2017(a).

106) Here, Mr. Racki and Upright Law knew or should have known that certain information in documents filed with the Court was inaccurate and yet they intentionally advised the Debtor to sign declarations under penalty of perjury affirming the accuracy of the information in the documents. As a result, cause exists to impose sanction sanctions.

Alternatively, the Retainer is Excessive.

107) Alternatively, the Court may order sanctions because the Retainer is excessive compared to the narrow scope of representation defined by the Retainer Agreement.

108) Here, Ms. Bishop paid Upright Law and Mr. Racki $1,550 for preparation of her bankruptcy schedules, attendance at the meeting of creditors, and to file the certificate of credit counseling. Under the terms of the Retainer Agreement, Mr. Racki is required to provide no other services to the Debtor—unless she pays him an additional fee. In light of the limited legal services covered by the Retainer, the Retainer is excessive, and the fee returned to Ms. Bishop is not sufficient to correct the problem.

109) Moreover, the retainer paid by Ms. Bishop is excessive considering Mr. Racki’s and Upright’s failure to provide the Debtor with competent legal representation and the multiple errors noted in the Schedules and Forms. Notably, Ms. Bishop was required to “self-select” the appropriate relief she needed under the Bankruptcy Code (chapter 7 vs. Chapter 13) and counsel for Upright, when she finally spoke with an attorney, failed to adequately advise her of her nonbankruptcy options, which should have included a discussion of the operation of New York law with regard to her real property that went into foreclosure in 2010. This is not adequate or diligent legal representation.

110) Additionally, Mr. Racki failed to prepare adequate and complete documents for filing, and/or to timely correct those inadequacies by filing amended schedules.

111) The United States Trustee also has serious concerns regarding whether Mr. Racki obtained the debtor’s informed consent prior to aggressively limiting the scope of his legal representation in her bankruptcy case. See In re Seare, 493 B.R. 158, 202 (Bankr. D. Nev. 2013) (“For matters as complex as bankruptcy, a signed retainer agreement that merely states that certain proceedings are excluded from the flat fee is unlikely to suffice. . . . There must be a demonstrated link between the excluded services and the client’s understanding of the import of excluding those particular services in relation to the client’s particular circumstance”).

112) Given the limited scope of services covered by the Retainer; the quality of the legal representation provided by Mr. Racki and Upright in the Debtor’s case; and the multiple errors in the schedules and forms, and the failure to properly counsel Debtor regarding the nature of her debts and relevant New York Law, cause exists for sanctions.

113) The United States Trustee requests the Court impose sanctions upon Racki, Upright and its affiliates for the following reasons:

  1. a) Failure to accurately disclose the debtor’s income, fees paid, and time of fees paid on the Statement of Financial Affairs (the “SOFA”)
  2. b) Failure to accurately disclose the debtor’s monthly income on Official Form 122A-1;
  3. c) Failure to accurately disclose the fees paid by the Debtor and all of excluded services on the Rule 2016(b) Statement;
  4. d) Failure to complete the Schedules accurately and completely;
  5. e) Failure to comply with the Debt Relief Agency provisions of Sections 526-528;
  6. f) Failure to provide adequate legal advice as to the need for filing, in light of the age of the debtor’s debt, the failure of the bank to obtain a timely judgement, etc.;
  7. g) Facilitating the Unauthorized Practice of Law by having non-attorneys set fees and “advise” the debtor on bankruptcy chapter options and go over the retainer agreement and other required disclosures; and
  8. h) Directing and permitting non-New York admitted lawyers to advise clients who live in the state of New York on legal options and rights

114) The United States Trustee recommends that the Court order a civil penalty sufficient to deter the abusive practice. See, e.g., United States v. Gulf Park Water Co., 14 F.Supp.2d 854, 858 (S.D.Miss.1998) (surveying methodology used by courts in assessing amount of discretionary civil penalties under environmental laws and concluding that civil penalty must be high enough so that party cannot write off penalty as an acceptable trade-off for doing business).

115) Cause exists to impose civil penalties under 11 U.S.C. § 526(c)(5)(B) against the Defendants in an amount not less than $5,000 each.

(end of section reprinting the Complaint)

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Filed by Kathleen Dunivin Schmit of the US Trustee’s office (WILLIAM K. HARRINGTON )

United States Trustee for Region Two) on April 28, 2017.

