Make More Money and Live Longer

Fortune Magazine has a story summarizing a study showing that Chapter 13 bankruptcy protection “increases annual earnings by $5,562, decreases five-year mortality by 1.2 percentage points, and decreases five-year foreclosure rates by 19.1 percentage points.”

The authors of the study argue that bankruptcy protection stops garnishments and eliminates the garnishment’s disincentive to work (if a person being garnished has a low paying, unsatisfying job, losing 25% of their paycheck may convince them that working isn’t worth it.)

The authors also hypothesize that the automatic stay and discharge of bankruptcy relive a significant amount of stress for the debtor leading to a longer lifespan.

So if debt is causing you to make less money or making your lifespan shorter, make an appointment with your friendly neighborhood bankruptcy attorney and see what we can do for you.

Who Is the U.S. Trustee in the Bankruptcy Process?

Someone You Hope You Will Not Meet in Your Chapter 7 or Chapter 13 Case

The U.S. Trustee’s Office is a division of the U.S. Department of Justice tasked with overseeing the bankruptcy process in the United States. The Role of the U.S. Trustee encompasses a number of different tasks, but the primary focus tends to be on a couple of different areas of specific concern to you as a consumer considering filing for bankruptcy:

• “Safeguarding” Chapter 7 eligibility by scrutinizing the Means Tests and income and expenses of each Chapter 7 filed;
• Ensuring that the people who you pay to help you prepare your petition are doing so within the framework of the law;
• Appointing and supervising the Chapter 7 and Chapter 13 Trustees who you actually interface with in your bankruptcy proceedings; and
• Prosecuting criminal cases related to bankruptcy matters when required.

The U.S. Trustee is tasked with policing not only the behavior of the real human beings actually filing bankruptcies in the U.S. but also the creditors responding to and filing claims for the debts they are allegedly owed within bankruptcy cases, but, as with Chapter 7 and Chapter 13 Trustee, the scrutiny laid upon creditors is very cursory relative to the amount of energy they spend policing the Means Test and the fees paid to debtors’ attorneys and (quite rightly) non-attorney “petition preparers.”

Should I Worry About the U.S. Trustee?

The vast majority of Chapter 7 and Chapter 13 cases filed do not involve any interaction with the U.S. Trustee. Although the staff and trial attorneys employed by the U.S. Trustee do review the transcripts of every 341 Meeting of Creditors meeting and Means Test and other petition Schedules filed in Chapter 7 cases, the reason that their role stops there in most cases is  because the filing debtor has hired a good bankruptcy attorney to assist them.

If you have retained an experienced bankruptcy attorney to assist you with your Chapter 7 or Chapter 13 filing, you will in all likelihood have little reason to be concerned about the U.S. Trustee. Your attorney will guide you through the assembly of the documentation required to accurately, honestly, and fully disclose all of the assets, debts, income, expenses, and other past and expected future financial transactions that are required to be disclosed in the bankruptcy petition. If you are eligible for Chapter 7 and it is the best option for you relative to other non-income considerations, your attorney will so advise you and guide you through that process. If you are not or Chapter 13 is the better option for you for a variety of reasons, your attorney will expertly guide you through that process.

The guidance of a knowledgeable bankruptcy lawyer is what will keep the U.S. Trustee away from your case. Attempting to draft your petition yourself or to calculate your own Means Test or paying a non-attorney “petition preparer” a few hundred bucks to “fill in the blanks” on the “bankruptcy forms” is a good way to put yourself in the cross-hairs of the U.S. Trustee.  It is potentially a good way to encounter Federal criminal charges, depending upon what you decide you don’t have to disclose.

If you are a Michigan resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced Michigan bankruptcy attorney, please contact  The Hilla Law Firm, PLLC at (866) 674-2317 or click the button below to schedule a free, initial consultation.

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If you enjoyed reading “Who or What Is the U.S. Trustee,” please browse Attorney Hilla’s other articles on his main Michigan Bankruptcy Blog.

Chapter 13 Hardship Discharge

In a Chapter 13 bankruptcy, you promise to pay creditors, via the Trustee, a certain amount of money in exchange for your discharge. But what happens if you can’t make all the plan payments?

Normally, your case would get dismissed if you don’t make all your plan payments. But §1328(b) allows what is called a hardship discharge.

To qualify for a hardship discharge, you must show three things. First, you must show that your inability to make the full plan payment is “due to circumstances for which the debtor should not justly be held accountable”. So things like disability, loss of a job, natural disaster, etc… should qualify you.

