Monthly Archives: August 2015

My husband is getting a significant raise. Is that going to mess up our bankruptcy?

I received this exact email over the weekend, and the answer is one of those those annoying “depends” kinds of answers.  getting a raise

If you have not filed bankruptcy yet, a significant pay raise may push you out of chapter 7 territory into a chapter 13 repayment plan.  Or if you are planning on a chapter 13 repayment, then it may make your plan payment even higher.

If you have already filed bankruptcy, then it depends on which chapter and where you are in the process:

Chapter 7

If your pay increases in the month between filing the case and meeting with the bk trustee at a 341 Meeting of creditors, then it could hurt you.  The trustee could recommend that the U.S. Trustee’s Office review your case to see if you still qualify for a chapter 7.  I have NEVER seen this happen.

If your pay increases after you file and after you meet with the bk trustee, it is not a problem at all.  To be technical, it will not “mess up” your bankruptcy.

Chapter 13

If your pay increases between filing the case and meeting with the trustee, your plan payment will probably increase as well.

If your pay increases between the 341 meeting and confirmation, your plan payment may also go up.

If your pay increases after your case is confirmed, it should not affect your case or payment unless the trustee had ordered some kind of income review 6 months down the road.

 

Who offers “cheap bankruptcy redwood road Utah?” (Or what are the top search keywords for my website?)

So I was on my Yahoo Small Business, Live Web Insights page, and it gave me the following table of people finding my website this week.  Out of 3,700 clicks (in the past 90 days), it claimed that these were the top searches, and although the numbers don’t really add up, it was fairly interesting.  (The top search that actually leads people to my website is any search for anything bankruptcy-related in the West Jordan, Utah area).

top searches

As for the Live Web Insights table:  Number 1 was a simple search for Payne and Bankruptcy.  About half of my new cases come from referrals from prior clients, and I can’t think of a higher compliment.  Thanks to everyone who has referred me to their friends and family.

The second most popular search was a little funny:  “Cheap bankruptcy redwood road Utah.”  I offer a fairly competitive price, but I’m really not the cheapest.  That being said, if you run this search and find me, give me a call and I can work with you.

What happens to my children if I gave them a wedding gift that I financed (like an R.C. Willey couch) and then went bankrupt?

It depends on what you want to happen.  You can wipe it out and let the creditor pick it up, or you can keep paying.

In bankruptcy, we can list that debt and get it discharged (wiped out).  Unfortunately, this means that the creditor now has every right to go pick up the financed collateral.  repo gift

I saw this a  couple of days ago in court where a client had financed a laptop for his daughter for college.  He had purchased it for her at R.C. Willey and financed it over the next couple of years.  Then, he gave it to his daughter to get her set up for her first year at the University of Utah.  At our 341 Meeting of Creditors, R.C. Willey showed up and asked what his intentions were with the laptop.  They gave him three options:

1.  he could let them go pick it up from his daughter and wipe out the debt,

2.  he could reaffirm the debt and keep paying the full balance, or

3.  he could reaffirm the debt at the current fair market value.

He chose to keep paying at the fair market value rate.  And yes, they actually would’ve have picked it up from his daughter, which would have been awfully awkward for everyone involved.

So if you finance something and then give it away as a gift, the creditor still has a secured interest.  Unless you keep paying that debt, they just may go pick it up.

 

Is a licensing study loan (Barbri, PNC Solution, MedCAP-XTRA, etc) a nondischargeable student loan?

Maybe.

It is a good general rule of thumb that student loans are NONdischargeable in bankruptcy.  It doesn’t matter if they are private loans or not.  They will most likely survive bankruptcy.

However, today I had a client ask me if his bar prep loan could be discharged.  When you graduate from law school, you have to pass a licensing exam called “the bar.”  Some people take out loans during this study period to cover expenses, like loans through Barbri, PNC Solution, or even post-med school loans like MedCAP-XTRA.  I had never thought it through and assumed that those were “student loans.”  Then, I did some research.

They MAY be dischargeable in bankruptcy.  study loan

I found the following article:  “Bar Study” loan determined to be dischargeable. by Erick Boeing (from his bankruptcy website/blog).  He won an adversary proceeding by default against a study loan with the following argument:

The Debtor initiated the adversary proceeding, claiming that the loan was not a “student loan” as defined by law. It was not intended to cover the costs of attending a Title IV institution; Indeed, there was no “institution” at all; she was engaged in self-study and had tutoring from private “bar prep” companies. Moreover, she was pursuing a professional license, not an academic degree.

And he won.  Of course, it was by default, but this gives an interesting framework to argue that a licensing study loan may be dischargeable.

Is there any way to stop a garnishment besides filing bankruptcy?

Yes, but you won’t like the options.  stop garnishment

1.  You can offer to pay the judgment in full.  If the creditors is paid in full, there is no reason for him to proceed with the garnishment based on his judgment against you.

2.  You can propose a payment plan.  This never works.  A garnishment is a court-ordered payment plan that guarantees your creditor 25% of your paychecks until the judgment is paid in full.  I can think of no situation where a creditor would willingly accept a payment plan instead of pursuing a court-ordered garnishment.

3.  You can quit.  Your wages cannot be garnished if you are no longer employed at the business where the garnishment is taking place.  And no, don’t do anything funny with your employer.  If the creditor finds out that your employer is doing something improper to protect you from garnishment, the employer can be liable for treble (3x) damages for the wages that should’ve have been garnished.

4.  You can contest the underlying judgment as improper.  This means that you pay a litigation attorney $3-5,000 to prove that you don’t really owe the money.  Of course, at this point, they have a judgment, and the odds are that you do owe the money.  Next you’ll argue that the lawsuit or the judgment was improperly served, but this is a losing argument and not worth your money to try.  Service is intended to let you know about the suit, and you obviously know about it now.

5.  (File bankruptcy).