Archive for February, 2012

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What Happens to Your Credit Card Debt After Death?

Wednesday, February 29th, 2012

The saying goes, “You can’t take it with you.” However, when it comes to credit card debt, in many cases you can. When a credit card belongs to one person only, the debt also belongs to one person only. Whether that debt must be paid or passed along to another person after your death depends on a couple of factors.

If you die with outstanding credit card debt, the first question is whether there is enough money in your estate to pay the credit card company. State laws direct the administrator or executor of your estate to pay certain bills first. Anything left after paying creditors will be paid according to your will or in accordance with state law if you die without a will. Non-probate transfers like life insurance and payable on death accounts (especially retirement accounts and bank accounts) are not part of your estate after death. Credit card companies typically cannot reach money that is not part of the decedent’s estate.

Generally, if your estate does not have enough money to pay your credit card debt, the card company gets nothing. However, in some cases the credit card company may have some options to get paid. First, if the debt was jointly owned, the survivor is now responsible for the debt. For instance, if you and your spouse were jointly obligated on the debt, your spouse is now 100% obligated to pay. This rule does not apply to authorized users on your account.

Second, if you live in a community property state, assets that are accumulated during your marriage are considered joint property, and, in some cases, so are the debts. The states of Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are community property states and a surviving spouse may be obligated to pay your credit card debts. Credit card debt will not pass onto other family members or friends.

Bankruptcy will discharge your credit card debts so that neither your estate nor your spouse will be affected. A dead person cannot file bankruptcy, but, once the bankruptcy is filed, the debtor can still receive a discharge after death. If you have concerns about burdening your loved ones with debt after your death, speak with an experienced attorney and discuss how the federal bankruptcy laws can help.

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4 Things Debt Collectors Don’t Tell You about Their Operations

Tuesday, February 28th, 2012

In October 2011, the Reader’s Digest [http://www.rd.com/slideshows/13-things-a-debt-collector-wont-tell-you/#slideshow=slide9] ran a slideshow titled, “13 Things a Debt Collector Won’t Tell You.” For those who are familiar with debt collectors, there’s little new. Debt collection agents cannot use profanity, call between 9:00 P.M. and 8:00 A.M., call you at work against your permission, and threaten to have you arrested. The article does tell readers a few things they might not know.

  • Debt collection agents receive bonuses based on how much they collect. This makes sense given that debt collectors want to extract the most they possibly can from their debtors, especially given that they paid so little for the debts (pennies on the dollar).
  • In keeping with the astonishingly low prices they paid for the debts, debt collector’s agents are often authorized to settle for as low as 15 percent of the debt’s total value. If the debt is still valid, this sounds like an excellent deal for debtors. Just remember, the debt collector is making a massive markup on your debt, so start by bidding low. Don’t be afraid to open in the single digits and insist on it.
  • Don’t give debt collectors more contact information when settling debt. They’re not collecting this to complete a form; they’re doing it as a backup plan in case the settlement falls through. By giving them this information, they can argue you gave them permission to contact those individuals. This is probably something you don’t want.
  • Debt collectors use good/cop bad cop tactics. This isn’t surprising, but remember that unless you exercise your rights, the collector is in a position of strength at all times. Similarly, managers won’t help you, so don’t ask to speak to them.

Many debt collectors may run legitimate businesses, but even the “good guys” often still cut corners and try to dupe people into paying debts they don’t owe or use dishonorable or illegal tactics. If you don’t have the situation firmly under your control, or you think the debt collector has broken the law, then it’s in your interest to hire an experienced Las Vegas bankruptcy lawyer to handle your case. It will give you some needed negotiating power, and filing a Chapter 7 bankruptcy can eliminate the debt entirely.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 to set up your free consultation.

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Equitable Interests in Property During Bankruptcy

Monday, February 27th, 2012

When an individual files a bankruptcy case, a bankruptcy estate is created. This bankruptcy estate is comprised of “all legal or equitable interests of the debtor in property as of the commencement of the case.”  Consequently the debtor must identify all legal and equitable property rights when completing the bankruptcy schedules. But what exactly is a legal interest and what is an equitable interest in property?

