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Nov 2020

We Stop Navy Federal Trying to Pull a Fast One

Posted by / in Chapter 13 Bankruptcy, Weekly Posts /

We Stop Navy Federal Trying to Pull a Fast One

This is a story of Navy Federal trying to take unfair advantage of a disabled vet; and how we were able to stop them.

Harry is the disabled vet. He wasn’t able to quite make ends meet when he filed Chapter 7 Bankruptcy in 2015, even though he was working. His biggest creditor then was Navy Federal.  He had a credit card, a personal loan, and a car loan with Navy.  He gave up the car—it was a 2007 with 131,000 miles.

Three years later, his health got worse. He lost his job and with it part of his income. Then, this year he go behind on his mortgage, talked to me, and we put him in a Chapter 13 payment plan, so he could catch the house up.

Up pops Navy Federal, demanding to be paid.  Demanding to be paid on the car he gave up in his 2015 bankruptcy, and the personal loan he cleared; and the credit card he cleared.

Navy Federal demands to be paid on debts that were cleared in bankruptcy five years before.

That set off the Chapter 13 Bankruptcy Trustee.  Not at Navy Federal; the trustee went off at Harry.  “You were supposed to list everybody you owed money to and you left Navy Federal out. Why’d you do that?”  The trustee asks the judge to toss out Harry’s payment plan, saying Harry had lied to the court.

My first job as a lawyer was to calm the trustee down. Harry could lose his house if his payment plan got tossed out.

Now, Navy had to know about the bankruptcy. Because if they’d been asking for payment during these five years, we’d have set them straight. They never did. they didn’t say anything until the slip their paper—called a proof of claim—into the bankruptcy court.

Maybe it’s an honest mistake.

They Probably Broke No Rule

Supreme Court

In Midland v Johnson, the Supreme Court said a “proof of claim” doesn’t have to be valid, it just has to be a claim.

The odd thing is there’s probably no rule broken here.  Even if they did it on purpose. In a case called Midland Funding v Johnson, the Supreme Court looked at the word “claim.” When creditors want to be paid in a bankruptcy, they file a paper called a Proof of Claim.

According to the Supreme Court, there’s nothing that says the “claim” has to be enforceable, it just has to be a claim. The burden is on Harry—and me, his lawyer—to catch them when they try to pull a fast one.  This time, we did.



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Nov 2020

If one of you is filing, we still need a whole family budget

Posted by / in Weekly Posts /

If just one person in the marriage is filing bankruptcy, we still need a whole family budget.

The question comes up all the time.  “Can I file bankruptcy and leave my wife/husband out of it.” The answer to that is, Yes.

But to get your case approved, we need to submit a whole family budget. That means we need to see the paystubs for both of you. And the expenses, rent food, utilities, car payments, etc. We need the total for both of you.

Some families put all the money in one account, and then one person writes out the bills. That makes this whole family budget pretty easy to do.

But a lot of folks don’t do it that way. “I don’t know what his car payment is; he pays it.” I hear that a lot. Or, “I make the rent payment, she buys the food.” It’s OK to do it that way, but we still need to show the court a whole family budget.

Many people can’t seem to get this right on the first try.  They give me the whole amount for the mortgage payment or rent, but for the clothing budget or health care, they give me only their total.

Whole family budget includes shoes.

Guys, $40 a month doesn’t keep your teens in shoes.

Whole Family Budget: Be Realistic. Be Accurate.

I see parents, often dads, with three teens at home, put down $40 a month for clothing. Guys, that $40 a month doesn’t even keep those kids in shoes. (The IRS and Bureau of Labor Statistics says $305.00 in apparel and services for a family of five.)

I’ve helped fifteen thousand people clear their debts. So, I have a pretty good idea what causes financial problems.  And it’s usually sudden loss of income and medical issues. But even if that’s what got you into debt, better budgeting can help you stay out and save. So if as a couple you don’t really know what each other is spending money on, sit down and get it straight.

That will help you get your bankruptcy approved and your debts cleared. And also help you make the most of your new start.

PS. I need to talk here about what the bankruptcy law calls “marital adjustments.” We are allowed to show on your budget money that your spouse does NOT bring home to the family.

Does the spouse have student loans? Is the spouse send money to an elderly parent or grand parent? We need to account for those in the whole family budget.

Is there an addictive behavior? Gambling? Smoking? Drugs? That’s will make the family budgeting discussion harder. But it makes getting your bankruptcy approved easier. So you need to put a dollar amount on it. And tell me.

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Oct 2020

Reviews Just reviews

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