Monthly Archives: February 2015

Discharged creditors are still reporting on my credit after my bankruptcy? How do I dispute this?

Sadly, this is pretty common.  Your attorney didn’t screw up, and the creditor isn’t being vindictive.  The creditors are just too lazy to update your credit report information.

You generally have two routes to go:

1.  pay a credit repair company to fix it (around $1,000), or

2.  send out the credit dispute letters yourself.  credit dispute

I vote for number 2, because it is much, much cheaper.

After your bankruptcy discharge, judgments can still report on your credit, but they are unenforceable against you.  (They might still be attached to your real property like your home, but that’s a discussion for another day).  Your other creditors who were discharged in the bankruptcy can only report “included in chapter 7 bankruptcy” or “discharged in bankruptcy” or something of the like.

If any of those accounts are still reporting that you are behind on payments, in collections, or have an outstanding balance, this is damaging your credit.

The easiest way to fix it is to send a simple “credit dispute letter” to the various credit reporting agencies so that the credit agency can review the mis-reported data from the creditor and remove it.

Here are two links to fairly simple but effective credit dispute letters:

Is my bank losing my loan modification documents on purpose?

I don’t think so, but I am constantly amazed at how many times they “didn’t receive the following documents,” even though you can verify that you faxed them (and they were received) at least 3 times.

I received the below letter for my clients today.

20150223_163149 (1)

I cannot even count how many angry calls I have received from clients who wonder if their mortgage company is out to get them, purposefully incompetent, or really that bad at receiving and tracking documents.  In the above letter, it reads:

Our records indicate that there is a pending application for loan assistance on your account, but the application is incomplete because we have not received all required documents and information.  at this time we are no longer actively processing the request.

However, these clients DID send everything, 3 times now, with fax “success” on each fax.  Even worse, Bank of America sent me an attorney authorization letter (for the clients to speak directly with their bank about a possible loan modification) every single day for the past month (over 20 letters).  And yes, I had already sent the the authorization.

All I can advise is keep your anger inside, and keep faxing the requested documents.  Then, follow-up to verify that someone there actually received them.  Eventually, they will realize that they have all of the necessary documents to at least process your loan modification request.

How can I open a checking account or debit card with bad credit?

It can be next to impossible to open a checking account with bad credit.  checkingaccountMy clients have shared the following tips with me:

1.  Second Chance Checking.

Basically a checking account for people with bad credit and/or who are listed on Chexsystems.

Here is a list from

Cyprus Credit Union‘s Fresh Start Checking is designed for members who failed to apply for traditional checking account due to their records from Chexsystems. The special account’s monthly service fee is only $5. And if you manage the checking successfully for more than a year, the account will be converted to a regulaer checking account. Cyprus has branches in cities of West Jordan, Magna, Salt Lake City, Riverton, Sandy, Saratoga Springs, Midvale, Midvale, West Valley City, South Jordan, Centerville, Herriman and West Valley, UT.

Utah Central Credit Union‘s JumpStart Checking Program brings second chance for you to rebuild personal finance. And if you can manage the checking successfully for more than half of a year, you’ll qualify for overdraft protection. The credit union has branch offices in Virginia Beach, Sandy, West Valley City, West Jordan, Herriman, Murray, Salt Lake City and Price, UT.

Western Federal Credit Union has branch in Salt Lake City, UT. So you can access a branch office of WFCU and apply for its Right Start Checking account.

Wells Fargo‘s Opportunity Package is a good solution especially for customers with past banking challengs due to Chexsystems records. The bank has branch offices in Salt Lake City, Ogden, Saint George, Clearfield, Lindon, Provo, Orem, Blanding, Richfield, Saint George, Sandy, Park City, American Fork, Layton, Eden, Saint George, Magna, Logan, Nephi, Draper, Vernal, Provo, Hurricane, Moab, Riverton, Beaver, Milford, Tremonton, Hyrum, Smithfield, Helper, Bountiful, Centerville, Payson, Clearfield, Bountiful, Fillmore, Vernal, Layton, Washington, West Jordan, Saint George, Spanish Fork, Castle Dale, Cedar City, West Jordan, Farmington, Kaysville, Layton, Duchesne, Roosevelt, Springville, Roy, Spanish Fork, Layton, Parowan, Escalante, Delta, VT.

Key Bank has branch offices in Salt Lake City, UT. So, you can try to apply for its Plus Check Cashing.

2.  Direct deposit debit cards.

You can have your paychecks deposited directly onto a pre-paid card, like

Netspend or

Walmart Money Card.

3.  Pre-paid cards.

Cash your paychecks and then deposit the money directly onto a pre-paid card.  This is a last resort and is as bad as walking around with a wad of cash in your wallet!


A Second Chance Checking account is a term of art for I have also covered this topic here:  Can I open a bank account after I go bankrupt? or Why am I still listed on Check Systems (Chex Systems, Inc.) even though I received a discharge for my bank account that was in overdraftt?

What happens to my 403b in bankruptcy (exempt)?

Nothing, unless it’s a really rare owner-only plan.  403b

Generally, retirement plans are protected or exempt from creditor collections and from bankruptcy trustees.  According to the IRS, a 403(b) plan is

A 403(b) plan (also called a tax-sheltered annuity or TSA plan) is a retirement plan offered by public schools and certain 501(c)(3) tax-exempt organizations.

