Preparing for Bankruptcy

Photo Credit: Taking Notes ©Antony Rufus, Dreamstime.com

Filing bankruptcy requires that you pull together documentation of your financial circumstance. Your attorney will review your documents to help determine your qualification for bankruptcy. Under Chapter 7 bankruptcy, you are required to provide a completed Bankruptcy Questionnaire listing all of your assets, liabilities (debts), income and expenses. You also will need to provide pay stubs and records of all income earned (or given) in the six months prior to your bankruptcy petition.

If you want to begin your Bankruptcy Questionnaire now, click here to access our form.

A Chapter 7 filing also requires that you prove your income meets the requirements of the Means Test and/or The Totality of Circumstances Test.

You will be asked to disclose evidence of your monthly gross income and details of any expected increases or decreases in income or expenses. You may be asked to provide your income tax returns for the past two years; and you may be required to file any outstanding tax returns before filing for bankruptcy.

In addition you will need to certify that you have completed both credit counseling courses within 180 days before filing your bankruptcy petition. You also will be required to attend a mandatory Meeting of Creditors, after which you will have 45 days to attend a federally-mandated financial management course, either in person or online.

Be sure to provide your attorney and the bankruptcy trustee with your photo identification and any other documentation specifically requested by the Court.

For legal advice on your case and circumstances, be sure to consult a qualified attorney.

 

 

 

What Happens to Income Tax Refunds in a Bankruptcy?

Under a Chapter 7 bankruptcy, income tax returns received during the bankruptcy period will become part of the Bankruptcy Estate and, if not exempt, will be under care of the bankruptcy trustee. The trustee is charged with evaluating the estate, liquefying assets and repaying as many creditors as possible with available funds. Your attorney will help determine which of your assets are exempt from liquidation.

If you are due a significant tax return, you may want to speak with a qualified bankruptcy attorney about the best time to file, how much cash you will be able to keep on hand during the bankruptcy period, and how best to protect your assets.

Daley Law is available to answer your questions and offers a free 30-minute consultant. If you have extenuating tax circumstances, Daley Law may refer you to a qualified tax attorney in your area.

Concerned about Credit After Bankruptcy? Know this …

A bankruptcy discharge provides major financial relief that helps debtors gain back their financial footing. Then, with fewer bills looming each month, most debtors are better able to manage monthly expenses. That’s the good news.

The bad news is that lenders and credit card companies, for a while, will not consider you a good financial risk and may only sparingly lend money should you find yourself in a financial hole again. A bankruptcy may stay on your credit record for up to 10 years, and if you accrue massive debt again, you will not be able to file another Chapter 7 bankruptcy petition for 8 years.

More good news …. You can build credit again by using credit responsibly. Once you have filed for bankruptcy, credit card companies have the right to automatically cancel your credit cards—even if you did not include them in your bankruptcy petition and intended to keep using those accounts.

REBUILDING CREDIT HISTORY

Begin to re-build your credit history as soon as possible. It may take at least two or more years before you obtain an above-average credit rating again. You can get a start by finding a bank that will issue you a “Secured Credit Card,” which works kind of like a bank account. You give the bank the amount of money you wish to tie to a credit card, while the bank watches your credit behavior. As you use the card to pay a bill or bills, and pay the bank on time each month, you will begin rebuilding your credit worthiness. When the bank sees that you are managing your monthly payments on time, your bank may even provide you with a small amount of additional bank credit ($100, $250, $350 or $500) above your own investment. If you continue to pay bills in a timely manner, your bank credit will increase — and so will your credit rating.

When choosing a Secured Credit Card, make sure the bank will report your credit behavior to the three credit reporting agencies: Experian, TransWorld, and Equifax. As those credit agencies receive word of your good credit behavior, they will begin to elevate your credit score. When your score goes up, you will have more access to credit.

BECOME CREDIT WISE

Just because you’ve earned more credit doesn’t mean you have to spend it. To manage credit wisely, use your secured card for necessities only, such as monthly utility bills that you would need to pay whether or not you had the credit card.

Avoid using your secured card for luxuries such as dining out or the latest fad in technology. By committing that your credit card spending will be only for true necessities, you will avoid the temptation to spend beyond your means. Over time, your new spending strategy will become a good financial habit, and you will rebuild your credit one step at a time.

