Archive for the ‘bankruptcy and inheritance’ Category

The Costs of Representing Yourself in a Las Vegas Bankruptcy Case

Thursday, March 31st, 2011

Remember that time is money.

-       Benjamin Franklin (1748)

Several years ago Ian Walker, a professor of economics at Warwick University in England, developed a mathematical formula to show the personal cost of an activity like mowing your lawn or washing your car. The formula looks like this:

V=(W((100-t)/100))/C

V is the value per hour;

W is your hourly wage;

t is your tax rate (e.g. 15%, 20%, etc.)

C is the local cost of living, which is a baseline of 1.0. If you live in an area that is 50% more expensive than the national average, use 1.5

For a person making $20.00 per hour, and a tax rate of 25%, the value per hour is $15.00, or $.25 per minute. Spending an hour mowing your lawn is therefore a value over paying the neighbor boy $30. So let’s look at whether representing yourself in a bankruptcy case is a “value.”

A represented debtor in a Chapter 7 bankruptcy must at minimum collect financial information; spend time with counsel during the initial interview and petition signing; complete credit counseling; attend the 341 meeting; and complete a course in financial management. A pro se (Latin meaning “for himself”) bankruptcy debtor must spend time on these things as well. However, the pro se debtor has a lot to learn including applicable exemption laws, and the bankruptcy rules and procedures. Setting that “learning time” aside for the moment, let’s look at some actual administrative costs the pro se debtor must perform “for himself:”

Time spent preparing the petition. Even the simplest petition will take the pro se debtor time to read the instructions and properly prepare the schedules. Your bankruptcy attorney uses sophisticated petition preparation software and is skilled at completing these forms. 6 hours.

Most pro se debtors drive to the bankruptcy court to personally file the bankruptcy case, and must pay the filing fee with cash, a cashier’s check, or money order. Your bankruptcy attorney has access to the court’s electronic filing system and can file your case within minutes from the office.  Time 2 hours.

Extra time at the 341 meeting. The trustee will schedule extra time to spend on your case. Usually, pro se cases are set at the end of the trustee’s docket, so you will have to wait extra time for your examination. 30 minutes.

Communications with the trustee.  The trustee generally requires income information, bank records, tax records, vehicle titles, recorded deeds, and other information. The bankruptcy attorney will provide these documents to the trustee while a pro se debtor must prepare and send them. 2 hours.

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Bankruptcy and Inheritance in Las Vegas

Wednesday, June 30th, 2010

When a bankruptcy debtor inherits money from someone who dies within 180 days of the date the debtor filed bankruptcy that money becomes part of the debtor’s bankruptcy estate. The inherited money that becomes part of the bankruptcy estate is used to pay your creditors. This is true even if you have received a discharge and your Chapter 7 bankruptcy case has closed.

For instance, if you file a Chapter 7 bankruptcy on April 1, and your great aunt dies on September 28 (within 180 days of the bankruptcy filing date), any money you receive from your great aunt’s estate must be turned over to the bankruptcy trustee. It does not matter when you receive the money or when your case was discharged. You might receive the inheritance years later, and it must be turned over to the bankruptcy trustee for payment to creditors. You may be charged with bankruptcy fraud (a federal crime) if you fail to inform the trustee of your inheritance or turn over the money.

If the trustee receives inherited money, your case will be reopened and a bankruptcy estate is formed. Notices to creditors are sent and the trustee will distribute the funds to creditors. In some cases you will be able to keep some of the money, and in other cases some of the funds may be returned.

Inherited property is treated the same as cash. If you receive a car or a family heirloom, the property must be turned over to the trustee. In some cases you may be able to exempt inherited property or the trustee may consider the value of the inheritance too small or burdensome to liquidate and distribute.

If you are considering bankruptcy and are aware of a significant chance of someone leaving you inheritance money, speak with your attorney. There are options to avoid turnover including rewriting the will to cut you out, or setting up a spendthrift trust. A spendthrift trust cannot be reached by creditors. Consult with an attorney to properly create a spendthrift trust or rewrite a will. There is nothing illegal or immoral about estate planning and your loved one may prefer leaving money to you rather than your creditors.  Contact Haines and Krieger today for a free consultation.

For a free consultation or if you need any assistance from Las Vegas Bankruptcy Attorneys, or have questions about Las Vegas Chapter 7 Bankruptcy, or Las Vegas Chapter 13 Bankruptcy, or Las Vegas Debt Settlement, please call the offices of Haines and Krieger at 702-880-5554 today.

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Las Vegas Bankruptcy and Inheritance

Tuesday, July 14th, 2009

We’ve spoken about marriage and bankruptcy.

Now it’s time to speak about death and bankruptcy.  Not your own death, but the death of a loved one, which leaves you with an inheritance.

We always ask our clients contemplating bankruptcy whether they foresee a loved one dying in the near future.  We don’t mean to sound morbid, but we want to protect our clients and we need this information.

Why?

Because if you receive an inheritance within 180 days of your bankruptcy filing, that inheritance will become property of your bankruptcy estate.  You’ll have to notify the bankruptcy court and the bankruptcy trustee that you’ve received an inheritance, and you’ll have to amend the paperwork you filed with the court to disclose the inheritance.  Worse, the majority of that inheritance money will be used to pay your creditors.

In reality, you may not receive anything from your inheritance for months.  Maybe even years.  But that doesn’t matter.  The key date is when your loved one passed away.  What will likely happen is that the bankruptcy trustee will contact the other beneficiaries of your loved one’s will to request that they buy out your interest in the inheritance.  The amount they buy your interest for will be used to pay your creditors.

If your loved one passed away after the 180-day period, you’ll be able to keep your inheritance in a Chapter 7 case.  But this may not be the case in a Chapter 13 bankruptcy.  The bankruptcy trustee may use your inheritance to demonstrate that you should make more payments to your creditors.

Why specifically 180 days?  Congress wanted to discourage people who knew they were about to receive inheritances from filing for bankruptcy in order to make sure their creditors couldn’t touch the inheritance.  But Congress reasoned that no one could really know if a loved one was going to die beyond six months.

There are ways to protect your inheritance.  Have a frank discussion with your loved ones, and suggest that they create a “spendthrift trust” for you, instead of leaving you property in a will.  This trust will give you use of the property, but the property will be beyond the reach of your creditors.

Don’t be scared to have this discussion.  Remember, your loved one intends to leave money or property for you.  They wouldn’t want to see your inheritance being used to pay your creditors any more than you do.

For a free consultation or if you need any assistance from Las Vegas Bankruptcy Attorneys, or have questions about Las Vegas Chapter 7 Bankruptcy, or Las Vegas Chapter 13 Bankruptcy, or Las Vegas Debt Settlement, please call the offices of Haines and Krieger at 702-880-5554 today.

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