What documents do I need to bring to my 341 Meeting of Creditors with the bankruptcy trustee (2017 revisit)?

I covered this in 2014 (see below), and it really hasn’t changed.

About a month after we file bankruptcy, we meet with a bankruptcy trustee assigned to your case.  It is his job to determine if you have any non-exempt assets (things I cannot protect) that he can sell off so that he pay a portion of those proceeds to your creditors.  

Normally, the trustee asks for the following:

1.  driver’s license and social security card,

2. bank statement showing the balance on the date you filed and the transactions in the account during the month around your case filing,

3.  a current paystub (to show that your income is consistent with the paperwork we filed with the court).

At the meeting the trustee may demand that we produce other documents, like vehicle titles, or a copy of your divorce decree.  If you’ve already disclosed everything to your attorney, none of the trustee’s questions or demands will be a surprise at all.

If you are missing one of the essential items, like a driver’s license or social security card, the trustee may even refuse to conduct the meeting and will reschedule it when you have those items.

2017 revisit

You can bring alternate documents to the meeting if necessary:

  1.  driver’s license — you can actually bring any government issued photo i.d.  I have even had clients use their concealed carry permits (which seems like a vague threat to the bk trustee, but is really innocent, I hope).  No, you cannot use your Costco card, and yes, I have had clients try to use the Costco card before.
  2. social security card — anything issued by a third party with your social security number will work, including a W2 or a 1099.  i have even used a lawsuit where the creditor put the debtor’s social security number on the caption of the lawsuit to identify them (old lawsuit.  We don’t do that kind of thing nowadays).
  3. bank statement — if you don’t have it, you can email an electronic copy later, but the trustee will not accept your online bank statement off of your phone.  I probably have at least 1 client a month try to do that, and the trustee does not want to handle your phone.
  4. paystub — same as the bank statement.  If you don’t have it, you can email it later, but you cannot show a copy of your paystub off of your phone.

What do I need to bring to my 341 meeting of creditors with the trustee?

Will bankruptcy stop my payroll garnishment for child support (2017 revisit)?

In 2014 I wrote about this (see below) and said, ‘No,” but it’s a little more complicated than that.  

Filing bankruptcy won’t affect your normal monthly child support payments. But, it can affect back-child support.  Let’s say that you pay $500 a month in child support.  You are behind, a lot, and they are garnishing that $500 plus another $250 a month for back child-support.  If we file a chapter 13 case and propose to cover the back child support as part of your chapter 13 payments, then ORS will go back to garnishing the original $500. You still have to pay the back child support as part of your chapter 13 case, but it can be stretched over your 5 year (60 month) chapter 13 plan.

So, technically, filing bankruptcy can stop some of your payroll garnishment for child support.

Will bankruptcy stop my paycheck garnishment for child support?

What happens if I don’t give the bankruptcy trustee my tax refund (revisited)?

I covered this back in 2014 here:  http://robertspaynelaw.com/myutahbankruptcyblog/2014/03/27/what-happens-if-i-dont-give-the-bankruptcy-trustee-my-tax-refund/

Just remember that you don’t have to turn over your refund if you receive and spend it all BEFORE you file bankruptcy, but what happens if you are ordered to turn it over and you don’t?   

Short answer: you unleash a hellstorm of court proceedings.
Long answer: If you don’t turn over your tax refund monies after the trustee demands them, then various bad things can happen to you. In a chapter 13, you are required to turn over your refunds for the next three years. If you fail to do so, the trustee will dismiss your case. Sometimes, the trustee will dismiss your case and request that the court bar you from filing a new case for 180 days. This means that you can’t go bankrupt, can’t stop garnishment, and can’t avoid creditors for 6 months from the date that it is dismissed.

In a Chapter 7, it’s even worse. If you don’t turn over your tax refund, the trustee can and will file a Motion for Turnover (requiring you to turn over the refund). If you still don’t comply, then the trustee will file a Motion to Revoke Discharge, and your chapter 7 bankruptcy gets thrown out, you still owe the trustee the tax refund money plus his/her legal fees, and you can never get a discharge of those debts in a new Chapter 7.

It’s bad.

This is why I warn my clients about losing their tax refunds and remind them that it’s worth it in the short term to get rid of a lot of debt.

It is infrequent, but I sometimes have clients who refuse to turn over their tax refund monies.  I had one client who refused to turn over an $8,500 refund, refused to get on a repayment plan with the trustee, and eventually lost his discharge of over $60,000 of debt.  He chose to keep $60,000 of debt instead of lose that one year’s worth of tax refund monies.  It happens.

