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Jul 03
Most Common Bankruptcy Mistakes

Hiring an attorney with low bankruptcy experience.

The number one mistake people make when filing for bankruptcy is choosing an attorney who does not have substantial bankruptcy experience. If a problem arises, their bankruptcy could be thrown out, certain debts declared non-dischargeable, and they could even lose assets, such as their house, car, or retirement plan. When hiring a bankruptcy attorney, choose someone who has a substantial amount of experience and practices bankruptcy law as the largest portion of their practice.

Hiring an attorney who does not advise their clients to avoid bankruptcy or at least discuss their options.

Bankruptcy protection is available under Federal Law. Many times, it is the most effective solution to solve financial problems. However, it usually is not the only choice. There are some downsides to bankruptcy, which each person who files bankruptcy should know and understand. If you have an attorney who does not explain the pros and cons of alternatives to bankruptcy, chances are you sat down with someone who is simply interested in getting a fee. Everyone should know the alternatives to bankruptcy prior to the bankruptcy being filed.

Fail the means test in court.

In order to initially qualify for a Chapter 7 bankruptcy, where most of your unsecured debts are eliminated, you must pass a "means" test imposed by the court. A means test is a way for the court to determine how much disposable income you have. If you have too much money, a court may reject your Chapter 7 bankruptcy. A person filing bankruptcy should KNOW before court if they pass the means test or not.

A good attorney should be able to review your unique situation during your free consultation and advise you on whether or not you are likely to qualify for Chapter 7. If you don't qualify for Chapter 7, your attorney should advise you about Chapter 13 or other options.

Fail to provide requested tax documents or show up at the creditor meeting.

To receive bankruptcy protection, you will need to provide a variety of financial information/documents to support your case and prove that you really do not have the money to pay all your creditors. Examples of these documents include income tax returns (1040 forms), paystubs, and profit/loss statements (if self-employed). The court may reject or dismiss a bankruptcy case if you misrepresent the tax information or fail to provide the tax documents.

With a Chapter 13 bankruptcy, you must file all tax returns for the four years prior to your bankruptcy filing. If you don't provide the court with your tax records, your Chapter 13 repayment plan will not be approved. In Chapter 7 bankruptcy cases, you must also provide requested tax documents to the court, or else your debts will not be eliminated.

For many people, the requirement to file taxes may be a barrier to getting a bankruptcy discharge, especially in this economy where many individuals may not have filed their taxes for a variety of reasons.

Your proposed repayment plan that is not feasible.

With a Chapter 13 bankruptcy filing, you repay some of your debts over a period of three to five years. However, your proposed repayment plan must be feasible in order to be accepted by the court. The court will review your current income, debts, and assets to determine whether you can realistically pay back your creditors under the plan. If not, they can reject your case and you may be able to file again with a plan that is acceptable to the court. Chapter 13 isn't for everyone. Please keep in mind that it is a long term commitment to paying back the amount you offer in your proposed plan.

Remember also that while bankruptcy is not fun for anyone, it is not the end of the world. If you have no other alternatives but to file for bankruptcy, take heart in knowing that you can rebuild your credit, finances and emotions after bankruptcy, probably faster than you think.

You do not take the steps to improve your Credit Report.

If a filing bankruptcy is appropriate, it is only the first step in a complete financial rehabilitation. Certainly, discharging the debts and stopping calls from creditors is important. However, a serious plan needs to be undertaken to control your credit in the future. After bankruptcy you should be sure to check your credit report regularly from now on for errors. There are a number of places that talk about "credit repair" however these services seldom deliver anything magical. Individuals need to "rehabilitate their credit" to remove any erroneous information and to put new, good credit on their credit report. The best thing to do is pay the bills you have to have timely, such as rent or mortgage payments. These two items are usually reported on your credit. Also if student loans remain after the bankruptcy, set up a new payment plan to get those back on track. In short making timely payments on obligations that report to your credit is the best way to put good credit on your credit report after bankruptcy.

