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10

Apr 2020

Announcement: Bankruptcy Hearings: Now Telephonic

Posted by / in Virginia Bankruptcy, Weekly Posts /

The Alexandria Bankruptcy Court Trustee Hearings are now by Telephone.

Bankruptcy Trustee hearings are now telephonic. That’s the policy of the Alexandria VA bankruptcy court, effective April 9, 2020. (Richmond and Norfolk, too.)

woman calling into bankruptcy hearing

Instead of a location, your hearing notice will have a phone number to call.

People who file bankruptcy are required by law to “appear” in front of the bankruptcy trustee to answer questions.  (For most people, the questions are, “Did you go over these papers when you signed them, and is everything you put there true?”) Those hearings by law are between four and six weeks after we send your papers to the court.

Starting now, you and I will appear by phone.

The trustee does about a dozen hearings per hour; and everybody will call in the same phone number. So you and I will be listening in on the hearings for every other person that hour. (This is the same as it would be if we were all sitting in the hearing room together.)

Mute your phone. When you call in, don’t say “Am I on? Am I on?” You’re on an open mic to the whole room. If you talk when it’s not your turn, you are interrupting the bankruptcy trustee. (You don’t want the trustee to be grumpy when it’s your turn.)

The trustee is supposed to check your ID and social security number. On the phone there’s no way they can match your picture. But having an ID that matches the name on the bankruptcy papers at least proves something. So take a picture, or scan, of your ID and social security card.  Email to vanessa@robertweed.com.

We Will Talk Privately Before and After

You and I will have a call-in the Saturday before scheduled time. To go over what’s going to happen. And make sure you are ready to call in.

On the day of, I’ll email you about ten minutes before; to make sure you are there; and cover any last minute jitters.  Afterwards, I send an email wrap-up. And set a time for a call later in the day to handle any follow up questions you have, or action items that came out of the hearing. Those calls will only be between us.

I’ll be looking at my email during the hearing, so if you want to whisper me a question, do it by email.  Use robertrossweed@gmail.com.  That’s the email I’ll be watching. (It gets to me 45 second quicker than robertweed@robertweed.com.)

Here are documents you should get 

The Notice of a Bankruptcy case comes to you in the mail about a week after the papers go in.  It tells when when your telephonic “appearance” is. It’s also a notice to the people you owe money to that they are required to leave you alone.  And that anybody who is garnishing you has to stop. 

Your Order to debtor  tells you that you are required to show up for the telephonic appearance.  And that if somebody dies and leave you money in the next six months, the bankruptcy trustee can come and get it. You get this in the mail with the Notice of a Bankruptcy Case.

Here’s stuff you need to look at before your telephonic bankruptcy hearing

The Bankruptcy information sheet is a form I’m required to give you.  Congress really wants you to know you have four choices under the bankruptcy law.  Chapter 12 is only for farmers (and fishermen.) I’ve never done a farmer. Chapter 11 is for people like Donald Trump. I’ve never done Donald Trump. Chapter 13 is a payment plan through the court. Chapter 13 can get you five years to catch up your house or pay off your taxes, You can also be forced into Chapter 13 if you are making too much money to get approved for Chapter 7.

Chapter 7 says ‘sorry I can’t pay these debts.’ For most people that’s what we want.

This Hearing Info is from me. It explains that you need to get us bank statements that cover the date your bankruptcy was filed.  For ALL your bank accounts including the ones “I never use.” It also lists the questions they usually ask.

Finally here’s my 15 minute video

Ignore the parts about where to go and where to park–these are telephonic bankruptcy hearings, remember.  But the other stuff is still right.  PS Actually one other correction. We use Moneysharp.org for the required class.  (The video mentions Hummingbird. They stopped covering Virginia.)

PS   The telephonic policy has been extended.  For cases filed through October 10, 2020, the bankruptcy hearings will be by telephone.  

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07

Sep 2019

Announcement: What to Expect at Your Bankruptcy Hearing

Posted by / in Blog, Virginia Bankruptcy, Weekly Posts /

What to Expect at Your Bankruptcy Hearing

For most people, your only bankruptcy hearing is what’s called the “meeting of creditors.”  (We almost never actually have creditors show up. We can also call it your “trustee hearing.”)

Here’s a video that explains where to go, best places to park, what to bring and what questions you’ll be asked.

I’ll be there as your lawyer, but you can review this video to know what to expect.

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05

Aug 2020

November Elections Might Help Bankruptcy Law and Your Student Loans

Posted by / in General Information About Bankruptcy Law, Weekly Posts / No comments yet

Democratic Platform Promises Good News on Bankruptcy and Student Loans

Are you struggling with student loans you can’t pay? The Democratic Platform promises to help.

