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May 2022

Solving Your Debt Problems By Doing Nothing.

Posted by / in Alternatives to bankruptcy, Weekly Posts /

For some people on Social Security, Doing Nothing About Debt Problems Works Fine

I tell a couple people a month there’s no reason to file bankruptcy. Most often older people who have no income except for social security. For them, there’s often no reason to file bankruptcy.

Here’s why.

People File Bankruptcy for Three Reasons

People file bankruptcy for three reasons. So the creditors can’t call you. So you don’t get garnished. And to get back to good credit. (After bankruptcy, people also sleep better and handle their problems better.)

Many people living on social security won’t ever need good credit.  This is a hard one for some people to take in.  Does your car have more miles ahead of it than you have on you? Then you will probably never need to buy another car. And your social security income is likely not enough to afford a house. So, you don’t need to worry about your credit score or your “good credit.”

They Can’t Garnish Your Social Security

If all you have is social security, they can’t garnish you. They can’t garnish it from the social security administration and they can’t garnish it from your bank.

To stop debt collector harassment, tell them “I refuse to pay.”

That leaves the collection calls. When you get collection letters, write them back.  Just write on it.  “All I have is social security. I can’t pay and I refuse to pay.”  The words “I refuse to pay” can give you additional legal rights. Tell them the same thing on the phone. Nearly all the debt collectors will give up after being told once or twice.

That’s it.


Now do NOT follow this plan if you have other money somewhere.  Or real estate. Or there’s a chance you could end up inheriting something. But for many people who just have social security, this plan of “doing nothing” works fine.




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May 2022

Colorado Bankruptcy Homestead Just Increased to $250,000

Posted by / in Virginia Bankruptcy, Weekly Posts /

In Bankruptcy, Can I Protect the Equity in My House?

Bankruptcy is set up by the Federal government, but each state sets its own rules on how much equity you can protect if you file Chapter 7 bankruptcy.  That protection is called your homestead exemption.  In April 2022, Colorado raised their homestead exemption from $75,000 to $250,000.

Colorado is one of five states that has increased their homestead since 2020. Let’s see how they compare.

California increased to $300,000

Colorado to $250,000

Connecticut to $250,000

Washington state to $125,000

Virginia to $30,000

July 2020 was when Virginia increased their homestead exemption from $5,000 to $30,000.  At the time that seemed like a big boost. And that did move us out of last place in the entire country.  But it’s still one of the lowest anywhere. 

Now the good news for most married people is that the Virginia’s homestead exemption is mainly needed by singles.

Homestead exemption

Virginia has one of the smallest homestead exemptions in the country.

Virginia Does Have a Better Rule for Married Couples       

Virginia recognizes tenancy by the entirety, which gives great protection to real estate owned by married couples.  Under tenancy by entirety, real estate owned by a married couple is safe from the creditors of only one.  Some married people, for cultural reasons or bad advice, put the house in only one name. And entirety doesn’t protect you for loans you co-signed for each other. 

Widows, divorced people, singles need the protection of a bankruptcy homestead exemption or Chapter 13

Widows, divorced people, singles and poorly advice married people need the protection of a homestead exemption. Virginia’s is near the bottom.  Now, having too much equity does NOT mean you automatically lose your house when you can’t pay your credit cards.  The bankruptcy court can help you with a Chapter 13. Chapter 13 is a payment plan through the bankruptcy court. That payment can be quite painful. Because the Virginia homestead exemption is one of the smallest in the country, people who could file Chapter 7 bankruptcy in most places end up in a Chapter 13 payment plan here.   

Want to know more about Virginia exemption law?    

I’ve written more about Virginia exemption law here.                


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Apr 2022

Penalties for Bankruptcy Fraud

Posted by / in General Information About Bankruptcy Law, Weekly Posts /

April 2022 saw courts dish out two big penalties for Bankruptcy Fraud.

In April 2022, over in the UK, former tennis great Boris Becker was sentenced to two-and-a-half years in prison for bankruptcy fraud: hiding $3 million in assets during his case. Becker had landed bankruptcy in the UK back in 2017, because of a $5 million bank loan he couldn’t pay. It came to light later that he hid assets from the bankruptcy court.

Prison sentence of bankruptcy fraud

Boris Becker , former tennis great, gets over two years in prison for bankruptcy fraud

Also in April, closer to home, William Henry Romm, III, of Glen Allen Virginia, pled guilty to concealing $400,000 from the bankruptcy court in his Chapter 13 bankruptcy case.  He faces a possible 20 years in prison when he’s sentenced in August.  (Usually people who plead guilty don’t get the max.)

They Look for This Bankruptcy Fraud Stuff

There’s a government agency–the Office of the United States Trustee–that’s in charge of looking for this stuff.  (Sometimes it seems like they are just “neat paperwork” police, but their job is to catch bankruptcy fraud.)  In 2020, they recommended 2489 people for criminal law prosecution.                      

Tell the Truth to Your Bankruptcy Lawyer

For most people–usually–there are both legal and illegal ways to protect yourself and your property in bankruptcy.  Your lawyer can point you to the legal ways: as long as you tell your lawyer the truth. Also, now and then I have to warn some people they should never set foot in the bankruptcy court.


