If you have been a victim of identity theft, you can file bankruptcy but you need to be prepared for potential complications.
Identity theft is a big problem in 2018 and a number of large retailers and even credit bureaus have been hacked. Personal and financial information about millions of Americans is available for sale on the “dark web” and criminals use this stolen data to open credit card accounts, sign for personal loans, and even buy houses and cars. You will not know that there was a problem at all until the bills start to arrive.
I have personally been a victim of identity theft twice. One time, a thief got hold of my credit card number and charged $5,000 to a custom suit maker in Hong Kong. In another instance, a fraudster hacked my American Express account and purchased (and picked up) a high end desktop Mac. In both of these situations the credit card company accepted my fraud report and canceled all charges.
If you find yourself with identity theft problems, you will discover that fixing the problem can take a lot of time and effort. Banks and other lenders may not believe you and will pursue collection. The fraudulent accounts in your name may be sold to collection agencies who don’t care that you are alleging identity theft. You may find yourself with lawsuits, endless collection calls and damaged credit.
Bankruptcy as an Option to Address Identity Theft Debts
You may decide to use bankruptcy as the tool to address identity theft problems. Bankruptcy may be an attractive option if you have other, legitimate, debts that you need to deal with as well.
When you file bankruptcy, you will force all of your creditors – both legitimate and those arising from identity theft – to deal with you at one place and at one time. If your case goes through to discharge, you will be forever clear of creditor claims.
On the other hand, your creditors have the right to object to either the discharge of a specific debt or to your bankruptcy as a whole. These types of objections are rare but if the amount at issue is large, creditors will file objections.
If you find yourself facing bankruptcy objections you will have to incur the cost of paying a lawyer to defend you. This may seem very unfair but if a creditor initiates bankruptcy litigation you need to respond.
Always File Police Reports if Your Identity has been Stolen
My experience has been that you can avoid finding yourself in litigation by taking proactive and documented steps to report the identity theft and to file police reports for every instance of identity theft. You cannot sit back and assume that just because you did nothing wrong, you won’t end up owing money.
If a creditor’s lawyer contacts me prior to filing a bankruptcy objection and I can provide that lawyer with copies of police reports, letters to creditors and credit bureaus and other evidence that you are not at fault, there is a much better chance that the creditor’s attorney will recognize that he is likely to lose his objection to your bankruptcy and that he will advise his client to back down.
If you have been a victim of identity theft and think bankruptcy might be an option to deal with this problem, please reach out to me – I’d be happy to help.
How to Request a Credit Freeze from the Credit Bureaus
The post Can You File Bankruptcy if You Have Been the Victim of Identity Theft? appeared first on theBKBlog.
When you file either a Chapter 7 or a Chapter 13 bankruptcy, you are allowed to declare certain property as “exempt.” Exempt property does not count as an asset for bankruptcy calculations. This is why you will not have to give up household items like your clothes, kitchen utensils and furniture when you file bankruptcy.
Exemption analysis can be one of the more confusing parts about filing bankruptcy. The Bankruptcy Code says that every state has the option of creating its own list of exemptions or state legislatures can defer and use a list of exemptions set out in the Bankruptcy Code.
The Georgia legislature has chosen to “opt out” of the federal scheme and the Georgia legislature has passed a list of exemptions which can be found at the Official Code of Georgia, section 44-13-100.
With limited exceptions for people who have recently moved to Georgia, bankruptcy filers who live in Georgia must use the Georgia exemption statute in their bankruptcy filings. So, even though the bankruptcy laws are issued by the United States Congress, Georgia bankruptcy filers use Georgia state law when it comes to identifying property that they can protect in their bankruptcy petitions.
Exemption Information on the Internet Often Incorrect
If you have been researching bankruptcy on the Internet, you can easily get confused because blogs and websites produced by non-Georgia lawyers will reference exemptions that don’t apply to Georgia filers. Further, the Georgia legislature has been updating (and increasing) the exemptions available to Georgia filers and many websites published by national legal publishers are not updated. Currently, for example, a very prominent and well respected legal publisher whose site appears at the top of Google’s rankings shows an version of Georgia’s exemptions statute that is outdated by more than 5 years and completely inaccurate.
