Category: Bankruptcy Attorney

How do I get a free credit report?

Posted on by Sean Wood in Bankruptcy, Bankruptcy Attorney, Chapter 13, Chapter 7, Credit Report, Payday Loans

How do I get a free credit report?

Short answer: go to www.annualcreditreport.com and request a free credit report.

19 creditOne of the most important things you need to do when preparing for a bankruptcy is to identify all your creditors. You are required to list all of your debts and creditors on the bankruptcy petition. I’ve had a number of clients ask me ‘how do I identify all of my creditors?’

The best place to start is with a credit report. Credit reports are not perfect and they don’t list all of your debts but for most people the credit report will include most of your debts. There, however, are some items that are usually not reported on your credit report. Pay day loan companies, for example, generally do not go to the effort to report these loans to the credit bureaus. Small businesses also rarely report debts. That is why I recommend to my clients that they keep a stack of all the bills and legal documents they have received.

Is it your bankruptcy attorney’s job to identify all your debts? People ask me this all the time and the answer is ‘no’. Not only is not his job, it’s also impossible for your attorney to identify all your debts. Your bankruptcy attorney can pull a credit report for you but, as I mentioned before, not all debts will be listed on your credit report. The person who knows your debts best, is you.

I always pull a credit report for my clients for a couple of reasons. First, I want to be sure I can identify as many debts as possible. Second, people often don’t keep track of lawsuits or judgments filed against them. Third, and most importantly, I can import all the data from the credit report into the software I use to create the bankruptcy petition which saves me huge amounts of time. As a side note, years ago, when I was a mere legal clerk, I used to manually enter in the data from credit reports into the computer. It was horrible. My eyes and my fingers hated me for it.

Although I pull credit reports for my clients, I encourage them to get and print out a copy of their credit report for our initial consultation. It helps both me and my clients figure out what debts they have.

Once a year you can order your free credit report from www.annualcreditreport.com. It’s a good idea, whether you are considering bankruptcy or not, to review your credit report to make sure there are no errors.

Can I keep the items I bought from RC Willey when I file for bankruptcy?

Posted on by Sean Wood in Bankruptcy, Bankruptcy Attorney, Chapter 13, Chapter 7, Creditors' Rights, Reaffirmation Agreements

Can I keep the items I bought from RC Willey when I file for bankruptcy?

Short answer: yes, if you want keep the item but you have the option to surrender the item.

18 RC Willey

About 4 to 6 weeks after you file any chapter of bankruptcy, you are required to attend what is called the “Meeting of Creditors”. At the Meeting of Creditors, the trustee will ask you questions about your bankruptcy petition. The bankruptcy trustee is an attorney appointed to represent the creditors in your case.

After the trustee has asked you some questions about your petition, he will ask “are there creditors with questions?” at which point any creditor can ask you questions. I would say a good three-quarters of my cases have no creditors that appear. When a creditor does show up it is generally the IRS, the Utah State Tax Commission, or RC Willey.

“Why does RC Willey show up to the Meeting of Creditors when no other creditors show up?” RC Willey tends to be a little more aggressive, for better or for worse, than other creditors. When you purchased a piece of furniture or any item from RC Willey on credit, RC Willey will retain a secured interest in that item, similar to the secured interest a lender has in your car or your house.

If for some reason you default on your loan, RC Willey has a right to take back the item that was sold to you, and they like to enforce this right. The reality is, however, they don’t want to take the item back from you. They want you to pay for the item. It is unlikely that RC Willey will recover more from acquiring the item and selling it at a discount than they will if you keep the item and pay them.

So what options do you have when you have purchased something from RC Willey? There are usually three options.

Option 1: Surrender the item

If you don’t care to pay for the item or it is a crappy item, you can tell RC Willey that you would like to “surrender” the item. Surrendering the item means you let RC Willey come take the item from you and whatever deficiency is left will be discharged in the bankruptcy.

Option 2: Reaffirm the debt for the full amount you owe

This is RC Willey’s preferred option. I always tell my clients, creditors care about one thing––collecting money. You do have the option to reaffirm the debt. When you file a bankruptcy, your contract with RC Willey is terminated. Reaffirming the debt means that you will voluntarily take on that debt again. If you reaffirm for the full amount, RC Willey will lend you credit in the future.

Option 3: Reaffirm the debt for fair market value

This option is usually the option I recommend to my clients. People generally like the items they purchased from RC Willey and would like to keep them. You do have the option of reaffirming the debt for the market value of the item. This amount is generally about half the amount you owe on the item, although it varies depending on the item.