Worried About Losing Property in Bankruptcy? Get the Facts

If you are in dire financial straits and holding off filing for bankruptcy because you are worried about protecting your property, here are a few things you should know.

Homestead Exemption
Florida’s homestead exemption offers protection to homeowners. If you have been a legal Florida resident for at least two years, and you have owned your home for at least 3.5 years, you may be fully protected under the Homestead Act from losing your home. If you have owned your property for less than 3.5 years, only a portion of the value of your home may be protected under bankruptcy law.

Other Protected Assets Under Bankruptcy

• If you have claimed a homestead exemption, you may retain $1,000 in personal property assets after bankruptcy; but if you have not claimed homestead exemption, you may qualify to keep $5,000 worth of assets per person in your household.

• Most employee Retirement plans are exempt from creditor claims.

• Individual retirement accounts and most annuities may be exempt. If you file outside of Florida, be aware that a recent Supreme Court decision ruled that bankruptcy may only protect IRA contributions the debtor made personally; inherited income from another person’s IRA may not be protected in other states.

• Personal property pledged to a secured creditor, such as a motor vehicle, recreational vehicle or boat may be retained, provided payments can be maintained.

• An unsecured motor vehicle with equity of $1,000 or less is protected. If you have more than $1,000 in equity, you should consult an attorney.

• Cash value of your life insurance, provider you are both the owner and the insured party.

Other protections under the law cover the bank account of a head-of-household when that account contains only wages; contributions made to college trust funds more than a year before bankruptcy filing; and personal property that was previously pawned.

Need more information before deciding if bankruptcy is right for you? Contact a qualified bankruptcy attorney.

Happy 50th Birthday to Miranda

YOU HAVE THE RIGHT TO REMAIN SILENT

The Supreme Court decision known as the Miranda Rule gave Americans under arrest the right to remain silent until they are able to speak with a defense attorney.

This landmark decision protected the rights of citizens from breaches of procedure and abuse of power that might arise while citizens are in custody. The Miranda Rule requires police to inform detainees of their legal rights before interrogating them and to abide by a set of procedural standards.

ORIGIN OF THE MIRANDA RULE

Miranda v. Arizona was a landmark decision released June 13, 1966, by Chief Justice Earl Warren, of the U.S. Supreme Court, who penned the majority opinion. The decision ruled in favor of Ernesto Miranda, one of four petitioners in a rape case. Miranda was (later) acquitted of the rape charge, as were two other defendants. The ruling declared a set of specific rights for criminal defendants, including that law enforcement officers must inform anyone arrested for a criminal act about their rights before they may be interrogated. The ruling also prepared a set of rules governing the behavior of enforcement personnel.

Said Justice Warren, “The cases before us raise questions that go to the roots of American criminal Jurisprudence: the restraints society must observe consistent with the Federal Constitution in prosecuting individuals for a crime. More specifically, we deal with the admissibility of statements obtained from an individual who is subjected to custodial police interrogation and the necessity for procedures which assure that the individual is accorded his privilege under the Fifth Amendment to the Constitution not to be compelled to incriminate himself,” the decision began.

WHAT “MIRANDA” MEANS FOR YOU

If you, a family member or friend have been arrested, be aware that the Miranda Rule offers protections under the law. It’s important to use the rule to protect against inadvertent self-incrimination. You have the right to remain silent and should avoid making any statements before consulting with an attorney or without an attorney present on your behalf.

Protect your rights by contacting an experienced criminal defense attorney who can advocate for you, spot mistakes in police procedure that may have bearing on your case, and represent you in court.

If you have questions about legal matters, speak with an attorney. Don’t assume that you should represent yourself because you consider the charges a “little matter.” Drug charges, drinking-and-driving offenses, and crimes against persons or property can carry with you for a lifetime and affect your ability to get a job, hold a job, secure a loan or even maintain a good credit rating.

Bankruptcy May Be Your Weapon of Mass Relief

Do you know someone who is under siege by creditors, has stopped answering the phone to avoid calls from collection agents, or lies awake at night wondering how to stop the financial bleeding? If so, let your friend know there is a way out. Bankruptcy can provide massive financial relief.

Most people under financial duress feel overwhelmed by stress. We’ve seen it over and over in our practice. People who finally decide to seek legal help arrive anxious about their situation and unsure whether they can get out from under their debt. They often feel guilty for having amassed so much debt that they put off asking for help. Some didn’t know whom to ask; others didn’t believe they had the right to ask for help.