Apr 28
DIVORCE LAWYERS ARE HERE TO GET YOU DIVORCED PART II

Your lawyer can't make it perfect.  I was in court one day listening to the case before mine and the lady getting divorced was testifying that she wanted her soon-to-be ex-husband to be ordered to pay for summer camp for the children.  She was very passionate that the children's lives shouldn't have to change because of the divorce.  While I believed the woman's sincerity, and I understood where she was coming from, I knew she would be disappointed in the result.  The woman's desire to have her children's lives go on as before is an impossible goal that the Courts cannot provide.  While the summer camp itself isn't really the issue, the problems from such an Order of the Court are.  It is hard to enforce and can keep the couple tied up in litigation going forward when the summer camp doesn't happen for whatever reason.  Who knows if the kids will want to go to camp in the years to come, or if that particular camp will even be open 5 years from now?  What if the children have to attend summer school one year, then what?  What if the cost goes up?  What if the Father loses his job or becomes ill or a million other things?  Then the whole issue comes back up.  Does the couple go back to court to fight about it?  I hope not.  What if 2 years are missed, etc? It simply isn't practical to keep an ex-spouse on the hook for this that and the other.  If a spouse is paying child support, that is enforceable, but debates about summer camp and the like will be much harder to take care of.

I have run into such similar requests quite often.  Some people want pet visitation, others want to keep the house, even though they need 2 incomes to pay for it.  I've been asked for the right to catalog all the couple's possessions, and I have had many requests to keep the children away from future boyfriends/girlfriends of the other spouse. 

Practically speaking, however, the above requests and others like them are unrealistic and very hard to enforce.  When a person gets divorced, it is important for them to understand that the police generally do not enforce the Final Decree of Divorce.  If your ex denied you dog visitation, the police aren't going to do anything about it!  You will have to pay your attorney their hourly rate to find your ex in contempt.  If your ex is found in contempt for denial of dog visitation, it is unlikely that the Judge will do anything harsher than yell at your ex (if he or she shows up for Court).   Perhaps they would make your ex pay a portion of your attorney fees, but nothing else will happen.  There is no jail time for being a jerk and refusing dog visitation is not a crime. 

Use common sense.  If your spouse's actions endanger you or others, you must get to safety and call the police.  If a crime is committed the police can handle it, but if your spouse is just being a jerk, take it with a grain of salt.  There are, of course, things that have more sway with the Court than others.  Some things are a big deal and others just aren't.  If your spouse has had 7 affairs during your 10 year marriage that is worth putting on a lot of evidence in court and making a big deal out of.  If your spouse just started dating and you've been separated for 10 months, it's not really a big deal.  If your spouse is a convicted drug dealer who is out on bond awaiting trial for their 10th arrest, that's a pretty big deal.  If your spouse got a DUI 10 years ago, not really a big deal. 

Bottom Line:  Divorce attorneys are here to get you divorced.

 

I hope this helps.  If you have questions or want to talk about it, please call me, Mattie Bhela, at 615-647-8010.

Apr 22
Divorce Lawyers Are Here To Get You Divorced

 

PART I

As you would expect, many of my divorce clients have been very, very upset by the entire process.  This is normal and understandable.  However, I don't want anyone to waste a great deal of time and money by trying to combine the legal side of the divorce (the part a lawyer does) and the emotional part (the part you have to do).  Therefore, if you are contemplating a divorce you should be aware of the following things:

Divorce papers mainly deal with assets and debts.  If you've ever read a typical Final Decree of Divorce it states some very basic things like:  1. Which spouse will pay what credit cards;   2.  Who keeps the house or will it be sold;  3.  Who gets what car and who will pay for it;  4. How the checking, savings and other accounts will be divided;  5.  Who keeps what furniture and any other stuff.  So, there isn't a whole lot of point in going on and on about what a mean, unfaithful, lazy, and generally awful person your spouse is.  Of course, your attorney should get a general idea of why the marriage broke up and what kind a person your spouse is, but there is no need to list alphabetically every transgression your spouse has ever committed because it just won't amount to much in the final analysis.  The purpose of divorce is to return you a single status and clarify who owns what, and provide for the care of any children.  Divorces do have a "fault" element but often it is far less important than other factors, like who has the financial ability to pay debts and who needs the assets in order to provide for the children. 