What are the median income figures for bankruptcy in Utah (April 2017)?

I posted this a couple of years back and realized that we need some updated numbers.  Here is the original blog post:  What are the median income figures for bankruptcy in Utah (February 2015)?

Basically, if you are over, then you are a chapter 13. If you are under, then you are a chapter 7. median income.  These are GROSS numbers (that means your income before we take out taxes, health insurance, or anything else).

Now remember that these numbers can be adjusted by child support payments (received or made), larger mortgages, huge tax debt, etc. So, it is a gross overgeneralization to say that if you are over that figure then you MUST be a chapter 13, but this is the baseline we start with. That being said, here are the current figures for Salt Lake County that we use on our Form 122A Current Monthly Income and Means Test for Chapter 7 (6 month average of current monthly income and disposable income):

Single: $56,638

Married: $62,903

Married with 1 child: $71,047

Married with 2 children: $79,710

Married with 3 children: $88,110

Married with 4 children: $96,510

Married with 5 children: $104,910

Married with 6 children: $113,310

Married with 7 children: $121,710

Married with 8 children: $130,110

Married with 9 children: $138,510

Married with 10 children: $146,910

Married with 11 children:  $155,310  (I have 11 children, and this is where I fit on the table).

When I file bankruptcy, can they sue an authorized user on my credit card?

No (generally).  

Generally, when you file bankruptcy as the signatory party on a credit card (the owner of the debt), it wipes out your liability for that debt.  So if you owe American Express $10,000 and go bankrupt, then it wipes out that $10,000 liability.  However, what happens if your son was also on the card as an authorized user (they issued him a card so that he could make charges on your account)?  He is NOT liable.

I get asked this question over and over, and although I am confident in the answer, I turned to Google just to make sure I’m getting it right.  Here is a very clear Question and Answer article from bankrate.com written by Steve Bucci entitled, “Others not liable for card owner’s debt,”

[A]uthorized users of credit card accounts are not financially responsible for payment of the accounts. But that won’t stop some collectors from asking you to pay. Some reasons they may give is to keep the memory of the person clear or that he would have wanted it that way. The next time you get a call, explain to them that you know your rights and that you are not legally responsible.

Ask them to send you a copy of the original agreement for the credit card account. They just might respond with, “We can’t send information regarding this account to you because you are not the owner of the account.” This would allow you to respond, “I rest my case.” Keep all your documentation with the lender in case you need it for a collector down the road.

They may try to argue that your authorized user is liable, and absent some particular fraudulent situations, they are wrong.  Additionally, if they report that bad debt on your authorized user’s credit report, he can file a simple credit dispute to get it taken off.

There are also some situations where your spouse could still be liable for the debt if you were the owner of the account and she was the authorized user.  In that kind of situation, it may be safest to file bankruptcy together.  That’s a bit more complicated, and I’ll save it for a different post.

A debt collector just told me that they are starting garnishment proceedings. When are they going to start garnishing me?

Never, if you file bankruptcy first.

That being said, it’s usually a lie on the part of the debt collector.  Garnishment is the tail end of a series of legal actions, and unless you’ve already been served, had a judgment entered against you, and given them your employer info to send the garnishment paperwork, then they are bluffing.  Basically, if they filed a lawsuit today, it will usually be about 45 days before you see the first garnishment from your wages.  

If they do already have a judgment, they will serve the papers on the payroll office of your employer.  Even then, payroll will normally inform you and give you a fair heads-up kind of warning.

It sounds scary on the phone, but collectors tend to say nasty things.  Many of those nasty things are at best, gross misrepresentations, and at worst, bald-faced lies.

I have given the timeline here:  A creditor just called and said that they are initiating the legal process for garnishment. How long do I have until they garnish me?

You can also find more information here:

A creditor just got a judgment against me. Will they start garnishing me right away?

How does a creditor find out where I’m working so that he can garnish my wages before bankruptcy?

How long will it take my creditors to garnish me after they get a judgment? (video)

 

 

 

What are the steps to purchase and finance a car in my chapter 13 bankruptcy?

You can purchase a car at any time, if you are paying cash.  Financing, on the other hand, is much more difficult.

Today I had a current client ask me about financing a newer car in the middle of her chapter 13 case.  She surrendered an upside-down vehicle in her chapter 13, and she was tired of borrowing vehicles from friends and family.  I responded to her email and gave the following steps:  

What options would I have if I need to buy a car? I surrendered mine when I filed and but now that I am moving to XXXX I’m not sure if I will be able to function out there without one. Can you let me know if this is possible?