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Check my blog’s search engine for more on this Complaint and Upright’s response. Just type “Upright Law” in my search engine for the Upright case law.

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

 

You can also access my website at http://www.mtvernonbankruptcylawyer.com

Illinois schools to teach financial literacy

Illinois financial literacy standards take effect

SPRINGFIELD, Ill. (AP) – Illinois schools will be required to teach financial literacy skills such as balancing a checkbook and putting money into a savings account this school year.

The Springfield Journal-Register reports that the Illinois State Board of Education adopted revised social science standards in 2015. Those standards were approved in February 2016 and include financial literacy throughout elementary, middle and high school.

The Illinois Treasurer’s Office, nonprofit Econ Illinois and Illinois Department of Financial and Professional Regulation pushed for the financial literacy standards.

President and executive director of Econ Illinois, Nancy Harrison, says the standards begin basic concepts at the elementary level. She says students will learn the importance of saving, having a good credit score and investing.

Illinois is one of 45 states to add financial literacy into its standards.

Information from: The State Journal-Register, http://www.sj-r.com

Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

 

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I have been calling for this for two decades. Bravo!

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (probate, wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Salem, Centralia or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

The Mooney opinion – Health Savings Accounts and bankruptcy

As a bankruptcy attorney in Mount Vernon, IL for over 20 years, I read through and analyze court rulings throughout the country, as they may be a harbinger of things to come in districts in which I practice and can be used to help Debtors get the financial relief they need.

Here is the opinion as to the availability of a Health Savings Account to a Trustee for liquidation in a Chapter 7.

 

Read a synopsis and review of the subject here

 

In re: DENISE E. MOONEY, Debtor/Plaintiff-Appellant, versus JOY R. WEBSTER, Trustee/ Defendant-Appellee. An appeal from the United States District Court for the Middle District of Georgia dated January 27, 2017. Case: 15-11229

Date Filed: 01/27/2017

Before HULL and JILL PRYOR, Circuit Judges, and CONWAY, District Judge.

When Denise E. Mooney filed a petition for Chapter 7 bankruptcy in 2013, she claimed the assets in her health savings account (“HSA”) as property exempt from the bankruptcy estate.  As we previously recognized, the Bankruptcy Code permits states to adopt their own lists of property that is exempt from a bankruptcy estate.  See In re Mooney (“Mooney I”), 812 F.3d 1276, 1279 (11th Cir. 2016) (citing 11 U.S.C. § 522(b)(2)).  Georgia has set forth its list of exempt property in O.C.G.A. § 44-13-100.  Mooney claims that the contents of her HSA are exempt from her bankruptcy estate pursuant to O.C.G.A. § 44-13-100(a)(2)(C), which exempts, in relevant part, any “disability, illness, or unemployment benefit,” and O.C.G.A. § 44-13-100(a)(2)(E), which exempts any “payment under a pension, annuity, or similar plan or contract on account of illness [or] disability. . . .”

The Chapter 7 trustee, Joy Webster, objected to the HSA’s exemption.  The bankruptcy court sustained Webster’s objection, and the district court affirmed.

On appeal, we certified questions to the Supreme Court of Georgia, including:

(1) Does a debtor’s health savings account constitute a right to receive a “disability, illness, or unemployment benefit” for the purposes of O.C.G.A. § 44–13–100(a)(2)(C)?

(2) Does a debtor’s health savings account constitute a right to receive a “payment under a pension, annuity, or similar plan or contract” for the purposes of O.C.G.A. § 44–13–100(a)(2)(E)? Mooney I, 812 F.3d at 1283.

The Supreme Court of Georgia answered both questions in the negative, holding that under Georgia law, an HSA does not constitute a right to receive a “disability, illness, or unemployment benefit” for the purposes of OCGA § 44-13-100 (a) (2) (C), nor does it constitute a right to receive a “payment under a pension, annuity, or similar plan or contract” for the purposes of OCGA § 44-13-100 (a) (2) (E). Mooney v. Webster, 794 S.E.2d 31, 36 (Ga. 2016).[1]  The Supreme Court of Georgia’s answers to our certified questions foreclose Mooney’s arguments on appeal.  Under Georgia law, Mooney was not entitled to claim the assets in her HSA as property exempt from the bankruptcy estate.  Accordingly, we affirm.