The platform of the 2020 Democratic National Convention says this: Democrats will restore the prior standard in bankruptcy law to allow borrowers with student loans to be able to discharge their debts in bankruptcy as a measure of last resort.

What’s that “prior standard?” That probably means a bankruptcy discharge can discharge student loans that have been in payment status for several years. (The required payment status was five years beginning 1976; increased to seven years in 1990.)

And I hope it means that private student loans are just regular debt.  Bankruptcy filed any time should discharge those. (That was the law on private student loans until 2005.)

So, if the Democrats have their way, if you are out of school, with no deferments, for seven years (maybe only five), then you can file bankruptcy to discharge your student loans.

What does this promise of future help mean to you now?

Should I Wait and See Election Results?

Suppose you have a credit card problem right now–and impossible student loans also hanging over you. If you file Chapter 7 bankruptcy today, you can’t file Chapter 7 again for eight years. So if there’s a new law, you’d have a very tough time taking advantage of it.

Can you hold on until after the election? November 3, 2020 is election day this year. That will decide if a Democrat is elected President. It will also decide if Democrats take control of the United States Senate. (It might hinge on a Georgia runoff January 5, 2021.) Democrats likely need control of the Senate to deliver on this student loan promise.

Election day

Election day is November 3, 2020

After the Election, Expect More Delay

The new President and new Congress come into office next January. But I doubt they get started on bankruptcy law and student loans right away. The pandemic and economic crisis will keep them busy. My own guess: I’d expect to see changes in the bankruptcy law affecting student loans taking effect by July 2022. That’s more than a year and a half after the election.

Can’t Wait that Long? Consider Chapter 13

If you can’t handle, or outrun, your debts until summer of 2022, you can protect yourself with a Chapter 13.

A Chapter 13 bankruptcy is a payment plan through the bankruptcy court. You have to pay “all you can afford” for three years–or sometimes five years. “All you can afford” puts you on a tight budget; but not as tight as a garnishment for 25% of your after-tax pay. (If you have a security clearance, filing Chapter 13 can protect your clearance. Going late on your debts can put your clearance in jeopardy.)

Here’s a big advantage of Chapter 13: You can drop out of Chapter 13 at any time. You’d plan to drop out when a new law allows you to discharge your student loans in a Chapter 7. If the law doesn’t change, you’d likely want to see the Chapter 13 through to the end.

Conclusion

Are your credit cards out of control? Are you in danger of getting garnished now? Do you also have a student loan problem?

Maybe filing Chapter 13 now is a good plan. You can set up small payments on the debts now. And be able to take advantage of a new law on student loans when it’s available.

Student loans can keep you in poverty

Now, bankruptcy is almost no help with impossible student loans.

Bankruptcy Law and Student Loans:  When Student Loans Became Special

Student loans now are in a special category that bankruptcy law can hardly touch.

Under the old, 1898 Bankruptcy Act, student loan debt was just another debt. You could clear in in bankruptcy just like credit cards, loans, medical bills. Starting in 1976, clearing student loans got tougher and tougher.

In 1976, a new law said that student loans had to be in repayment status five five years, before they could be discharged.  (Excerpt for undue hardship.) The current bankruptcy code was passed in 1978, kept that five years.  In 1990, it was stretch out to seven years. In 1998, the seven years was gone.  You could only clear student loans based on “undue hardship.” And undue hardship basically means paralyzed, never work again.

In 2005, private student loans received the same special status of government and charitable student loans. That’s where we are today.

During the presidential primary season, Sen. Elizabeth Warren called for the Federal government to just forgive them all. The Democratic platform doesn’t go nearly that far.  Probably a Democratic majority in the Senate won’t do that either.

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19

Jul 2020

IRS Means Never Having to Say….

Posted by / in After Bankruptcy, Blog, Chapter 7, Chapter 7 Bankruptcy / No comments yet

IRS Means Never Having to Say….Anything

The IRS is not like most creditors. (Your probably knew that.)  The IRS in bankruptcy is not like most creditors in bankruptcy, either.

Knowing what debts have been cleared (discharged) by your bankruptcy is easy for most debts. For credit cards, loans (including payday loans, who want you to think they are somebody special), car loans, medicals. When those debts are properly listed (scheduled) in the bankruptcy, they are automatically discharged, unless they object.

So, for example, Capital One. Was your Capital One card listed on the schedule of debts? (Schedule F.) Yes. Did they object? No. Then they are discharged.

That’s NOT the rule for the IRS in bankruptcy.

IRS and Bankruptcy: Not Like Other Debts

IRS logo illustrating the IRS in bankruptcy

IRS in bankruptcy is not like other creditors.

First of all, not all income tax debts can be discharged. (Some people assume none can be, but you know better than that.) The main rule is you can discharge taxes that were due more than three years ago, and were properly filed. See 11 USC § 523(a)(1).