A strong tool in the legal arsenal, the bankruptcy law gives people the right to ask for help getting back on their feet.

About the Bankruptcy Court

By the 1960s, the rise in consumer bankruptcy and congestion in the federal courts led to proposals for reform of the nation’s bankruptcy laws. As part of a broad plan to revise the bankruptcy code, the congressionally chartered Commission on Bankruptcy Laws of the United States recommended the establishment of independent bankruptcy courts within the federal judiciary. The Bankruptcy Reform Act of 1978 (92 Stat. 2657) conferred original bankruptcy jurisdiction on the district courts and established a bankruptcy court in each judicial district to exercise bankruptcy jurisdiction. The act provided that the new bankruptcy courts would be considered adjuncts of the district courts, but would be presided over by bankruptcy judges appointed by the president and confirmed by the Senate for fourteen-year terms, beginning in 1984. In the meantime, the incumbent referees would serve as bankruptcy judges. Additional challenges to the bankruptcy law in 1984 changed bankruptcy jurisdiction. Under current practice, district courts automatically refer bankruptcy cases and proceedings to the bankruptcy court. A bankruptcy court is authorized to decide all referred business, except in limited matters known as “non-core” proceedings. If one of the parties does not consent to entry of a judgment by the bankruptcy judge in these proceedings, the bankruptcy court may only hear the matter and submit proposed findings of fact and conclusions of law to the district court. The district judge then enters the final order, which is subject to review by the courts of appeals or bankruptcy appellate panels.

The Attorney’s Role

An attorney evaluates and helps determine a client’s qualifications for bankruptcy. The attorney also files the bankruptcy petition to the court trustee for consideration. (Individuals may represent themselves in bankruptcy court as well). Once the bankruptcy petition is filed, the court-appointed bankruptcy trustee evaluates the case and considers the needs and rights of creditors in each case, as well as the qualifications and means of the debtor before submitting the case for adjudication.

A court-approved bankruptcy judgment may discharge massive debt under a Chapter 7 filing, or establish a feasible repayment plan under a Chapter 13 bankruptcy for some or all of the debt. Other bankruptcy chapters address the financial needs of specific entities, such as businesses, farms and municipalities. A variety of remedies may apply. However, not all debts are dischargeable under bankruptcy: college loans, child support payments, criminal restitution demands and divorce judgments may not be discharged through bankruptcy.

At Daley Law we recommend that people and companies suffering severe financial stress consult an experienced attorney who can help explore legal options and recommend the appropriate course of action. Seeking the advice of a qualified lawyer is strongly recommended because bankruptcy has long-term financial and legal consequences. If you need help finding a bankruptcy attorney to assist you, visit NACBA.org

Timely Topic: How Your Tax Return Can Reduce Your Debt

PHOTO CREDIT: US Dollars ID: 280422 © Manuel Hoo | Dreamstime Stock Photos

Most people run right out after receiving their tax return and spend it on a luxury (or necessity) they’ve been hoping to enjoy. To make the most of your tax return, think about safe alternatives for turning the money returned to you into more money in your pocket. Here are a few options:

• Start an interest-bearing savings account that can add to your peace of mind.
• Speak to a reputable financial adviser who can help you decide where to invest it carefully, perhaps in a low-risk mutual fund, annuity, 401K or other retirement plan, where your money is likely to make you money.
• Use your tax return to reduce indebtedness by paying down debts not likely to be discharged under a bankruptcy filing (such as child support and college loans).
• If you own a small business, you might choose to invest it in a special project, such as a sales, marketing or incentive program, that will help add to your bottom line.
• If you are so deeply in debt that your tax return feels more like a small drop in an already leaky bucket, then contact Daley Law or another qualified attorney to help you review your debt situation.

Debt management is a skill that you can learn. For more information read our last article on Financial Fitness.

Timely Topic: Gun Ownership Laws and How They Apply to You

Gun | 9 mm Still Life © Douglas Greenwald, Dreamstie Stock Photos |  ID: 195099

Know Your Options, Know the Law

In the wake of the murderous Paris and San Bernadino terror attacks, the White House  acknowledged that terrorism in this country is a threat to be taken seriously. Now, gun sales are skyrocketing across the country.

