Monthly Archives: January 2015

How late at night can you electronically file a bankruptcy case?

As late as you need.  (24/7)  late

Almost all bankruptcy attorneys use bankruptcy software that allows us to file the paperwork electronically.  I use Bestcase.  I don’t know if it’s the best, but it’s the only one I’ve ever used.

I can file electronically, 24 hours a day, 7 days a week, including holidays and weekends.  The court system seems to be up and functional about 99% of the time.  I can only remember a handful of time when the court’s ECF (case management/electronic case file) system has been down, and even though, it was only down for a few hours during maintenance.

I have spent more than one night on the couch in my office, waiting for a client to finish his online class and call me, so that I could roll over and hit “send” on the computer to stop a foreclosure the next morning.

Last night, someone was on my website late at night, searching for the phrase “how late at night can you electronically file a bankruptcy case in Utah?”  That same client could have sent an email or text to my general email at help@robertspaynelaw.com, and maybe I could have stopped his 9 a.m. foreclosure.

 

How much new credit card debt do you have from Christmas 2014?

This was an interesting topic on the morning show on a local radio station ZHT (The Morning Zoo on 97.1 with Frankie, DB, and Jess).    They asked people to text in their current credit card balances.  Some of the text messages are posted here:  http://www.971zht.com/onair/text-topics-53669/how-much-credit-card-debt-do-13155022/

Some of the posts seemed to indicate people who may need to call me rather quickly, such as:

20,000 in credit cards includes two surgeries

I have 4 credit cards with a total of $5,275

3 cards 29,000

Just consolidated 4 cards 7500 in debt.
daughter married in addition to holidays. $22

Read more: http://www.971zht.com/onair/text-topics-53669/how-much-credit-card-debt-do-13155022/#ixzz3OvJLRv00

This made me think about people who may have overextended in the past few months, especially in Christmas.  Looking at some of the texts above, the person with $5,275 really doesn’t need bk, but the person with $20,000 in credit card debt including two surgeries really ought to call an attorney and see his bankruptcy options.

Honestly, each of these people above may have to pay their creditors back in full, whether they file bankruptcy or not, but they should at least explore their options.

How do I request that the bankruptcy trustee abandon my home so that I can sell it?

You send him a Request for Abandonment.  (link below).

When you file bankruptcy, everything you own becomes part of the bankruptcy estate (including your home).  You cannot sell off any of these assets until the trustee officially abandons them.  Normally, the trustee will file a No Asset Report or Report of No Distribution, which abandons all of your property.  It looks like this on the court docket:

Chapter 7 Trustee’s Report of No Distribution (Docket: https://ecf.utb.uscourts.gov/cgi-bin/DktRpt.pl?377206)
Docket Text:
Chapter 7 Trustee’s Report of No Distribution: having been appointed trustee of the estate of the above-named debtor(s), report that I have neither received any property nor paid any money on account of this estate; that I have made a diligent inquiry into the financial affairs of the debtor(s) and the location of the property belonging to the estate; and that there is no property available for distribution from the estate over and above that exempted by law. Pursuant to Fed R Bank P 5009, I hereby certify that the estate of the above-named debtor(s) has been fully administered. I request that I be discharged from any further duties as trustee. Key information about this case as reported in schedules filed by the debtor(s) or otherwise found in the case record: This case was pending for 5 months. Assets Abandoned (without deducting any secured claims): $ 0.00, Assets Exempt: $ 0.00, Claims Scheduled: $ 0.00, Claims Asserted: Not Applicable, Claims scheduled to be discharged without payment (without deducting the value of collateral or debts excepted from discharge): $ 0.00. (Loveridge tr, Elizabeth)

It usually takes the trustee about 4 months after your case has been filed before she will file the No Asset Report.