AFFIRMED.

 

 

About the blogger: Michael Curry of Curry Law Office in Mount Vernon, Illinois has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Waltonville, Woodlawn, Lawrenceville, Centralia, Louisville, Xenia, Grayville, Effingham, Dieterich, Vandalia, McLeansboro, Dahlgren, Albion, Flora, Clay City, Kinmundy, Chester, Sparta, Olney, Mount Carmel, Nashville, Fairfield, Cisne, Wayne City, Carmi, Grayville, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

 

 

 

[1] We certified a third question as well:  “Is a debtor’s right to receive a payment from a health savings account ‘on account of illness [or] disability’ for the purposes of O.C.G.A. § 44– 13–100(a)(2)(E)?” Mooney I, 812 F.3d at 1283.  Because the Supreme Court of Georgia answered our first two questions in the negative, it did not address the third question.  Mooney, 794 S.E.2d at 32.

 

Alaska, Georgia and Louisiana Top CFPB’s List for Consumer Complaint Filings

Posted by NCBRC – February 13th, 2017

In its monthly complaint report, the CFPB reported that the top three financial products or services receiving complaints in December, 2016, were, in descending order, debt collection, credit-reporting, and mortgages. Mortgage servicers garnered complaints for such things as misapplication of payments and ineffective resolution of borrowers’ problems with their loans. To account for monthly and seasonal fluctuations, the report compares complaints against companies in three-month segments to the same period the prior year. Equifax, Wells Fargo and TransUnion had the dubious honor of being the top three complained–about companies in the period from August to October, 2016. With respect to complaints relating to types of loans, the three-month average for complaints concerning student loans rose by 109% over the same period last year. The three states with the greatest increase in consumer complaints were Alaska, Georgia and Louisiana.

CFPB Monthly-Complaint-Report Feb 2017

 

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About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Waltonville, Woodlawn, Lawrenceville, Centralia, Louisville, Xenia, Grayville, Effingham, Dieterich, Vandalia, McLeansboro, Dahlgren, Albion, Flora, Clay City, Kinmundy, Chester, Sparta, Olney, Mount Carmel, Nashville, Fairfield, Cisne, Wayne City, Carmi, Grayville, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also get to my website at www.mtvernonbankruptcylawyer.com

 

 

 

Student Loans and Chapter 13: a review of the Engen case

As a bankruptcy attorney in Mount Vernon, IL for over 20 years, I read through and analyze court rulings throughout the country, as they may be a harbinger of things to come in districts in which I practice and can be used to help Debtors get the financial relief they need.

Kansas has recently ruled on an issue very important to some debtors: Student loans and their treatment in a Chapter 13 Plan.

Read a synopsis of the case here.

Student loans are considered a non-priority unsecured debt in bankruptcy. However, the debt is non-dischargeable. This means that the debt (principle and interest) survives the bankruptcy and you will have to continue to pay the debt when your bankruptcy is completed.

Chapter 13 bankruptcy is a consolidation of all debt into one payment. Non-priority unsecured debt share a base amount that is paid over time and in proportion to the debt owed. The larger the debt, the more they will be paid from that base. For example – if your Chapter 13 Plan provides for a total sum of $10,000.00 to be paid to the general unsecured base, and your student loans are 65% of your debts, it will receive 65% of the $10,000; or $6,500.00.

When the bankruptcy is over, you will have paid $6,500.00 to your student loan. But interest continues to accrue during the 3-5 years you are in the Chapter 13. Depending on how much you owe, this may only pay some of the interest only. The principal may have remained untouched.

As the court says: “pro rata distribution of the plan funds to all unsecured creditors, and the inability to pay off the student loan debt faster than its nondischargeable interest may be incurred, could result in the debtors owing more at the end of their plan than they owed going into it. Hardly the goal of chapter 13 bankruptcy.”

However, courts in the past have rejected that argument in treating student loans differently than other non-priority unsecured debt.

The only success attorneys have had in treating student loans differently is if there is a co-debtor on the loans. In that case the co-debtor can pay the loan directly (if it was their loan) or if the debt is paid its regular monthly payment inside the plan.