The second is “the value, as of the effective date of the plan, of property actually distributed under the plan on account of each allowed unsecured claim is not less than the amount that would have been paid on such claim if the estate of the debtor had been liquidated under chapter 7 of this title on such date”. In a nutshell, your creditors must have already received, via your plan payments, as much as they would have received in a chapter 7 liquidation.

Lastly “modification of the plan under section 1329 of this title is not practicable”. This can mean you are already at month 60 of a 60 month plan or you income is so low that you can’t afford any plan payments or other factors which make a plan modification unfeasible.

Since granting a hardship discharge is at the discretion of your Bankruptcy Judge, you should discuss this with your attorney to determine if it is appropriate and if the judge is likely to grant it.

Can a credit card company challenge your bankruptcy?

When a client sits down with me to discuss a bankruptcy they often ask me the same question.  What are the odds that my bankruptcy will be successful?  Now, I do explain to them first the income limitations and tax filing and document production requirements needed to sucsusfully navigate a Chapter 7 or 13 case.  However, the only real reason a bankruptcy should fail other then for a failure to comply with some court order is if a Creditor challenges your ability to receive a discharge due to fraud or hiding of an asset.

This type of challenge by a Creditor is called an adversary proceeding under Title 11, Sections 727 and 523.  They can file a formal complaint with the bankruptcy court to ask that your debt to them not be discharged, or that even your entire case be dismissed for filing in bad faith or by committing fraud.

The reality is that this type of challenge almost never happens in a simple Chapter 7 case, as the cost is very high and the standard of proof is equally daunting for the Creditor.  More specifically, the creditor must be able to demonstrate with specificity exactly how you committed fraud, or that you are hiding an asset and not disclosing it to the bankruptcy court.  This also includes false information you provided your creditors in order to obtain a loan or line of credit.  For example, you make $15,000 a year, but misrepresent your income to your lender and inform them you make $90,000 a year to get a higher line of credit.

The bottom line is that as long as you are truthful in your filing and disclose all of your financial information, including all assets you have and all creditors you owe money to, including family and friends, you should not have a problem with your discharge being challenged.   This includes listing any real estate you own or have a right to, as well as any claims you can bring against another person or entity to collect money.  However, if your discharge is ever challenged you need to take it seriously and consult with your attorney right away.

The foregoing article was for informational purposes only and is not intended to be legal advice or create any attorney client relationship with the Phillips Law Offices LLC.

Independent Foreclosure Review Payments and my discharged Bankruptcy

For many of our clients, they have now received their checks from the Office of the Comptroller of Currency from the Independent Foreclosure Review but now they are asking, do I need to call my attorney? The general answer is yes because if you received your discharge in the last 18 months, the check is actually an asset from your case HOWEVER the majority of Chapter 7 Trustees and some chapter 13 Trustees have already notified debtor’s attorneys of their intention to administer the asset only if it exceeds a very high dollar amount.

Please call your attorney for more information and for the vast majority of those who received checks, you will get to keep them without any issue or worry.

Can I Discharge a Personal Injury Judgment in Bankruptcy?

By John Hilla, Michigan Bankruptcy Attorney

On Purpose or While Intoxicated—Or Neither?

A personal injury judgment is as dischargeable as any other unsecured debt, such as credit card or medical debt, so long as the judgment against you wasn’t for an “intentional tort” or for death or personal injury caused by your intoxication.

That is, if the judgment is based in an allegation of mere negligence, as is commonly the case with automobile, slip-and-fall, dog-bite, and other typical personal injury judgments, the judgment will be able to be fully discharged in either a Chapter 7 or Chapter 13 bankruptcy.

Non-Dischargeability for Intentional Torts

So what is an “intentional tort?” A tort is the name of an action one person may take which may allow another person some level of legal remedy against them under civil law. It is the part of the US legal system from which nearly all legal actions which are not criminal claims or breach of contract claims arise. The commission of a tort by one person against you would be the basis for a lawsuit you might file against them in civil court for which you might claim money or other damages as a remedy.

All personal injury lawsuits are lawsuits based upon the commission of a tort, or tortious act. The first question with regard to dischargeability in bankruptcy of a judgment received after the filing of a personal injury lawsuit is, “Was this an intentional tort?

An intentional tort is an act you committed on purpose, not by accident.