Because the Georgia legislature does change the exemption statute every year or two you should be very careful about accepting as true anything you see on the Internet about exempt property in Georgia. I am writing this article at the beginning of 2018 and I intend to keep it updated but if I was researching bankruptcy I would confirm anything I read with an experienced personal bankruptcy lawyer.
What Property Can You Protect When You File Bankruptcy Using the Georgia Exemption Statute
Currently, as of January, 2018, the Georgia exemption statute lists several categories of property that you can protect when you file bankruptcy, including:
- $21,500 of equity in real estate
- $5,000 of equity in motor vehicles
- $5,000 of equity in household goods (with no one item worth more than $300)
- $500 of equity in jewelry
- $1,500 of equity in tools of the trade
- $2,000 of equity in cash value of an insurance policy
- 100% of the value of an IRA, 401(k) or pension
- 100% value of Social Security benefits
- $1,200 of value in any property, plus up to $10,000 of unused real estate exemption [this is the “wildcard” provision]
- the state includes a few more categories that apply in limited circumstances – you can read the actual statute here.
If you are married and file jointly with your spouse, you may double the exemption amounts.
How Do Exemptions Work in Your Bankruptcy Filing?
When you declare property as bankruptcy, that property does not exist for bankruptcy purposes and neither the trustee or creditors can assert any claims on it.
In a Chapter 7 bankruptcy, one of the jobs assigned to the trustee is to marshal your assets, sell them and distribute the proceeds to your creditors based on a priority system set out in the Code. When you declare your assets as exempt, the trustee cannot grab your assets.
Let’s say, for example, that you own, free and clear, a car worth $16,500 and a truck worth $16,500. You file Chapter 7 and declare the car exempt:
($5,000) motor vehicle exemption
($10,000) unused real estate wildcard
$0 equity available for the trustee to liquidate
You will notice that the law allows us to “stack” your exemptions – in the example above, I was able to add the motor vehicle exemption to the wildcard exemption to protect all the equity in the car.
However, there is no exemption remaining to protect the truck – it is considered non-exempt equity. So in this case, the trustee would ask you to turn the truck over to his/her office, sell it and distribute the proceeds to creditors. In the alternative, you could approach the trustee and offer to “buy the estate’s interest” in the truck with funds borrowed from a relative or friend.
As a practical matter, most Chapter 7 cases are “no asset” cases, meaning that everything the debtor owns is exempt.
In a Chapter 13 bankruptcy, your non-exempt equity is one factor to determine how much you pay in your Chapter 13 plan. Unsecured creditors in Chapter 13 have to receive at least as much as they would in a Chapter 7 liquidation.
Your Wildcard Exemption Can Save You Thousands
As you can see, the wildcard exemption can make a huge difference in either Chapter 7 or Chapter 13. For an individual, we have up to $11,500 of exemption to apply to any property, and for a joint filing we have $23,000 to apply to any property.
The wildcard can be added to any other exemption (as shown in the example above) or it can be used for cash. Many times, the wildcard exemption can make the difference between choosing Chapter 7 vs. Chapter 13, or it can reduce by thousands what you have to pay back in your Chapter 13.
Since $10,000 (or $20,000 in a joint filing) of the wildcard available to you arises from your real estate exemption, it is worth your while to spend a little time coming up with an accurate real estate valuation. In general, I am looking for the lowest real estate valuation that I can defend.
I recommend to my clients that they call a local real estate agent for a “drive by” valuation that takes into account any needed repairs. I also look at Zillow.com (many trustees use this site to estimate valuation) and if the drive by appraisal is significantly lower than Zillow I many recommend a more in-depth drive by appraisal or perhaps a more formal appraisal.
If you are considering filing personal bankruptcy in the Atlanta or north Georgia area and you need advice about how to maximize your use of bankruptcy exemptions, please reach out to me – I’d be happy to walk you through the calculations.
The post How the Georgia “Wildcard” Exemption Can Save You Thousands When You File Bankruptcy appeared first on theBKBlog.