More than Three Years—Look at the Calendar

The due date for taxes is usually April 15, unless there was a holiday, or you asked for an extension, or because of some natural disaster (Covid-19 in 2020) there was an automatic extension.  523(a)(1).

That you can figure out for yourself, usually. (There are other rules on timing that do apply. This is NOT a complete analysis.)

Properly Filed—Lots of Gray Area

I say “properly filed” but that’s not the wording in the law. It’s my shorthand.

Your taxes do have to be filed, by you. (When people are chronically late, the IRS will often look at the W-2’s, estimate a tax and send you a bill. That does NOT count as filing a return for bankruptcy purposes).

You can’t file a fraudulent return. And you can’t willfully attempt[ed] in any manner to evade or defeat such tax.

That gray area is enough to give anyone who owes taxes some worry about what the IRS will do. You might feel certain you don’t pay because you were broke, but worry the IRS says you were evading.

I Got My Discharge. Am I OK?

The IRS does NOT have to say. The IRS does NOT have to tell the bankruptcy court, or you, if they say you filed a fraudulent return or willfully attempted to evade. They can decide whenever they want that they think you’re an evader.  You find out when you get collection notices again.

Is There Anything I Should Do?

Actually there is. You should get your account transcript and look at the IRS notes. You can see if they have your debt coded as discharged in bankruptcy. Or are they showing something else.  You can get your transcripts here.

Get your tax account transcript.  The IRS has several different transcripts, For what we are talking about, the tax account transcript is the one you want.

What If There’s an IRS and Bankruptcy Problem?

If there’s a problem, you need to talk to a lawyer who knows more than I know about about tax law and the IRS and bankruptcy.  That’s not me.  I’ve told you all I know, here.

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07

Jul 2020

Get Your Money Out of Wells Fargo

Posted by / in Before Bankruptcy, Blog, Weekly Posts / No comments yet

If you are filing bankruptcy, Get Your Money Out of Wells Fargo.

People filing bankruptcy get kicked when they are down, if they bank  at Wells Fargo.

Wells Fargo sees your bankruptcy on your credit report and they freeze your checking and savings account.  At least they do if you have more than five thousand dollars in their bank.  (They have said in court they only do it if you have more than $5000.00.  But they don’t just freeze the amount over $5000.00–they freeze it all.)

Get your money out of Wells Fargo

Why would a bank beat up their own customers?

Why Does Wells Fargo Beat Up Their Own Customers

So, why would Wells Fargo beat up their own customers like this? They claim they are required to ask the bankruptcy trustee if he wants the money. Although they are the only bank that does this, they have adamantly stuck to this policy for years.

It’s hard to make sense as a business proposition. I personally have probably cost them nearly a thousand customers over the years.  (At one of our national meetings of NACBA, a former NACBA president joked maybe they did it to collect bounced check fees.  That seems a small reward for losing lifetime customers.)

Anyway, get your money out of Wells Fargo.  (A couple weeks after the bankruptcy is filed, you can go back there if you want.)

I first wrote about this problem in 2011.

I first wrote about this Wells Fargo problem in 2011

Since then several lawyers have tried to fight this. As far as I can tell, the bank won every time.  

So, get your money out of Wells Fargo.

 

 

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25

Jun 2020

After bankruptcy….the car still has to pay!

Posted by / in After Bankruptcy, Blog, Chapter 7 Bankruptcy, Weekly Posts / No comments yet

…But the Car Still Has to Pay.

When you file Chapter 7 bankruptcy, that means you don’t have to make the car payments.

But that does not mean you get a free car. You don’t have to make the car payments, but the car still has to pay.

That’s because the car finance company is attached to the car title. Lawyers call that a lien.  If the debt that’s attached to the car isn’t paid, the lien holder will repossess the car.

Don’t Forget to Make the Car Payment

It’s easy after bankruptcy to forget to make the car payment.  If it slips your mind, the car finance company won’t send you a reminder. Why? Because you don’t have to pay. They also won’t send the car a reminder letter. They know the car doesn’t open its mail.

And if you get a week behind, they won’t call and demand payment. Because you don’t have to pay. And they won’t call the car, because the car doesn’t have a phone. Only one thing happens if you forget to pay. You wake up in the morning and the car is gone.

Don't forget to make the car payment. The car still has to pay.

If you forget to make your after bankruptcy car payment, you won’t see the car. the car still has to pay.

Does Paying the Car Help Your Credit Score?

Suppose you forget to pay and the car gets repossessed. The repossession won’t show up on your credit report.  That’s because the bankruptcy discharges the debt from you. But that also means your car payments won’t show up on your credit report if you do pay. You don’t have to pay.

Only one thing happens if you pay. You keep the car.

Only one things happens if you don’t pay. When you wake up in the morning, the car is gone.

You need to make the car payments if you want to keep the car. 

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