The vast majority of personal injury lawsuits are based on negligence or other non-intentional torts. You didn’t mean to let your dog get out of the yard and bite that guy, but you didn’t adequately lock your gate or post any warning signs. You were negligent in keeping a dog that might be prone to biting somebody … You didn’t mean to drive your car into that lady’s swimming pool, where she just 523to be floating in an inner tube. You were negligent in the operation of your vehicle.

Those sorts of negligent, non-intentional torts are dischargeable in bankruptcy.

An intentional tort is something you intended to do to someone else, actually did, and which caused damage: assault, battery, false imprisonment, and others. If you punch somebody in the face, and they end up with their jaw wired shut for a year, destroying their up-and-coming career as a nose model for sinus medication advertisements, you will be the proud owner of a judgment for an intentional tort if they sue you and win.

That judgment will not be dischargeable in bankruptcy.

Non-Dischargeability for Death or Injury Arising from Intoxication

Additionally, a personal injury judgment for injury or death which occurred because you were intoxicated from the use of alcohol or some other drug will also not be dischargeable in bankruptcy, regardless of whether you intended to be drunk or intended to cause damage while drunk or intoxicated.

This is because Section 523(a)(9) of the US Bankruptcy Code (the Federal statute governing the bankruptcy process in the US) says this is the case. This Section of the Code makes it clear that a debt originating from “death or personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance” is not dischargeable.

Chapter 13 Bankruptcy Can Help Even if the Debt Is Non-Dischargeable

Even if your personal injury judgment is not dischargeable in bankruptcy, you can still receive assistance from the bankruptcy process in dealing with it. A Chapter 13 “payment plan” or “reorganization” bankruptcy will allow you to repay the debt in full at 0% interest over 3-5 years.

Chapter 13 bankruptcy is, essentially, a payment plan in which you repay to your creditors what you can afford to repay over 36-60 months, after your necessary household expenses are taken into account. Debts that are dischargeable, such as credit card debt, receive whatever you are able to pay into the plan over that time-period, and then the unpaid balance is totally discharged just as it would be in a Chapter 7 bankruptcy.

Non-dischargeable debts must be paid 100% of what the creditors holding those debts are owed, in contrast. Thus, while your credit card creditors may only be paid 0.5% of what you owe them by the end of the plan, a non-dischargeable personal injury creditor will be paid 100% of what you owe—and in priority over the dischargeable creditors.

A Chapter 13 can be of great assistance in forcing even a creditor holding a non-dischargeable claim to accept a reasonable monthly payment that still allows you to keep food on your table.

Can You Discharge a Personal Injury Judgment in Bankruptcy? The Bottom-Line

The bottom-line is that, if you are being sued for a personal injury, particularly if the suit is for an amount of money above your insurance limits or if you had no insurance if there is an auto or homeowners insurance claim involved, you should contact an experienced bankruptcy attorney immediately to explore your options.

Post Discharge or Dismissal – Should I call my lawyer?

So I was sitting in a signing today with a client who had filed a Chapter 13 Bankruptcy a few years ago with another attorney and their case has dismissed because they could not make their payments. This js not an uncommon occurrence in any bankruptcy attorney’s practice however what was uncommon was the next thing we talked about: after dismissal, the client was contacted by a creditor who had been paid in full in the Chapter 13 who repossessed the car and forced the client to pay another payment to settle the account. The client never called his old lawyer and just made the payment.

This story is just one of a lot of stories we all see more and more rather it be from a dismissed Chapter 13 case or a discharged Chapter 7 or 13. Your bankruptcy may be over but you may still need your attorney’s help to protect you and know your rights.

School Transcripts and Bankruptcy

Colleges and universities treat your school transcript like it was top-secret information. Not only do you have to pay them to get the transcript sent to your new school, but if you owe the university or college anything (tuition, library fines, school parking tickets, etc.), they won’t send out your transcript. How does bankruptcy affect this?

School tuition (or other money owed to the school) is dischargeable debt. This is different from student loans. Student loans borrow money from a third party to pay to the school. Unpaid
tuition is money that is owed to the school itself. The filing of the bankruptcy should get your transcript released by the action of the automatic stay. The discharge you receive at the end of the bankruptcy should also eliminate the debt and clear the way for your transcript to be released.

If you have already received your bankruptcy discharge and/or filed your bankruptcy and the school will still not release your transcript, talk to your attorney. Sometimes a strongly worded letter to the school will help things along. If that doesn’t work, there are stronger measures that can be taken to obtain compliance.