If you are behind on your mortgage, you can use Chapter 13 to stop a pending foreclosure and repay missed payments over the 5 year term of your Chapter 13 plan. However, filing your Chapter 13 case is only the first step in saving your home.
In Atlanta area Chapter 13 cases, your repayment plan will include a section which says that you agree to send in your regular mortgage payments as they come due during the term of your Chapter 13 plan. Your Chapter 13 trustee payment includes payments to the mortgage company to repay missed payment. Ongoing, future payments, must be paid directly to the mortgage company outside your plan.
Making your mortgage payments directly to your mortgage lender is part of your plan obligations. Both your mortgage payment obligation and your obligation to pay your trustee start immediately after you file your case. In fact, you will not be able to get your Chapter 13 case confirmed (approved) by the judge if your post-petition mortgage payments are not up to date.
During the course of your case, if you fail to send in your ongoing monthly mortgage payments, several bad things will happen. First, there is a good chance that your mortgage lender will file a Motion for Relief from Stay and ask the bankruptcy judge to lift bankruptcy protection so the lender can restart foreclosure proceedings.
Second, your options to save your home will all but disappear. Once a motion for relief has been filed, you cannot voluntarily dismiss your Chapter 13 and then refile – if you dismiss, you will not be allowed to refile for 180 days – plenty of time for the lender to complete a foreclosure sale.
Fortunately, most lenders will negotiate with you and your lawyer to allow you to catch up your delinquent post-filing mortgage payments. Obviously this will require cash flow but it is another opportunity to save your house.
Chapter 13 can be very confusing because of all the technical rules. The one thing that makes Chapter 13 work is money – payments to your Chapter 13 trustee and direct payments to your mortgage lender.
The post Why You Must Pay Your Mortgage Directly After Filing Chapter 13 appeared first on theBKBlog.
A 2017 ruling by the Georgia Supreme Court most likely represents a significant weakening to a consumer protection provision contained in Georgia’s home foreclosure law.
Georgia law allows what is known as a non-judicial foreclosure. This means that if you fall behind on your mortgage payments, your mortgage company does not have to go to court to seize possession of your home.
Instead, buried deep in the fine print of your mortgage paperwork is language that allows your lender to foreclose on your property simply by giving you written notice and thereafter advertising a foreclosure sale in the legal newspaper of the county where the property is located.
In Georgia, a lender can seize your house in less than 40 days if you are in default. Compare this to a home foreclosure process that typically lasts a year in a judicial foreclosure state like Florida.
Despite this extremely short foreclosure process, Georgia law does contain one small bit of consumer protection in the form of the deficiency confirmation process. If your lender foreclosures, they can take your home quickly but you would most likely not be liable for any deficiency claim if the foreclosure sale nets less than the balance due on the loan.
This is because Georgia law says that before a lender can sue on a deficiency it has to first go to a Superior Court judge within 30 days of the foreclosure and convince the judge that the foreclosure sale was “reasonable.” Since most foreclosure sales result in the lender “buying” the property back for the balance due on the loan, very few lenders even tried to argue that the foreclosure sale price represented the fair market value of the home. Therefore we almost never saw lenders suing (former) homeowners for a deficiency balance after foreclosure.
Enter the Supreme Court of Georgia with the case of York vs. Res-GA, LJY, LLC. In this case, Res-GA, LJY was the lender, having purchased York’s mortgage from The Community Bank. The Community Bank had included in its loan documents a waiver provision whereby York agreed that in the event of foreclosure, the lender (Community Bank or whoever owned the note) did not have to go through the confirmation process before suing the borrower (York) for any deficiency.
By allowing this waiver the Supreme Court of Georgia is basically giving a green light to mortgage lenders in the state to include waiver provisions in all mortgage documents from this point forward.
The problem with this, of course, is twofold. First, when a borrower is at a closing, signing dozens of pages, he is most likely not thinking about potential foreclosure problems or that he has just given his lender the right to sue for tens of thousands of dollars and bypassing any court protection. Further, even if the borrower knows about this waiver issue, he is not in a very strong negotiating position. If the borrower refuses to sign the waiver the lender can refuse to loan the money and the borrower won’t get his new house.