Without getting too technical, a legal interest is simply ownership that is readily recognized by law. Say, for instance, that you go to the auto dealer, buy a car, and title it in your name. This is a legal interest in a vehicle that is disclosed when completing your bankruptcy schedules.

On the other hand, an equitable interest may exist when there is no legal interest, but in fairness there should be an interest in the property. The most common type of equitable interest is an express trust. In a trust a trustee hold the legal right to the property for the benefit of another person (the beneficiary). If you are the beneficiary of a trust, this is an equitable interest that must be disclosed on your bankruptcy schedules.

Another common situation that may result in an equitable interest is a child’s vehicle. Suppose that your son purchased a car with his own money, but it is titled in your name to save on insurance. You have legal title, but your son has an equitable interest. You must list your legal interest on your bankruptcy schedules. That begs the question: can the bankruptcy trustee take the car?

Probably not. This situation is called a “resulting trust.” Your son paid for the car and drives the car. . . it’s his car. Just like in the express trust situation discussed above, the law will recognize that you are the trustee with legal title of the car and your son is the beneficiary. The bankruptcy trustee will want evidence of the “real owner,” including evidence that shows you did not pay for the car.

Equitable and legal interests are sometimes difficult to distinguish during bankruptcy.  If you have co-signed for a secured loan, recently purchased property for a family member, or are named in a trust, there is likely a property interest that must be disclosed. It is vital to discuss all of your financial issues with your attorney prior to your bankruptcy filing. Your attorney can propose options for dealing with the situation and for protecting your property rights.

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6 Ways Bankruptcy Can Still Help You Become a Homeowner in Las Vegas

Sunday, February 26th, 2012

Most of the news and writing about bankruptcy deals with advising people on how to keep their homes. This has been especially true for those considering filing a Las Vegas bankruptcy after the housing bubble burst. Foreclosure defense has been a big issue for bankruptcy attorneys, as has stripping mortgages. However, many people who file bankruptcy aren’t homeowners but wish to become ones someday. What about them, the renters?

Fortunately, debtors who rent won’t be banished from home ownership forever. Here are the 6 things bankruptcy can do to put you back on track to home ownership.

(1)  Know now that whatever damage your debt has done to your credit worthiness is done. Avoiding bills will not make things better. Filing bankruptcy—or just negotiating your debt—will actually improve your credit score in the long run.

(2)  Discharge will help. By the time people consider filing a Chapter 7 bankruptcy, much of their after-tax income goes to debt payments. The accrued interest that gets tacked on to debt will be a burden on your income going into the distant future. By discharging your debt, you can begin saving anew.

(3)  A payment plan can help too. Many people choose, or because their incomes are too high have no choice, to file in Chapter 13. With the three-to-five-year repayment plan that you agree to, and the discharge at the end, you can save for a house.

(4)  For student debts, Income-Based Repayment (IBR) is your best friend. This fairly recent program allows you to have some discretionary income left over after paying for government loans. Another issue to look into is to see if your student loans have any provisions that allow co-signers to be released after a certain number of years.

(5)  Bankruptcy will help you deal with auto loans. In Chapter 13, for instance, you may be able to “cram down” the remaining principal on your car loan, which can save you money.

(6)  Government programs facilitate homeownership. For example, government enterprises such as Fannie Mae or Freddie Mac have lower down payment requirements than most other lenders. Using one of these programs after can ease your path to home ownership.

Many Americans still dream of home ownership, and even after filing bankruptcy, it’s still possible to achieve.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 to set up your free consultation.

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8 Suggestions for Improving Your Credit Score

Saturday, February 25th, 2012

Credit scores have rapidly become the metric for determining how much of a spendthrift people are. Their uses have grown from what kinds of loans banks will extend you to whether someone will give you a job and even if you’re worthy of obtaining a professional license. While the score is created by for-profit companies for commercial purposes, improving your credit score won’t hurt. There are many suggestions for maintaining and improving one’s credit score. Here are some good ones:

(1)  Obtain your credit report. By federal law, you’re allowed to do this three times per twelve month period. Unless you plan on moving or going on a sustained job hunt anytime soon, now would be a good time to obtain one. Just note that many commercial Web sites, like freecreditreport.com, aren’t always as free as you might think they are. Your credit report should list all your debts and the amounts you owe your creditors. If it lists some that you didn’t take on, you can report the error.

