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30

Apr 2013

Getting Sued After a Short Sale?

Posted by / in Before Bankruptcy, Chapter 7, The 2005 Bankruptcy Law / No comments yet

Getting Sued After Short Sale?

Getting sued after a short sale is highly probable.  Saw three couples this month who needed to file bankruptcy, because they were getting sued–garnished in one case–by the second mortgage after a short sale.

It was surprising that they were surprised.   At the peak of the crisis, four or five years ago, second mortgages would take what they could get at a short sale and let the rest of it go.  But they don’t often do that anymore.  (At least not without intense negotiation.  I’ve seen it once in the last year.)

And usually they make you sign that you KNOW that you still owe the money.  So, where’s the surprise?

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21

Mar 2013

Filing Bankruptcy and self employed? You need a “Profit and Loss”

Posted by / in The 2005 Bankruptcy Law / No comments yet

If you file bankruptcy, you need to send in proof of your income.  For most people, that means your pay stubs.   Section 521 of the Bankruptcy Code requires people to send in at least two month of their “payment advices“–meaning pay stubs–received from your “employer.”

What if you are self employed?   You don’t get a pay stubs and don’t have en employer.  Do you dodge that requirement?

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15

Sep 2011

Bankruptcy means test: Watch out for January 2012!

Posted by / in The 2005 Bankruptcy Law / 8 comments

Your bankruptcy means test may be too high if you file your bankruptcy case in January 2012.

People with bi-weekly paychecks get 26 paychecks a year.  Usually you will have 13 paychecks in the six months look-back period of the bankruptcy means test.    But some people will have 14 paychecks instead of 13 for the six months of July – December 2011.  If your first September paycheck was dated September 9, you will be one of those people.  (It’s no problem if you got paid on September 2.)

Bankruptcy lawyer Robert Weed: If you got paid September 9, 2011, filing bankruptcy January 2012 could be a mistake.

Most people on bi-weekly pay look forward to those months with three checks.  They usually come every six months.  But this year, if you got paid September 9, both July and December will be three check months.  (Your next three check month will be June 2012.)  But in bankruptcy, good is bad.  That 14th paycheck could force you into a five year Chapter 13 bankruptcy repayment plan, because your income could be just a little too high.)

Here’s one example:

Take a single parent supporting one child in Virginia making exactly $30.00 a hour, no overtime, renting, one paid for car, no medical issues, no child care.    That family is means test eligible for a Chapter 7 bankruptcy, if the parent files in October 2011 or November 2011, or December 2011, or February 2012, or March 2012.  But in January 2012:  not eligible. Mandatory five year Chapter 13 payment plan.

This problem can be fixed with proper planning.  I had to change the bankruptcy filing date for a client I met yesterday, to avoid that problem.  Otherwise, it would cost him $300 per month for 60 months–an $18,000 mistake.

The 2005 Bankruptcy Reform has a lot of tricks and traps.  This is one of them.

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NORTHERN VIRGINIA BANKRUPTCY LAW OFFICES