Thanks,
XXXX

Yes, but it’s obnoxious.

If there is any way that you can have someone else finance it in their name, and you make the payments, do so.  Otherwise, here is how you finance a car in a chapter 13:
1.  go to a dealership and tell them how much you can spend on a car and that you are in a 13,
2.  they will show you a type of car you might be able to buy,
3.  sign a purchase contract and have them draft up the finance agreement,
4.  send it to me,
5.  I file a motion with the court, and then we wait 30 days for the court to approve it,
6.  the court awards about $500 in additional fees that you have to pay out (through your chapter 13 payments),
7.  go back to the dealership and show them the signed order, and then,
8.  you can finally drive a car off the lot similar to the one you originally looked at over a month ago.
Robert
I stand firm with the adjective above, “obnoxious.”  I also didn’t tell her that the court will
usually only allow a car under about $400 a month, it has to fit your budget, and the court
frowns on luxury (Cadillac) or sports (Mustangs) vehicles.
If you can buy something with cash, always do so.  It’s much cheaper, and your insurance is
cheaper as well.  If you’re not in that kind of situation, then try to finance something as cheap as
you can stomach that will still get you from Point A to Point B.

Can I change the interest rate on my car title loan in bankruptcy?

In a chapter 7, no.

In a chapter 13, yes.

In a chapter 7 case, we can list the title loan, check a box that says that we will reaffirm or keep the loan, and you can keep the vehicle.  But, you keep the exact same payment terms:  same interest rate, balance, monthly payment amount, etc.  So in a chapter 7, no, you cannot change the interest rate.  You can always try to negotiate, but it seems hit and miss with my clients when they try to negotiate a different amount with someone who already holds the title to their vehicle.

In a chapter 13, yes, we can change the interest rate to something called the Till rate, which currently is 5.5%.**  So, in a chapter 13, you can change the interest rate on your title loan, usually about 250%, down to 5.5%.  This doesn’t change the outstanding balance, but it sure cuts down those future interest payments.  

 

**The Till rate is based on a Supreme Court case called TILL V. SCS CREDIT CORP. (02-1016) 541 U.S. 465 (2004).  I have linked it if you would like some light reading.  I would warn you that the Supreme Court does not generally use cute little pictures made from Microsoft Paint (unlike this blog).

What happens to my property settlement from my divorce when I file bankruptcy?

It depends.  If you have already received the settlement proceeds or items, you’re fine.  If you are still waiting on it to finalize, you’d better wait on the bankruptcy.

When we file bankruptcy, I can protect most of your property under various exemptions.  For example, I can protect $3,000 of equity in your car.  Unfortunately, I generally cannot property property settlements proceeds still coming to you.  So if your ex-husband still owes you another $5,000 from your old joint savings account, and he is sending it to you in 2 weeks, then we’d better not file until after you receive and spend it.  Otherwise, the bk trustee will step into your shoes and intercept that money for himself.  

If you’ve received it and spent it, you’re good.

If you are waiting on the settlement proceeds, do NOT file bankruptcy yet.

And don’t think that you can hide this from the bk trustee.  The moment trustee realizes that you are divorced, he will ask you if you still have any property settlement coming to you.  He’ll also want a copy of the divorce decree.  It’s not worth potential perjury charges and a loss of your bk discharge to keep the settlement secret.

 

 

I surrendered my condo in bankruptcy, but now the HOA is suing me for post petition fees?

Yes they can.  

It’s not very common, but at least twice a year I have clients face this issue:  they surrendered their home in a chapter 7 bankruptcy, and then the HOA sues them for HOA fees which came due after the bankruptcy was filed.

Bankruptcy wipes out your personal liability for those fees which arose prior to the bankruptcy file date.  If you’re keeping the home, you’ll still have to pay them back, but if you’re surrendering the home, you do NOT have to pay them back.

The problem is that new HOA fees keep coming due until your name is off the title of the home. (Your names comes off title when they sell or foreclose the property).  Your chapter 7 case does not affect these new post-petition fees.  The Bankruptcy Code Section 523(a)(16) exempts from discharge any:

(16)  fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor’s interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case;

In other words, even though you’re giving up the home, the HOA can still come after you for new fees.  All you can do is wait until the bank forecloses or the trustee sales the property.  Once that happens, your name is off title, and the new title holder will have to pay those fees for you.

I’d like to give credit where credit’s due.  I used the following two articles for inspiration here:

HOA dues still due after bankruptcy filing? by Justin Harelik, and

Post-Petition HOA Fees in Bankruptcy, by the Wilson-Goodman Law Group.