No one can MAKE your soon to be ex-spouse behave.  If your spouse yelled at you during the marriage, they are probably going to yell at you during the divorce and on into the future if you must be around them.  It goes without saying that you are getting divorced because things didn't work out.  Once you initially explain the situation to your attorney there is no need to call your lawyer every time your spouse casts you a hateful glance.  Of course, if your spouse becomes violent or you are in physical danger, call the police.  However, being annoyed by your spouse or even harassed is something you can tell your attorney the next time you meet.  I usually tell my clients to keep a calendar and write down what happens and we can go over it when we meet from time to time during the progression of the case.  Remember:  attorneys bill by the hour so its quicker to say:  "My spouse was late picking up the kids 2 times last week and 1 time the week before that" instead of calling me the moment it happens and telling me how frustrated you are.  I assure you the court cannot MAKE your spouse be on time.  If they are late all the time it is frustrating, but the Court won't put your spouse in jail over it and they won't end visitation because of it.  The courts or your lawyer can't change your spouse into a good person.  I assure you I have seen the biggest jerks in the world walk out of divorce court with approximately half the assets and debts and good visitation with their kids.  Being a jerk doesn't mean a spouse loses everything: it just means they might get a bit less than if they were nice.

Let the little things go.  If you can settle this divorce by letting your spouse have furniture, and old car, a little bit of money, etc.,  do it!  There is no practical reason for insisting that you get the couch, the linens or the china.  Such things can be easily replaced.  So many people have told me "It's the principal of it" or "I won't give him or her the satisfaction."  This getting even or winning could never be worth the $200 an hour I'm going to charge you to fight about it.

READ MORE ABOUT IT IN PART II

Mar 22
Bankruptcy can be a "No Brainer"

I often have clients who ask me "Should I file bankruptcy?" So I put together a list of circumstances where it almost always makes sense to file for bankruptcy.

You have no assets.  This is one of the main components which helps a person decide whether or not a bankruptcy is for them.  Chapter 7 bankruptcy is about selling your assets and paying off the debt with the proceeds.  If you have no assets, there is nothing to lose, you're just getting rid of unwanted debt.  There is nothing at risk.  If there are no assets to sell, then the Bankruptcy Trustee can't take anything of yours to sell.  Also, please be aware the Trustee does not generally want your furniture or the basic day to day things you need to run your home like dishes, pots and pans, etc.  In Tennessee, you are allowed to keep $10,000 worth of your stuff to start over after the bankruptcy.  So if you do not own a home or real estate, any other substantial assets. and your car is worth far less than $10,000, a Chapter 7 bankruptcy may help you.

You make less than $39,000 a year including overtime.  This means you are "under median" in the State of Tennessee and you pass the "means test."  Larger families of course can make more income.  Please see the table below to see if you automatically pass the "means test" in Tennessee.

State1 earnerFamily Size
2 People3 People4 People *
Tennessee$39,759$48,053$56,042$62,805

 

You are being garnished at work or your bank account has been levied.  Losing some of your paycheck or money in your bank account means things have gotten out of hand.  In Tennessee, once a creditor has a judgment against you, they can take 25% of your pay subject to some deductions.  I don't know anyone who can suddenly live without 25% of their income.  If you are being garnished for a debt other than taxes, student loans, child support, or alimony, it is most likely time to file bankruptcy. 

It would take years to pay the debt back.  Of course this is a flexible factor and some people have more tolerance than others for staying in debt.  For example, let's say John Doe owed $35,000 in credit cards and medical bills, and he could afford to pay back $150 a month.  Doing the simple math, it will take him 233.3 months to pay back the debt without interest.  This is almost 20 years and doesn't include interest!  Take a look at your budget.  How much can you afford to pay towards your debt each month?  How many years of your life can you devote to paying back debt?

I hope this has been helpful.  If you have questions or want to talk about it, please call me, Mattie Bhela, at 615-647-8010.

Jan 22
Welcome to my blog!

This is where I'll be sharing my thoughts on topics that matter to me. Who knows... I might even share pictures, videos and links to other interesting stuff.

If I catch your interest, let me hear from you.