The downside of reaffirming for fair market value is that RC Willey will NOT lend you credit in the future. For most people, this is not the end of the world. While I personally like RC Willey and I have purchased from them multiple times in the past, there are plenty of other furniture stores that WILL lend you credit.

What if I want to keep some of the items I purchased from RC Willey but not all of the items?

You can pick and choose which items you would like to reaffirm. Let’s say you really like a dining room table you purchased from RC Willey but you don’t like the sofa you purchased. You can reaffirm and keep the dining room table and surrender the couch.

What if I do not have the item?

Occasionally I will have a client tell me that they no longer have the item they purchased from RC Willey. I have heard all kinds of stories of what happened to items purchased from RC Willey from family members taking the items to foreign countries to ex-boyfriends and ex-girlfriends who have disappeared with the items. What happens then?

RC Willey has two choices––give up or file a suit for fraud against you. I say they have two choices but in every case I have dealt with RC Willey they just give up. Suits for fraud are rarely filed and usually involve tens of thousands if not hundreds of thousands of dollars of debt. Any claim RC Willey files against you is not a secured claim but rather an unsecured claim. After all, they cannot expect you to surrender an item you do not have.

Can I keep my tax refund if I file for chapter 7 bankruptcy? Will the trustee take my tax refund if I file for chapter 7 bankruptcy?

Posted on by Sean Wood in Bankruptcy, Bankruptcy Attorney, Chapter 7, Taxes

Short answer . . . it depends. (skip to the end for a summary on when to file)

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I never counsel anyone to represent themselves pro se in a bankruptcy. The reason is this: it is very easy to lose more money representing yourself than it would be to hire a bankruptcy attorney.

The trustee assigned to your case has one goal which is to collect and liquidate as much non-exempt property as possible to return as much funds as possible to the creditors. The trustee also has an incentive to go after assets because he keeps a small portion of what he collects.

In almost every case the trustee can easily find some property that is not exempt. Typically those who file bankruptcy have less than $100 in their bank account. Why? Because money in a bank account is not exempt and the trustee could take all of this money if he chooses to. That being said, most of the time the trustee does not go after this money because it is not worth his time to file a motion to sell or liquidate property that will earn him a few dollars. Trustees call these types of assets “administratively burdensome” and do not pursue this property.

So what does all of this have to do with taxes? The trustee likes to collect more money without having to spend much time. Because of this all trustees goes after the low hanging fruit: tax refunds.

Bankruptcy attorneys know that the tax refund is not exempt and so they do not fight these types of motions. Bankruptcy attorneys will fight the trustee on how exemptions are applied. But for tax returns, there is no fighting. It is relatively easy for the trustee to collect a tax refund.

For many people who file bankruptcy, their tax refund is the single biggest windfall they will receive that year. The trustee knows this and will almost always go after your tax refund.

So how do you keep the trustee from collecting your tax refund? That depends on which month of the year you file. If you are one of the first people to file your tax return and get your tax refund in February then you can spend all of your tax refund and then file for bankruptcy. As long as you spent this money on non-exempt property (typically food, gas, necessities) then there is nothing the trustee can collect. If, however, you filed bankruptcy before you received and spent your tax refund then the trustee will require that you turn over the entire amount.

After about the month of May, most people have received their tax refund and the trustees stop pursuing the tax refund for that year. Depending on the trustee, around the end of June to the first part of August the trustee will start directing that you handover a pro rata share of your next year’s tax refund. Let me give you an example of how this works.

Let’s say you file a bankruptcy on July 1, 2015 and your 2015 tax refund will be $2,000. The trustee will ask that you handover your 2015 tax refund that you will get in early 2016. The trustee will then take a share that is equal to six months of the twelve total months of the year 2015, which will be 50% of the $2,000 which is $1,000. The reason is that all of the tax refund you are building up to the date of filing for bankruptcy is part of the bankruptcy estate. All tax refunds accruing after the date of filing is not part of the bankruptcy estate.

So let’s use another example. If you file on August 1, 2015 and your tax refund will be $2,000. This time the trustee will keep seven months of the total twelve months of 2015, which is $1,166.66.

If you file on September 1, 2015 and your tax refund will be $2,000 then the trustee will keep eight months of the total twelve months of 2015 (which is two thirds). That means the trustee will keep $1,333.33.