The Kansas Court has found that, despite their categorization by the Bankruptcy Code and Court rulings, student loans ARE a different type of debt than other non-priority unsecured debts.

It helped to have a sympathetic debtor – the OTHER unsecured debts had been paid down 83% before the case was filed. During the life of the bankruptcy the student loans will presumably receive their “fair share” relative to what the other unsecured debts have already received pre-petition.

Quite likely that will be the factor most courts will use to distinguish this case from ones in the future. Also, it is likely the lender did not object to the Plan. Had it objected would the court have ruled differently?

But Debtors with a similar situation may finally be able to find relief from their student loan debt in a Chapter 13 filing.

 

 

 

About the author: As a bankruptcy attorney in Mount Vernon, IL Michael Curry of Curry Law Office has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Waltonville, Woodlawn, Lawrenceville, Centralia, Louisville, Xenia, Grayville, Effingham, Dieterich, Vandalia, McLeansboro, Dahlgren, Albion, Flora, Clay City, Kinmundy, Chester, Sparta, Olney, Mount Carmel, Nashville, Fairfield, Cisne, Wayne City, Carmi, Grayville, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 to speak directly with a lawyer and be on your way to Finally Be Financially Free!

 

Financial Wise Guides

Have you gotten your Kindle copies of my Financial Wise Guides? It is a first step on your way to being Financially Free!

https://michaelgcurry.com/non-fiction/

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About the author: Michael Curry of Curry Law Office in Mount Vernon, Illinois has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Waltonville, Woodlawn, Lawrenceville, Centralia, Louisville, Xenia, Grayville, Effingham, Dieterich, Vandalia, McLeansboro, Dahlgren, Albion, Flora, Clay City, Kinmundy, Chester, Sparta, Olney, Mount Carmel, Nashville, Fairfield, Cisne, Wayne City, Carmi, Grayville, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

tags: Bankruptcy Attorney Lawyer Mount Vernon Illinois Centralia Fairfield Carmi

 

 

 

“13 Days a Beatle” Celebrity Spotlight: Jimmy Nichol

Bankruptcy affects people of every age, creed, sex or ethnicity from every part of the country. Even celebrities both loved and disliked have their financial problems and depend on the bankruptcy laws to get out from under crippling debt.

Being so near my birthday, I HAD to pick a Beatle, even a temporary one…

ringo-nicol

From Wikipedia:

James George Nicol (born 3 August 1939), better known as Jimmie Nicol or Jimmy Nicol, is a British drummer and business entrepreneur. He is best known for temporarily replacing Ringo Starr in The Beatles for a series of concerts during the height of Beatlemania in 1964, elevating him from relative obscurity to worldwide fame and then back again in the space of a fortnight.

After then working with a number of different bands, including a successful stint with The Spotnicks, he left the music business in 1967 to pursue a variety of entrepreneurial ventures.

Nicol had hoped that his association with The Beatles would greatly boost his career but instead found that the spotlight moved away from him once Starr returned to the group. His subsequent lack of commercial success led him into bankruptcy in 1965.

jimmy-nichol

Check my blog for more Celebrity Spotlights.

Michael Curry is the author of helpful ebooks on bankruptcy and debt relief, available on Kindle: What Bankruptcy Can Do, What Bankruptcy Can’t Do and Finally Be Financially Free.

At Curry Law Office in Mount Vernon, IL, we are here to help you through your financial difficulties. Our down-to-earth bankruptcy attorney offers common sense advice and solutions for your bankruptcy filing.

Debt problems come in all shapes and sizes. For some of our clients, the issue that drives them to seek a lawyer’s advice is mounting credit card bills. For others, it may be an abusive creditor or a home foreclosure. At Curry Law Office in Mount Vernon, IL, we offer a free debt-relief planning session to discuss your financial problems and identify solutions.