If you need to sell, or even short-sell, your home before the report has been filed, you can request that the trustee officially abandon your home early.  You do this by filling out a court form, mailing it to the trustee, she signs it, and then you file it with the court.    abandoned

The form is located here:  https://www.utb.uscourts.gov/forms/request-abandonment-and-proposed-abandonment-template.  Just remember that the trustee won’t abandon your home unless your properly fill it out and attach the documentation she requests, “documents that reflect a properly secured property interest in the property listed above” such as loan documents, a copy of the Deed of Trust, any liens, etc.

Can I use my tax refund to pay my parents back (before filing bankruptcy)?

No, no, no.

The bankruptcy trustee is going to ask yo to give an accounting on how you spent your tax refund.  Paying your parents back on a loan is about the worst thing that you can do.  This is a preferential transfer (where you prefer Mom and Dad over every other creditor), and the bankruptcy trustee will sue your parents to recover that money.

In fact, do not use your tax refund money to pay any unsecured creditor (like a credit card, a medical bill, or a payday loan).  If you do, there is a good chance that the bankruptcy trustee will sue that creditor in order to recover the monies you paid prior to filing bankruptcy.

What happens to my car/truck lease in bankruptcy?

Nothing, unless you want to get rid of it.

When you file bankruptcy, whether chapter 7 or chapter 13, you can choose to terminate various leases, including apartment leases, furniture leases, and even vehicle leases.  The creditor cannot fight your right to terminate a lease.  So, if you want to give back that vehicle and cancel the lease contract, then do so.

In either a chapter 7 or a chapter 13, once you terminate that lease, the creditor is allowed to come repossess the vehicle.  lease

In a chapter 7, whatever balance you still owe on the lease becomes an unsecured debt which gets discharged (wiped out).

In a chapter 13, whatever balance you still owe on the lease becomes an unsecured debt which may or may not be paid back as part of your chapter 13 plan.

If you want to keep the lease, you simply assume it as part of your bankruptcy.  This is generally easy to do, unless you are in a chapter 13 with a small monthly payment, and the trustee objects to your retention of an expensive lease on a luxury vehicle.

 

Can we cancel our rent-to-own (lease/purchase) contract on our home with bankruptcy?

Yes.

In bankruptcy, whether we file a Chapter 7 or a Chapter 13 case, we can cancel any contract or lease that you signed prior to the bankruptcy case.  That contract you signed to purchase the home that you are renting is something that we can get rid of in bankruptcy.

The next questions is:  what kind of rights do you have in the property and/or the money you put down originally?

None.

Your deposit is gone, and you won’t get it back.  You don’t have any ownership interest in the property because you were never on title.  Basically, you just walk away.

When can I file my 2014 tax returns in 2015? (updated)

January 20th.  january 20

This question matters so much in bankruptcy because the majority of my clients are waiting to file bankruptcy after they receive their tax refund and spend it.  I was reading on a RapidTax.com blog and saw the following article below, which I will quote in part:

When Can I E-File 2014 Taxes in 2015?

The IRS has announced that the 2015 Tax Season will start on January 20, 2015!

The 2015 Tax Season to e-file a 2014 Tax Return begins on January 20, 2015!
Last year, the IRS e-file start date wasn’t until January 31, 2014. Luckily, you’ll be able to file your taxes much earlier this year!
Even better, you’ll be able to prepare your 2014 Tax Return starting on January 1, 2015 with RapidTax and will be e-filed once the IRS begins accepting e-filed returns. ….

This is almost two weeks earlier than last year, which means you can get your refund at least two weeks sooner, and then file bankruptcy two weeks sooner.

Just remember that getting a tax refund anticipation loan will let you spend your refund more quickly, but you cannot actually file your bankruptcy case until after the refund has been officially issued and spent.

I was just served a Summons and Complaint. How long until they can garnish me?

Longer than you think.  It’s probably at least 30 days out (more likely 45).  garnishment timing

Please remember that this is based on Utah law in the Utah state courts.  That being said, it’s probably very similar in other states.