(2)  Deal with collection agencies promptly. This might require contacting a bankruptcy attorney.

(3)  Weigh your credit card debts. If you have multiple credit cards with different balances, chances are the interest rates on them differ too. If this is the case, then using lower rate cards is better in the long run than using others.

(4)  Play the interest rates. You may even wish to consider moving some of your higher-interest debt to your lower-interest credit cards. This might involve applying for a new card, but it can be worth it. Contacting the creditor and asking for a lower interest rate can work, as can asking for a waiver of the annual fee. Before doing this, though, make sure that the “balance transfer” fees incurred are still worth the benefits of the lower interest rates.

(5)  Otherwise, pay off the high interest debt first. This is common sense: less high-interest debt today means more savings tomorrow.

(6)  Don’t buy any large ticket items that offer you “no money down!” and other promotions. You’ll probably end up paying higher interest later.

(7)  Pay bills on time. This is another common sense suggestion, but much of a credit score is just many timely payments over a long period of time. Tracking when these payments are due will help you with…

(8)  …Keeping a budget. It’s not too hard for people to cut out extraneous discretionary spending, like dining out frequently. It’s not necessarily fun, but it is easy. On the other hand, budgeting groceries takes more effort, but the savings can also be substantial. Research purchases online before committing.

Credit scores might be numbers for companies to use to their advantages, but controlling your own debt is worthwhile for its own sake. If you’re having debt problems though, consulting with an experienced Las Vegas bankruptcy lawyer can help immensely.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 to set up your free consultation.

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Can I Keep My Jewelry in Bankruptcy?

Friday, February 24th, 2012

Everyone knows that the price of gold has skyrocketed over the past decade. During 2002 gold averaged around $300 per ounce, and by 2012 it climbed over $1,700 per troy ounce. Precious stones have also increased in value. An “average” 1 ct diamond sells for $10,000 more today than in 2002. These price increases can have a serious impact on your bankruptcy case.

During a Chapter 13 bankruptcy case you get to keep all of your jewelry, no matter the value. A Chapter 13 bankruptcy is funded by payments from your income. You pay what you can afford over three to five years. Any remaining debt is discharged at the end of the repayment period.

On the other hand, filing a Chapter 7 bankruptcy could put your jewelry at risk. That is because a Chapter 7 bankruptcy is a liquidation process. State and federal laws allow you to keep certain property that is reasonably necessary to your fresh start after bankruptcy. These laws are called commonly called “exemptions” and protect your assets from creditors and from the bankruptcy trustee.

Before applying legal exemptions to protect your jewelry, you should accurately value each item. Keeping your jewelry may come down to providing the bankruptcy trustee with trustworthy evidence of its value. One way to do this is to have your gold jewelry appraised as scrap gold. The general rule is that the weight and karat of the gold determines its value. Ten-karat gold means that it has 42% gold content. Fourteen-karat gold is actually 58% pure gold and about 75% of the content of 18-karat jewelry is gold. Consequently, a 14-karat gold necklace weighing one troy ounce is worth 58% of the market rate (e.g. 58% of $1,700/ounce means that the necklace is worth $986).

Gold dealers have costs associated with buying gold and will typically only offer a fraction of the market value. One recent investigation found that bids from mail-away gold purchasers can vary from as little as 18% of market value, to a high of 90%! Many pawn shops openly display what they pay for scrap gold, so choose your appraiser carefully. A price that is too low will be disregarded and a value that is too high can put your property at risk.

If you have expensive jewelry and need bankruptcy relief, speak with an experienced attorney and discuss your options. In many cases the value of your jewelry can be protected by legal exemptions. In unusual cases you may consider filing a Chapter 13 bankruptcy, selling the jewelry before filing, surrendering the jewelry to the trustee, or purchasing the nonexempt equity from the bankruptcy estate. Before doing anything, get competent legal advice.

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Who Owns My Mortgage?