Whether you live in Mount Vernon, Salem, Waltonville, Woodlawn, Lawrenceville, Centralia, Louisville, Xenia, Grayville, Effingham, Dieterich, Vandalia, McLeansboro, Dahlgren, Albion, Flora, Clay City, Kinmundy, Chester, Sparta, Olney, Mount Carmel, Nashville, Fairfield, Cisne, Wayne City, Carmi, Grayville, or anywhere in Southern Illinois; call or text today (618) 246-0993 or email michael.curry.law@gmail.com. Finally Be Financially Free by calling now.

tags: Bankruptcy Attorney Lawyer Mount Vernon Illinois Centralia Fairfield Carmi

 

Til Debt Do Us Part (2) – Chapter 13s

WHAT BANKRUPTCY CAN’T DO: Divorce Debt? Domestic Support Obligations part 3

Bankruptcy helps relieve the burden of credit card and loan debts, medical bills, back utilities and rent, and so forth.

But there are some debts that bankruptcy does not affect; that are “immune” from a bankruptcy discharge – the word is “non-dischargeable”. This means that when the smoke clears and the bankruptcy is over, these debts will still have to be paid.

My previous blogs were about taxes, traffic fines, speeding tickets, student loans and all the various types of what I call Intentional Debt. Lately my focus has been on Child Support/Alimony/Maintenance/Domestic Support Obligations. Last time we talked about these debts surviving Chapter 7.

But a Chapter 13 is different. If a debt from a divorce decree or settlement is in the form of a property settlement it is NOT a DSO is therefore IS dischargable in a Chapter 13 case.

It may be a DSO in a Chapter 7, but NOT a DSO in a Chapter 13.

Huh?

Case law has developed a thorough test to distinguish a DSO from a property settlement agreement. It is a huge list of factors that the judge needs to review.

  1. Whether the settlement agreement includes payment for the ex‐spouse;
  2. Whether there is any indication that provisions within the agreement were intended to balance the relative income of the parties;
  3. The position of the assumption to pay debts within the agreement;
  4. The character of method of payment of the assumption;
  5. The nature of the obligation;
  6. Whether children resulted which had to be provided for;
  7. The relative future earning power of the spouse;
  8. The adequacy of support absent debt assumption;
  9. The parties’ understanding of the provisions;
  10. The label of the obligations;
  11. The age of the parties;
  12. The health of the parties;
  13. Existence of “hold harmless” or assumption terminology;
  14. Whether the assumption terminated upon death or remarriage;
  15. Whether the parties had counsel;
  16. Whether there was a knowing, voluntary, and intelligent waiver of rights;
  17. Length of the marriage;
  18. Employment of the parties;
  19. The demeanor and credibility of the parties;

***

Some examples:

  • A couple has been married for 30 years, since they were teenagers. He went to college and makes $200,000.00 per year. She never went to college and was a stay-at-home Mom and raised the kids. He was ordered to pay the credit cards but then files bankruptcy. She objects to the discharge of these credit cards. This one is pretty easy and leans in her favor.
  • Both couples make $50,000.00 per year and will likely remain at their jobs for many years to come. She was ordered to take on all the credit card debt in exchange for an agreement to NOT pay any alimony or maintenance to her spouse. She files bankruptcy and the spouse challenges the discharge of the debt. This leans in the spouse’s favor.
  • At the time of the divorce both of the divorced couple made $50,000.00 per year and the joint debts were divided more or less evenly. A year later, she lost her job and after months of searching took a job for $25,000.00 per year. She also incurred a lot of medical bills since the divorce due to her chronic illness and lack of insurance. She filed bankruptcy and he challenges the discharge of their debt. This liens in the Debtor’s favor.
  • One spouse agrees to take on all the credit card debt. He files bankruptcy the next day. It has been proven that he consulted with a bankruptcy attorney months ago and has planned to file all along. This leans in favor of the other spouse, too.

Fair to say only about 1% of the cases are this easy. Most are very complicated and each factor has to be weighed.

No one factor carries more weight than another. The bankruptcy judge is given a lot of latitude in reviewing all the factors and how much weight to give each one. You can have all 19 factors on your side plus plenty more and the judge could still rule in favor of your ex-spouse for the reason that something doesn’t seem right.

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 So what happens in your Chapter 13 regardless of how the debts are determined?

If the debts are ruled as a property settlement the bills are paid with other unsecured debts and discharged after the bankruptcy is completed.

If the debts are ruled as DSOs, they have to be paid as priority unsecured debts. This means they have to be paid in full during the life of the Chapter 13 bankruptcy. Unpaid interest survives. This means even if you pay the entire $10,000.00 in credit card debts you may still owe thousands of dollars in interest when the Chapter 13 is complete.