Here in Utah, if I want to garnish your wages, I do the following:

1.  Summons and Complaint  I prepare a Summons and Complaint (fairly easy to do:  here is the Utah Courts link:  http://www.utcourts.gov/howto/filing/summons/

2.  Service  I serve you.  This usually means that a constable will come knock on your door and hand you the legal papers.

3.   Default Judgment  I wait 21 days.   You can respond and fight it and drag this out (see Crazy Cat Lady link below).    If you don’t respond to the Summons, I get a default judgment. http://www.utcourts.gov/howto/filing/default_judgment/

4.  Writ of Garnishment  (Once I have the judgment) I mail a Writ of Garnishment to your employer.  Once he receives it, you may start seeing the garnishment on your paychecks the next week, but it usually takes at least 2 weeks.  http://www.utcourts.gov/resources/forms/garnishment/  Officially, your employer has 7 business days from receipt before he has to respond to the creditor.  (If I don’t know where you’re working, it will take me at least another 30 days).

5.  Actual Garnishment  The employer starts processing my garnishment at 25% of your paycheck (unless you have another creditor garnishing you in front of me).

In other words, it is a lengthy process.  If a creditor tells you that he’s going to start garnishing you, he may do it one day, but he has to jump through a number of legal hoops first.

Here are some other blog entries on the same issue:

How to file an answer to a summons/complaint/lawsuit (a.k.a. “The Crazy Cat Lady Defense”). (video)

How long will it take my credit card to sue me (file a lawsuit) after I stop paying and default?

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

Is there a chance that a creditor will garnish/levy my tax refund?

Yes, but it’s a lot less common than you’d think.  Odds are, unless you owe back taxes, child support, or student loans, you’re tax refunds will be safe.

However, remember that it is very, very easy to garnish your bank account.  So if your tax refund goes into your bank account and sits there, your creditors may be able to get it easily.  It would be safer to have HR Block put it on one of their debit cards, or have it deposited into your parents’ account.

Here’s how your tax refund can be garnished.  garnish taxes

1.  Back taxes — If you owe back federal taxes, then the IRS will do an offset.  You can’t stop this (unless you file bankruptcy, and even then, they may process the offset anyway).  If you do file bankruptcy before the offset, the trustee gets your refund.  If you owe state taxes, then the state taxing authority can do an offset.

2.  Student loans — If you owe Federal student loans, like Stafford loans, then they can garnish your federal return, same as the offset above.  If you owe state student loans like UHEAA, then they can garnish your state return, same as the offset above.

3.  Child support — If you are behind on child support, it is very easy for ORS to garnish state and federal returns.

4.  Judgment creditors — If a creditor has a judgment against you, they can jump through a large number of hoops to try to serve a writ of garnishment on the state or federal Department of Treasury, but it’s very rare.  (A judgment creditor is a creditor who has already sued you in court and received a judgment against you).

5.  Creditors without judgments — They cannot garnish anything.  They don’t have a judgment yet.

In most cases, your refund is going to be safe unless you owe the big three above (taxes, student loans, child support), and you’ll want to wait to file your bk until after you receive the refund.

 

Is there any way to keep my car loan out of bankruptcy?

No (but it doesn’t really matter).  You can still keep the loan if you want to.

When we file bankruptcy, we cannot pick and choose your creditors; we list them all.  However, you can keep that car, and the car loan (in most cases).

In a chapter 7, you can choose to reaffirm the loan, which means that you’ll make the same payments, same interest rate, same balance, etc.  However, your attorney won’t sign the reaffirmation agreement if your budget doesn’t support the car payment.  For instance, if you make $1,500 a month and want to keep a new F350 with payments of $800 a month, your attorney will probably refuse to sign the agreement.

In a chapter 13, you can list the secured car loan and offer to repay it at about 5%.  The court almost always allows this, unless you are trying to keep a luxury vehicle with a large loan balance without repaying your other creditors as well.

It’s really that simple.  You won’t lose the vehicle unless you want to lose it (or you are a more extreme case).