Regardless of which side of the gun control debate you stand on, we believe it is important to know the facts about gun ownership and conduct yourself wisely in the event that you already own or intend to purchase firearms.

Since the Daley Law tagline advises people to “Know Your Options, Know the Law,” we are sharing some information about gun laws. According to data released by the National Rifle Association Institute for Legislative Action, no state permit is required to possess or purchase a rifle, shotgun or handgun in the State of Florida. If you intend to purchase or use firearms, Daley Law advises you to understand how your weapon operates and practice proper safety procedures involved with handling a weapon.

Gun Dealer Responsibilities

No licensed gun dealer, manufacturer or importer shall sell or deliver any firearm to another person until he has obtained a completed form from the potential buyer or transferee and received approval from the Department of Law Enforcement by means of a toll-free telephone call. The Department of Law Enforcement shall destroy records of approval and non-approval within 48 hours after its response. The fee for the instant check shall be $8.00. Exempt from the instant check are licensed dealers, manufacturers, importers, collectors, persons with a concealed carrying license, law enforcement, as well as correctional and correctional probation officers.

Who Has the Right to Control, Possess or Carry Firearms and Concealed Weapons?

It is unlawful for any convicted felon to have in his or her care, custody, control, or possession any firearm or to carry a concealed weapon unless his civil rights have been restored. It also is unlawful for drug addicts, alcoholics, mental incompetents, and vagrants to own, possess or use any firearms.

Gun Laws and Domestic Violence Offenders

A person may not have in his or her care, custody, possession, or control any firearm or ammunition if the person has been issued a final injunction that is currently in force and effect, restraining that person from committing acts of domestic violence.

Gun Laws and Minors

It is unlawful to sell, give, barter, lend or transfer a firearm or weapon other than an ordinary pocketknife to a minor less than the age of 18 without his/her parent’s permission, or to any person of unsound mind. It is unlawful for any dealer to sell or transfer any firearm, pistol, Springfield rifle or other repeating rifle to a minor. A minor may not possess a loaded firearm at his home, unless engaged in lawful activities.

Protecting Your Rights

Daley Law is dedicated to protecting the rights of individuals as they navigate the legal system. If you are arrested on weapons charges or have questions about your rights as a gun owner in the State of Florida, criminal defense attorney David A. Feinswog can answer your questions.

Note: For appropriate interpretation of the law, please seek the advice of a licensed attorney. The information contained in this post is not intended to be legal advice and should not be considered a legal opinion. This information is only intended for informational purposes and to facilitate discussion.

Make This Your Best Financial Year Yet

Want to make this the year you really get behind your financial goals? Practicing the 12 behaviors listed below can help you build financial stability. Don’t wait to implement these suggestions. Start using them today, and day-by-day, to exercise and strengthen your financial muscle.