This may make your plan payment difficult to pay. Those $10,000.00 in DSOs could be as much as $300.00 per month in a 36-month plan. Add your car payment, the house payment, back taxes owed and other fees and your Chapter 13 payment may be unaffordable – the legal phrase is infeasible.

Unless there is another reason to remain in a Chapter 13, you should consider converting to a Chapter 7 and pay the debt on your own terms.

***

A good local bankruptcy attorney will have the experience and knowledge of your district to advise you how the bankruptcy judge of that district views and reviews these factors.

Copyright 2016 Michael Curry

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About the author: Michael Curry of Curry Law Office in Mount Vernon, Illinois has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Waltonville, Woodlawn, Lawrenceville, Centralia, Louisville, Xenia, Grayville, Effingham, Dieterich, Vandalia, McLeansboro, Dahlgren, Albion, Flora, Clay City, Kinmundy, Chester, Sparta, Olney, Mount Carmel, Nashville, Fairfield, Cisne, Wayne City, Carmi, Grayville, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

tags: Bankruptcy Attorney Lawyer Mount Vernon Illinois Centralia Fairfield Carmi

False Filing: Protect Yourself from Identity Theft and False Tax Returns

You probably know someone who has been the victim of identity theft. Perhaps YOU have been the victim of identity theft as well. Someone has used my credit card or got a credit card in my name; someone has used my social security number on a tax return.

As a bankruptcy attorney, I have seen the latter quite a lot in the last few years. In both the Chapter 7 liquidation and Chapter 13 consolidation bankruptcy, Debtors are required to give some of their tax refund money to the trustee to disburse to their creditors.

But I have had a few Debtors who were unable to file their taxes (and get their refunds) because taxes have already been filed in their name! Fortunately, both the court and the trustee are sympathetic and do not put them on a deadline while the IRS sorts out the problem.

The Debtors in those cases were lucky – the identity theft was discovered. What if I were on social security, disabled, not employed or otherwise were not required to file a tax return? How can I find out if someone is using my social security number to file tax returns?

This type if scam could go on for years. You would have no idea someone was using your social security number to file tax returns and receive refunds – because you do not HAVE to file! The only time you would discover it is if, for some reason, you decided to file taxes OR the scammers goofed up and the IRS or state department of revenue contacted you about an error or other red flag.

You can check to see if anyone has used your social security number by preparing and filing Form 4506-T Request for Transcript of Tax Return.

4506t

Now hold on, you say. How can I request a transcript of a tax return I did not file?

Fill in the top of the form – name, address, social security number, etc. Then check box #7:  Verification of Nonfiling, which is proof from the IRS that you did not file a return for the year. Current year requests are only available after June 15th. There are no availability restrictions on prior year requests. Most requests will be processed within 10 business days.

Line 7

The IRS will verify that you did not file tax returns. At worst, they will verify there HAS been a tax return filed under your social security number in the past. You will then have to take steps to report the identity theft to the IRS and elsewhere. This blog post does not go into those details, but Google it – there are dozens of places you can seek advice on where to go and what to do next.

Note the June 15th date – you cannot check to see if someone filed a return under your social security number for 2015 until June 15, 2016. Information on 2014 and prior years are available before that June date.

Identity theft leaves us feeling sick and angry. But in this high-tech society, it is something we have to watch out for; something we have to ardently guard against. This particular type of theft – tax returns filed for people who do not have to file returns – is particularly heinous because it can be left undiscovered for years. Someone is using you to line their pockets with our tax dollars – and this time we didn’t vote for them!

If you are worried about this issue, request verification. Do it every year.

Original Material Copyright 2016 Michael Curry

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About the author: Michael Curry of Curry Law Office in Mount Vernon, Illinois has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Waltonville, Woodlawn, Lawrenceville, Centralia, Louisville, Xenia, Grayville, Effingham, Dieterich, Vandalia, McLeansboro, Dahlgren, Albion, Flora, Clay City, Kinmundy, Chester, Sparta, Olney, Mount Carmel, Nashville, Fairfield, Cisne, Wayne City, Carmi, Grayville, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

tags: Bankruptcy Attorney Lawyer Mount Vernon Illinois Centralia Fairfield Carmi