Wednesday, February 22nd, 2012

Many homeowners are surprised to learn that their monthly mortgage payment check is not made out to the owner of the mortgage note. The company that receives your money is the servicer of the loan, but is not necessarily the legal note holder. This distinction can become important if you need to modify or change the terms of your loan.

A loan servicer is a company that collects and processes your monthly payment for a percentage of the interest payment. While a mortgage note’s owner may change, the loan servicer may not change. Buying and selling mortgage notes is common, and sometimes a mortgage note is bought and sold in rapid succession making it difficult to determine the current owner. So how can you discover the current owner of your home’s mortgage.

Since the loan servicer is the owner’s agent for handling the day-to-day tasks associated with managing your loan, call the servicer and request your note’s owner. MERS, or Mortgage Electronic Registration Systems, tracks the identity of servicers that registered loans on its system. You can search their registry for your current loan servicer at www.mersinc.org/homeowners/. Once you have called your loan servicer, follow up by contacting the mortgage company and request verification that it holds your mortgage note.

If your loan is guaranteed by Fannie Mae or Freddie Mac, you can search for the note holder via the internet. Statistically, about 50 percent of U.S. mortgages are currently held by Fannie Mae and Freddie Mac, and about 30 percent are guaranteed by FHA. Fannie Mae’s website is: www.fanniemae.com/loanlookup/.

Freddie Mac’s is: www.freddiemac.com/avoidforeclosure/ – under “Tools and Resources,” click on “Loan Lookup.”

Knowing the current owner of your mortgage note is necessary for filing bankruptcy. The federal bankruptcy law places the burden on the debtor to make reasonable efforts to obtain accurate information. Providing inaccurate information could cause delays in your case and you may miss out on needed financial relief. If you have questions concerning your mortgage debt, speak with an experienced bankruptcy attorney.

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Transportation During Chapter 7 Bankruptcy

Tuesday, February 21st, 2012

For most people having reliable transportation is a necessity. A vehicle is required to get to work, school, or to an appointment at the doctor. Most of us can’t imagine doing without a personal vehicle. Filing bankruptcy doesn’t mean you have to give up having a car, truck, or motorcycle.

The first question is whether you have equity in the vehicle you own. Equity is simply the difference between the amount you owe and what your vehicle is worth. If you owe more than your vehicle is worth, you have “negative equity,” which is really no equity at all. The bankruptcy laws allow you to keep a reasonable amount of vehicle equity. If this amount is not enough to fully protect the vehicle, you may use other legal exemptions to protect your vehicle equity. Finally, if you have more vehicle equity than you can legally protect, you can purchase the equity from the Chapter 7 trustee.

The second consideration is your lender. There are three options for dealing with vehicle loans in Chapter 7 bankruptcy: reaffirmation, redemption, and surrender (a controversial “fourth option” is available in some states and circumstances. Speak with your attorney to see if your situation qualifies).

If you wish to continue the monthly payment, you can execute a reaffirmation agreement. This is a contract that states that the debt you owe the lender will survive the bankruptcy and the lender agrees to not repossess the vehicle. In some cases you can use a reaffirmation agreement to rewrite the original agreement. This can be useful if you have missed a few payments or need to reduce your interest rate.

If your vehicle is substantially “upside down,” you may want to consider a redemption. In a redemption, the debtor pays the lender the fair market value of the vehicle. The payment is made in a lump sum which usually requires another loan at a high interest rate. However, for a car that is worth thousands less than what is owed, the new monthly payment could be hundreds less – even with the high interest rate.

The final option is surrender. Sometimes just walking away from a lemon or a bad deal is the best choice. In a Chapter 7 bankruptcy, you simply turn over the car to the lender and owe nothing. There is no prohibition against buying a different vehicle during or after your bankruptcy case. If you need to purchase a different vehicle, speak with your bankruptcy attorney.

The United States bankruptcy laws contain powerful provisions for protecting property and reducing debt. There are many options available in Chapter 7 or Chapter 13 cases. Consult with an experienced bankruptcy attorney and explore your options under the federal law.

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Education Issues During Bankruptcy

Monday, February 20th, 2012

Filing bankruptcy impacts every aspect of your finances. If you need to fund your child’s education, it is important to discuss the details with your bankruptcy attorney. Three common educational financing concerns during bankruptcy are: funding a 529 educational savings account, paying for private school tuition, and college loans.