The later in the year you file, the greater the amount the trustee will be able to keep of your tax refund. Because of this, many of the people who file later in the year do not have a very sizeable tax refund if they have one at all. This also means that there are more bankruptcies filed in the months of February, March, and April. Debtors can receive their refund, spend it, and then file for bankruptcy without losing any of their tax refund.

Here are my basic guidelines for each month of the year.

January to April. Make sure you receive and spend your tax refund before you file for bankruptcy. The trustee cannot collect a refund if you have spent your refund (on exempt property).

May to June. Again, make sure you receive and spend your tax refund before you file for bankruptcy. Most trustees don’t start asking for the following years tax refunds until the end of June.

July to December. The trustee will take a proportional share of your tax refund. If your tax refund is large and you absolutely must file a bankruptcy then it is best to file sooner rather than later. If you aren’t getting much of a tax refund, or none at all, then it won’t matter when you file. If you are getting a large tax refund then it might, depending on your particular situation, make sense to wait until the next year to file for bankruptcy.

Do I need to hire a bankruptcy attorney?

Posted on by Sean Wood in Attorney Skills, Bankruptcy, Bankruptcy Attorney, Chapter 13, Chapter 7, Filing for Bankruptcy

waterblaster-pressure-washer-gx390The short answer is ‘no’. Anyone can file his or her own bankruptcy. Perhaps the wiser question is ‘should I hire a bankruptcy attorney?’ The short answer is ‘yes’. Allow me to explain.

When I was in college I ran a mobile detailing business with a friend of mine. I borrowed my dad’s pressure washer, bought a truck, and bought the necessary equipment and I went out and found some clients. The business was successful while it lasted but in the end my friend and I ended up at different colleges and we gradually wound up the business.

A couple of years later my dad went to go use the pressure washer on our driveway. When he tried to use the washer, only a weak stream came out. Frustrated, he came to me since I had used the washer so much in the past.

Thinking I was up for the challenge, I decided to have a go at it. The engine seemed to be working just fine so I turned to the pump, a complex copper piece attached to the engine. I was a little nervous but I started taking the pump apart. Inside I found all kinds of pieces that somehow worked together. I tried my best to remember where everything went but there were just too many pieces and I started to forget how to reassemble the machine.

I sat there on the garage floor surrounded by various pieces. I couldn’t find the owner’s manual so I had to download a PDF from the Internet. I ran out of time that Saturday but I thought I had a pretty good idea of which piece needed to be replaced. I emailed the corporate headquarters of the company that made the actual pump and ordered a part from them.

A couple of Saturdays later I found sometime and I attempted to put the pump back together. Needless to say, it took much longer than I had expected. I ran into all kinds of weird mechanical hiccups. Finally, at the end of that Saturday, I was able to put everything back together and I decided to give the pressure washer a test run. I was really hoping the darn thing would work because I had just invested two Saturdays into fixing the washer and I had spent some of my dad’s money buying a new part. If it didn’t work, I was going to be ticked. The moment of truth was here. I fired up the engine and squeezed the trigger. A powerful stream came shooting out of the machine. I was relieved that I didn’t have to spend another Saturday troubleshooting that pressure washer.

Now you might be asking at this point, what does a pressure washer have to with the price of tea in China? More specifically, what does a pressure washer have to do with bankruptcy? I’ll tell you.

There are several repair shops near my house that know how to fix pressure washers. I could have easily taken the washer to one of those shops. It would have been easier. It would have saved me two Saturdays. True, it would have been more expensive. But most importantly, I would be more certain that the job would get done.

Sometimes people ask me if they need an attorney to file bankruptcy. Again, the answer is ‘no’. Generally you don’t need an attorney to represent yourself in legal matters. But I generally would not recommend going at it alone. When I was fixing that pressure washer, I decided to do it on my own because the risk was low. If I didn’t fix the washer, someone else could probably fix it. Even if I destroyed it, we could go buy another one for a couple hundred bucks.

You and your family’s economic well-being is a whole “nother” story. Can you really afford to lose your house or your car? Can you afford to have your wages garnished? Do you really want to roll the dice on these things? Of course you can always re-file should your case get dismissed but there are consequences to filing again. And if you have to file again, you have to pay the filing fee again. At this point, you aren’t really saving much money at all and you have to do all the work. The work takes you longer than it would an attorney because it is something you are new at and you don’t know if you are doing it right. The list goes on and on.

Do you have to hire a bankruptcy attorney? No. Should you hire a bankruptcy attorney? Yes.