1. Picture your financial fitness. Visualize your life when you are financially fit. What will life look like, sound like and feel like when you have more money in the bank and fewer bills dragging you down? What will you see happening around you? What will you hear people saying? What will your own self talk sound like? How will you feel inside? Take time now to capture that feeling in your body and memorize it. Later, when you are tempted to spend beyond your means, pull that picture to mind and recall how good you will feel if you don’t spend extra money and let yourself enjoy the security of money in the bank instead. Get in the habit of spending money only to reduce debt instead of increasing it.
2. Commit to learning all you can about financial fitness. Start by reading at least one book on finance and debt management. Check out Dave Ramsey’s Total Money Makeover and Zero Debt by Lynnette Khalfani-Cox. You also may like Debt-Proof Living: The Complete Guide to Living Financially Free by Mary Hunt and The Richest Man in Babylon by George Clason, which uses parables to share information about discipline and self-control. Save money on books by checking them out of the library or purchasing the Kindle edition.
3. Make a budget and stick to it. Make a list of your bills on paper, a ledger sheet or a computer spreadsheet. Review it and decide which purchases and monthly bills are absolutely necessary and required. Then practice eliminating at least one expense per month from recurring bills. Think about what you can do without or do for yourself instead of hiring someone to do it for you. For example, can you eliminate your Starbucks run by carrying coffee from home? How much will you save if you color your own hair or cut your own lawn? How much might you save if you buy fresh foods instead of prepared foods? And stop eating out at restaurants if you have debt you can’t manage now. Eating at home is easier on your budget. As you change these behaviors, you’ll be working your financial decision muscles and saving money too!
4. Focus on saving for the long term. If you have a retirement plan, increasing the payroll deductions you allocate to a savings effort by even one percent will help you save for the future. Get in the habit of increasing your contribution to matched plans annually by one percent until you have met the maximum contribution allowed. If you don’t have a retirement plan, speak to a banker, accountant or financial planner about how you can set up a self-managed plan, such as an IRA or Roth fund. Or simply open a savings account at your local bank and deposit a small amount from each paycheck.
5. Stop borrowing. Resolve not to take on more debt this year. Avoid the temptation to respond to credit offers you think will help you stretch your paycheck. Use the money you don’t spend on credit to pay down existing debt or save for a rainy day.
6. If you’re drowning in debt, learn how to negotiate and settle outstanding debts. Don’t rely on so-called debt consolidation companies. Most are scams. Companies (even those claiming to be non-profits) that offer debt management services add their own costs to your debt and only help you stretch payments out. You will pay more in the long run, which is not a good strategy for getting out of debt. A well-reviewed book on this topic is Negotiate and Settle Your Debts by Mandy Akridge.
7. Pay early, whenever possible, and always on time. This will help you get ahead of your bills, which may reduce stress. Did you know that stress hormones interfere with clear judgment? When you develop more financial fitness and feel better about your financial position, your confidence in your financial behavior will grow and may reinforce itself. Paying early or on time will also help improve your credit rating, which will be important to you if you need to renegotiate a mortgage or make a big purchase when you can afford it.
8. Watch less television! Television ads (especially the late night and home shopping variety) manipulate people into wanting and buying things they don’t need. Don’t be conned into buying on a whim.
9. Use only cash or debit cards (not credit cards) to make purchases, and don’t buy unnecessary items.
10. Live within your means. Plan to spend 10 percent less than you earn (and do it). Then put the 10 percent you don’t spend into savings.
11. Monitor your credit rating. Don’t purchase credit reports your don’t need. You can get a free credit report each year from each of the three credit reporting agencies (Experian, Equifax, TransUnion). Don’t get the reports from each agency all at once. Ask for a report from one of the three at three-to-four month intervals and you will be able to monitor your credit all year long, without incurring additional expenses. If you notice errors, contact the agency/agencies involved to correct any mistakes.
12. Stay balanced. Just as physical exercise helps with physical gait, the exercise of balancing your checkbook regularly will help keep your finances steady. Don’t rely on the bank balance you see online because that does not show you checks still outstanding. If you don’t keep a printed ledger, you could mislead yourself about how much money you actually have in the bank. Stay alert and aware of your ability to pay. And you’ll protect your credit score at the same time.

At Daley Law, we’re interested in how these strategies work for you. Drop us a line and let us know. Or call our office to schedule a consultation if you are so overwhelmed by debt that you believe you need assistance. Don’t wait and get deeper in debt while wondering what to do. We’re here to help.

Avoid Taking Worthless Checks in Your Business

If you accept checks in your business, it’s essential to teach employees the check-taking policies and procedures they must follow when accepting every check. It is vital to stress the importance of this policy to your employees. When policies are clear and posted, then no customer should feel they are being singled out or treated unfairly.

Below you will find some recommendations issued by State Attorney Phil Archer, 18^th Judicial Circuit. We think it’s worthwhile to pass them along.

Whether you are an individual accepting a check for a purchase at your garage sale, or a business accepting payment for goods and service:

• Do make sure to collect information that identifies the person who wrote the check.
• Do Not agree to hold a check for any length of time or for any reason. The attorney general cannot file worthless check charges if there is any type of agreement to hold the check.
• Do Not accept checks that are already signed. Be sure the check is signed in the presence of the person accepting the check. In the case of company checks, it is vital that the signature is legible. If not, ask the person signing the check for his/her name and note the name on the check.
• Do Not accept a check if you have any reason to believe the check might not be good. Require another form of payment.
  When accepting checks, require the following: home phone (or business phone if it is a business check), date of birth, current residence, place of employment, sex, color and height of person writing check, driver’s license or state photo ID, state issuing the ID.

Contact the state attorney’s office in your district if you encounter a problem. If you have received a bad check, Daley Law advises individuals and businesses to explore their options under the law.