It is very similar to a 401(k) plan, which is also exempt or protected in bankruptcy.

So, the short answer is that nothing happens to your retirement plan.  You can protect the whole thing in bankruptcy.

Can my HOA sue me after I file bankruptcy?

Yes, and it stinks.

When you file bankruptcy, you can surrender the home/condo/townhome back to the mortgage company.  They will sell the home off, but if there is any deficiency, they cannot sue you for the difference.

HOA dues are a little different.  If your name is still on the property after you file bankruptcy, then they can still bill you for ongoing HOA fees.  Even worse, until the bank or a buyer titles the property back into someone else’s name, you will still be liable for those new HOA fees.  This means that you may surrender a home in bankruptcy and still get sued a year later by the HOA.

Banks seem to understand this, and they will keep the property in your name for as long as they can (if the home is upside down with no potential buyers).  Eventually, someone will buy the home and will have to pay all of those fees off at closing, but until that happens, you will still get billed by the HOA.

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

Now remember that these numbers can be adjusted by child support payments (received or made), larger mortgages, huge tax debt, etc.  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 22C (6 month average of current monthly income and disposable income):

Single:      $52,021

Married:    $58,595

Married with 1 child:   $66,552

Married with 2 children:  $72,274

Married with 3 children:  $80,374

Married with 4 children:  $88,474

Married with 5 children:  $96,574

Married with 6 children:  $104,674

Married with 7 children:  $112,774

Married with 8 children:  $120,874

Married with 9 children:  $128,974

Married with 10 children:  $137,074



What is a tax refund disposition in bankruptcy?

A tax refund disposition is an explanation of what you spent your tax refund on.  It is also the trustee’s best way of determining if you misused your tax refund so that he can recover assets for the bankruptcy estate.

When you file bankruptcy, you want to wait until after you have received and spent your tax refund.  Otherwise, the bankruptcy trustee will demand that you turn it over so that he may pay your creditors from that refund money.  However, you have to be careful on what purchases you make.  For example, if you spend $5,000 of your tax refund on a Sankara Stone used in Indiana Jones and the Temple of Doom,  then the trustee will take that stone and sell it for the benefit of your creditors, unless Professor Jones recovers it first.  tax refund disposition

This means that you need be careful on what you purchase with the refund.  After filing bankruptcy, the bankruptcy trustee will ask you to give him a disposition or explanation of your purchases.  I tell my clients to make a list and save receipts.  One client went above and beyond, and received her $7,400 refund, cashed it, and kept receipts of every single purchase, here:  best tax refund disposition ever.

Can I cancel my cell-phone contract when I file bankruptcy?


As part of your bankruptcy, you can cancel any contracts or leases that you have signed.  So, if you have a current cell phone bill with T-Mobile, Verizon, Sprint, AT&T, or whichever other company ropes you into a long term deal, you can list the contract in your bk and wipe it out.    stay in school

Now let’s say you owe T-Mobile $1,500.  You can list that and wipe it out in your bankruptcy.  But, if you keep using the phone after we file, you will be liable for any new charges up until the time you turn it off.  So if you use it for another month after filing bk, then you will owe T-Mobile for that one month of service because your new bill occurred from activity after you filed bk.

You can also sign up with a new carrier before you go bankrupt, go bankruptcy on the old plan, and keep the new agreement.

The attached screen-capture is my best attempt at showing the concept of “cell phones,” and I just love the exchange between me and my 17 year old son who wanted to skip out of school early.

Can I pay off my therapist/doctor/orthodontist before I file bankruptcy?

No.  Or at least not more than $600.

There is something in bankruptcy called a “preferential transfer” where you prefer one creditor over all of the others.  It is a bad thing.  So, let’s say you pay your doctor on a past due bill of $1,000, then you have preferred him over all of your other creditors.  This isn’t fair to the other creditors, and the bankruptcy trustee may sue your doctor to recover the $1,000.  There is (kind of) a $600 threshold, but it’s dangerous to pay off unsecured creditors before going bankruptcy.  doctor preference

Today, I had a client with court-ordered therapy.  He wanted to pay the therapist on a $1,000 past due bill to continue his therapy so that he was not in violation of parole.  Even though it is court ordered, it is still a preferential transfer, and I warned him to not pay more than the $600.

So, to recap:  if you pay off your doctor on a past due bill before you go bankruptcy, your doctor may get sued by the bankruptcy trustee.


Can I ask the bankruptcy court to email me all of my case notices (DeBN)?

As of today, yes.

Normally, my clients would have to wait to receive paper notices from the court (like a Notice of Discharge or Notice of 341 Meeting of Creditors), or else I would have to forward the court email to my clients.  This was frustrating for my clients, and I honestly did not appreciate having to print/save court notices in .pdf format and then individually forward them to my clients.

As of today, the bankruptcy court is now allowing clients to do something called Debtor Electronic Bankruptcy Noticing (DeBN).  It’s free, and all my clients have to do is have an email address and complete an form which I then file with the court.  The form is located here:, and it is called the Debtor Electronic Noticing Request.

With this new service, the court sends out an email to my clients for each new document/notice in the case.

I am actually excited about this, because it means that my clients will receive the same notices I get, at the same time, and they can open/save them in .pdf format.