Section 529 of the Internal Revenue Code makes special tax allowances for contributions to protected education accounts. These accounts are also protected from creditors (and from the trustee) during bankruptcy, but special rules apply. For instance, the beneficiary of the account must be your child, stepchild, grandchild, or step-grandchild. You cannot set up a 529 fund for yourself, then file bankruptcy and protect the money.

The timing of deposits into a 529 Plan will determine whether the money is protected. Deposits made within 365 prior to your bankruptcy filing are not protected at all. Deposits made between 365 days and 720 days prior to your bankruptcy filing are exempt up to $5,850 per beneficiary. Any deposit made over 720 days before filing bankruptcy is entirely exempt.

Private school tuition for elementary and secondary schools may or may not be allowed during a Chapter 13 bankruptcy. Congress allows an educational expense of $147.92 per month per child under the bankruptcy means test. Whether you will be allowed to pay more than that is decided on a case-by-case basis. Chapter 7 bankruptcy debtors are not prevented from paying private school tuition.

College loans may also be impacted by bankruptcy. Your bankruptcy does not affect your child’s ability to obtain need-based financial aid such as Pell Grants and Stafford Loans. However, you are disqualified from credit based financial aid like the PLUS (Parental Loan for Undergraduate Students) Loan and the Graduate PLUS Loan if you have declared bankruptcy within the past five years, unless there were extenuating circumstances or you can obtain a creditworthy cosigner.

Fortunately, your child qualifies for increased unsubsidized Stafford loan limits if you are denied a PLUS Loan. Stafford loans are advantageous because the loan remains in forbearance while the student attends school, while a PLUS Loan is subject to immediate repayment.

Bankruptcy can impact funding your child’s education. Each case is different and a qualified legal opinion is required to guide you to the most beneficial outcome. Consult with an experienced bankruptcy attorney and discuss your unique situation. Your attorney can explain your legal options.

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3 Big Reasons to Obtain a Credit Report before Filing Las Vegas Bankruptcy

Monday, February 20th, 2012

One step Las Vegas bankruptcy attorneys counsel their clients to take before filing bankruptcy is to obtain their credit reports. Each of the three credit reporting agencies (Equifax, Experian, TansUnion) is required to send you a free credit report once every twelve months due to a provision in the federal Fair Credit Reporting Act. The agencies allow this through a Web site, AnnualCreditReport.com, and you can order from only one or all three at the same time. The information they contain will be the same, so no one agency is better than another. Any other site may ask you to register and later pay, which got “FreeCreditReport.com” in trouble a few years ago. Essentially, if the site asks for a credit card number, it’s not going to be free, or it will charge you a membership fee after a month or 30 days.

A credit report tells you several things, each of which is important to know before contemplating bankruptcy:

(1)  Who your creditors are. This is immensely important, particularly because you need to know the identities and addresses of your creditors so you can list them on your bankruptcy petition. These addresses will also be definitive, unlike the ones that are listed on their Web sites or correspondence. If you omit any, they’re not discharged. Also, even if you go through a Chapter 7 Las Vegas bankruptcy and obtain a discharge, you won’t necessarily know the identities of the creditors it applies to.

(2)  How much you owe your creditors. For strategic purposes, this will help you decide if you want to try to negotiate your debts with your creditors or file bankruptcy. There is no minimum debt amount required to file, but the more debt you have, the more worthwhile it will be to do so. Importantly, just because it’s on your credit report doesn’t mean it’s 100 percent precise, but it should be precise.

(3)  How many payments you’ve missed to creditors. This section will also tell you if any of your debts are in the process of collection, as well as the identity of the debt collection agency. You can use this to inform the collector about your bankruptcy or just to calculate your arrearages.

Tracking how much you owe is by every measure a wise move. If you lose track, say in a move, after an illness has passed, or even after you’ve finally gotten back on your feet financially and want to tackle your debt, starting out by getting your credit report is the right move. Bringing it to your bankruptcy attorney will also make your initial consultation productive.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 to set up your free consultation.

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