Given Georgia’s incredibly fast foreclosure process I find it absurd that the Georgia Supreme Court would hand the banking industry the power to extract even more money from borrowers, but that is exactly what has happened.
Until this point I have generally counseled recently foreclosed homeowners to hold off on filing bankruptcy following a foreclosure because further financial claims arising from the foreclosure sale were so unlikely. Now, I suspect that aggressive lenders will drive more struggling borrowers into bankruptcy. We will see if that happens.
The post Georgia Supreme Court Rules in Favor of Mortgage Lenders Over Homeowners in Important Decision appeared first on theBKBlog.
When your Chapter 13 plan is confirmed, it means that the bankruptcy judge assigned to your case has formally approved your plan of reorganization and all creditors are bound to the terms of your plan.
In the Northern District of Georgia, a hearing on the confirmation of your plan will be scheduled automatically a the time you file your case. Usually, these hearings are scheduled for about 2 to 3 months from the date you file your case. Therefore, you can think of the first 2 or 3 months of your plan as a kind of probation period.
While in this probationary period, you have all the benefits of bankruptcy – namely the automatic stay that protects you from creditor action – while the Chapter 13 trustee watches to see if you have the capacity to meet your plan obligations. This is also the time when creditor claims are filed and either creditors or the trustee can object to your proposed plan.
Usually the most significant objections we see are the following:
- Funding – are you paying the trustee the amount you set out in your proposed plan?
- Terms – if creditor claims came in higher than expected, do we need to amend your plan to squeeze these claims into the maximum 60 month term of your plan?
- Good faith – does your plan allocate enough money each month to creditors?
In the majority of Chapter 13 cases, we will have to amend your plan prior to confirmation to satisfy the objections filed by the Chapter 13 trustee or by creditors. Usually this means that we will have to bump up your Chapter 13 plan payment.
From our perspective as your attorney, the issue with increasing the plan payment has to do with the long term viability of your case. We know, for example, that during the 5 year term of your plan, you are likely going to need new tires for your car, repairs to your home, a medical emergency or an unexpected funeral to attend. Creditors and the trustee will push back on allocating any funds for an unknown future expense. This is where an experienced attorney will negotiate on your behalf.
After your case is confirmed, your job primarily involves making payment to the trustee and direct payments, if applicable, to your mortgage company, vehicle leasing company or to any other creditor who is eligible to receive direct payments under the terms of your plan.
If you fall behind on your trustee payments, the trustee will file a motion to dismiss your case. If you fall behind on a mortgage, lease or other direct creditor payment, that creditor will likely file a motion for relief from stay.
Hearings will be scheduled for any motion to dismiss or motion for relief from stay, and we will have an opportunity to work out a payment plan to get you caught up. Obviously, however, if you didn’t have the money to make your regular trustee or creditor payments, you may struggle even more to catch up any arrears.
If your financial situation takes a turn for the worse, or if you need to allocate your funds to cover an emergency, we also have the option of asking the judge for a 2 or 3 month suspension in your requirement to make trustee payments, and we can also file a proposed amendment to your plan to either surrender secured property that you cannot afford or to reduce the plan payment based on reduced income.
In general, however, Chapter 13 assumes steady and consistent income and steady and consistent expenses. The more instability you have with income or expenses the likelihood of a plan failure and dismissal of your case.
Chapter 13 cases do not always result in a completed plan and order of discharge of debts. The percentage of Chapter 13 cases that successfully complete is only about 33%. This means that two out of every three Chapter 13 plans end up being dismissed or converted to Chapter 7. Some people use Chapter 13 as a tool to buy time and preserve assets in the hope that a new job comes through, to to remain in a home as long as possible.
I advise my clients to use the power of bankruptcy to walk away from secured property (i.e., a house, car, furniture, jewelry) that you have to stretch to afford.
Whatever your goal, if you need to file either Chapter 7 or Chapter 13, Ginsberg Law can help. We have been representing Atlanta area debtors for almost 30 years and we are standing by to serve you.
The post What Happens After Your Chapter 13 Plan is Confirmed? appeared first on theBKBlog.
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