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Jan 2022

After Paying for Ten Years, Nina Got Public Service Student Loan Debt Forgiveness

Posted by / in Weekly Posts /

After Paying for Ten Years, Nina Got Public Service Student Loan Debt Forgiveness

There’s very little bankruptcy law can do to help people with student loans. But as a bankruptcy lawyer, I can at least give people good advice.
Since 2017, I started steering people who seemed eligible to Public Service Student Loan Debt Forgiveness. Back then, hardly anyone I talked to had heard of it. The last year or so, most people I mentioned it to knew about it and were in.
Just Wednesday, Nina told me, her student loans had been forgiven. For me, that’s a first.
To get approved, you first have to be in public service. (That’s mainly government or a hospital, but it’s estimated that 25% of jobs in the US can count as public services jobs.) Next you have to make your payments for ten years. (Doesn’t have to be ten years in a row. Just a total of 120 payments.) The program was signed into law by President George Bush in 2007. So in theory, eligible people who signed up right away could have been approved starting in 2017–four years ago.
In that first year, 28,000 people applied for forgiveness, thinking they had completed the program Exactly 96 out of the 28,000 got approved.
For the first four years, more than 98% of the people who applied got rejected. (This is 98% rejection of the people who knew about the program and thought they had completed it!).

Joe Biden to the Rescue

Last October, the Department of Education changed the regulations on public service student loan debt forgiveness. They said that 550,000 people who had been turned down would now be eligible. I’m guessing Nina is one of these.

Student Loan Bankruptcy Reform Is Still Needed

It’s nice to have this program that targets people who work in government, or hospitals or other public service. We want good people to take those jobs.
Electrician is not eligible for public service student loan debt forgiveness

Running telephone wires is an important job. But people who run telephone wires, stock grocery shelves, or care for the elderly in nursing homes aren’t eligible for the public service student loan debt forgiveness that people working for government can get.

Still there are lots of jobs that are important to the country that don’t count as public service for that program. Running telephone wires. Repairing cars. Caring for the elderly in nursing homes. Stocking grocery shelves. Face it, many people who completed college and held a government job for at least ten years are pretty well off. (Even with her student loans cancelled, Nina is still in a tough sport. Mainly because her husband disappeared, leaving her with two kids.)

Every week I talk to people who will die in debt to their student loans. No way to pay; and no way to clear them. The 2020 Democratic Party Platform proposed to treat student loans like any other debt. Eligible for bankruptcy if you can’t pay. In this closely divided Congress, any reform needs Republican support. Very few Republicans are willing to get on board. The most visible Republican supporter of student loan bankruptcy reform, Rep John Katko, (R-NY), has announced he’s leaving Congress as the end of the year.
I’m excited for Nina. And for the half million people President Biden has helped be eligible for student loan forgiveness. But there are millions of Americans far worse off than Nina, whose financial lives are crippled–for a lifetime–because they cannot use bankruptcy, or something, to get out from under their student loans.

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Jan 2022

Alternatives to Bankruptcy: Credit Counselling Debt Management

Posted by / in Weekly Posts /

Alternatives to Bankruptcy: Money Management Credit Counselling

For high income people who can’t quite handle their debt, “credit counselling” can be an alternative to bankruptcy. Credit counselling services–the kind I’m talking about anyway–have agreements with the major credit cards on what payments they will accept through their program. 

Professional and ethical standards for credit counselling non-profit companies are set by the National Foundation for Credit Counselling. The financial industry set up National Foundation for Credit Counselling in 1951. They wanted to give people an alternative to talking to bankruptcy lawyers like me.

Credit Counseling is an alternative to bankruptcy

National Foundation for Credit Counseling was set up by the financial industry to keep you from talking to me.

Outfits affiliated with the NFCC will recommend a “debt management plan” that they expect the credit card companies will accept according to their pre-arrangements. They can usually get each payment down a little off the regular minimum monthly in a plan that still pays everybody off in five years.  Debt management plans have to be licensed in most states, including Virginia.

One of the biggest credit counselling companies is Money Management International. I started sending people to them when they had an actual office with a live counselor in Manassas.  That’s been gone since about 2006. (Actually that was a local outfit that was swallowed up by MMI.)

Martha Likes Her Debt Management Plan

I sent Martha to MMI last month.  Here’s what she told me.  “I took your advice and called the Money Management group and loved their program.  I start with them on the 18th with the first payment and then they will contact my creditors and we have a 5 year plan to get everything paid off with minimal damage to my credit score.”

Based on what people have told me, these legit credit counselors work with you on your budget. If you really can’t afford their debt management plan, they tell you. That’s a big reason I can recommend them.

(Do NOT confuse these credit counsellors with debt settlement companies.  I have comments about them, here. I do NOT recommend them.)

If credit counselling gives you all the help you need, it’s a good solution.





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Jan 2022

Stress and Your Heart

Posted by / in Weekly Posts /

Stress May Be Your Heart’s Worst Enemy

That’s a headline in today’s New York Times.  

I pass that on because as a bankruptcy lawyer I see people defeated by the stress of debt’s they can’t pay.  Good people go for years dragging around bad debts they can’t pay, before they finally take advantage of the fresh start the law offers.  

“According to the American Psychological Association (APA), money is the top cause of stress in the United States.” verywellmind.com   If your money stress is debt stress, that’s one of life’s problems that’s easiest to fix.  Don’t let the stress of impossible debt destroy your heart health.

Here’s the link to the New York Times article.

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