Summertime and Debt Problems

Memorial Day has passed, and summer is officially here. As a Pittsburgh bankruptcy attorney, I have always found there is a noticeable dip in people calling to consult about filing bankruptcy in the height of summer (and Christmas, as well). It makes sense in a lot of ways. It's a time to enjoy the outdoors (those days are certainly limited in Pittsburgh and Western Pennsylvania!) and it is the time most families use to take a vacation. It's not a natural time to think about debt.

However, there are several circumstances when you should probably put off thoughts of BBQs and the beach, even just for a couple hours to consider your options in a free consultation.

1. Creditor lawsuit- if a creditor has sued you, you might be facing a default judgment and resulting lien on your property. This includes liens on bank accounts, which could lead to direct deposit paychecks being lost to your creditor. Chapter 7 and Chapter 13 bankruptcy can wipe out these lawsuits and liens. Filing a bankruptcy is something you should consider immediately if you are facing a lawsuit. My office can inform you if any lawsuits are pending.
2. Increase in income- if your income is due to increase in the near future, you may want to consult a Pittsburgh bankruptcy attorney immediately. The increase in income could push you from a Chapter 7 to Chapter 13 bankruptcy, which means you will need to repay some or all of your creditors. It could also increase the amount of money that must be repaid in a Chapter 13 bankruptcy. Commissions and bonuses also count as "income" for bankruptcy purposes, so if you get these annually in summer, now is the time to act in filing bankruptcy. Timing is always important in bankruptcy, and it shouldn't be dictated by the weather.
3. Filing a bankruptcy takes time- Setting up a payment plan, collecting all the documents needed to file, and completing the required courses takes some time and effort. It's normally a process that takes weeks, even months in complicated cases. The sooner you start, the sooner you can be finished, and the process won't bleed into important things (like Steelers season)
4. Stop harassing calls and letters- nothing can dampen a nice summer faster than a string of harassing phone calls and letters from a creditor. Chapter 7 and Chapter 13 bankruptcy can stop this contact through the "automatic stay", which occurs immediately upon filing. Once a bankruptcy is filed, your creditors are forbidden by the bankruptcy automatic stay from contacting you in any way. Enjoy your summer in peace and quiet.
5. The pluses of bankruptcy outweigh the negatives- While summer may not seem like the ideal time to file bankruptcy, it really not that hard to do. It's a lot easier to enjoy your summer when your mind is free and clear from concerns about debt. If you can do something affordable, that doesn't take too much effort on your part, and it removes perhaps your greatest, most pressing concern... why wait until Fall?

I am an experienced Pittsburgh bankruptcy attorney who can help you consider all your options, bankruptcy or otherwise. Summer is actually a great time to give yourself a new financial start. Contact us today to set up a free consultation.

How Long Do I Need to Wait to File Another Chapter 7 Bankruptcy?

An occasional issue for someone looking to obtain debt relief through bankruptcy is a previous bankruptcy filing. Debtors are not limited to filing one bankruptcy in their lifetime, but there is a mandatory waiting period between Chapter 7 bankruptcy filings.

Section 727(a)(8) of the United States Bankruptcy Code prohibits a discharge in a bankruptcy case if, "the debtor has been granted a discharge under this section... in a case commenced within 8 years before the date of the filing of the petition."

To make a couple points clear... first, the "discharge" is an extremely important part of any bankruptcy case. The discharge is what actually dismisses your debt. Without a discharge, a debt can still be collected on, and you can still be sued by a creditor. Sometimes, it is known going into a bankruptcy that a certain debt will not be discharged, for instance a student loan obligation or some tax debts. However, a bankruptcy in which ZERO debts are discharged is pretty much worthless. A Chapter 7 bankruptcy that does not discharge your credit card debt, personal loans, or medical bills serves no purpose.

So, since section 727(a)(8) prohibits a bankruptcy discharge for cases filed within 8 years, there is no reason to actually file such a Chapter 7 bankruptcy. You could technically file the second Chapter 7, but there would be no resulting discharge.

A second major point to make clear is how the 8 year period is calculated.  727(a)(8) speaks of a previous case "commenced" within 8 years. "Commenced" is just another way of saying "started", and a case is started when the petition is filed. So, to get a discharge in a Chapter 7 (the whole point of a bankruptcy!) you must wait 8 years and a day from the date you filed your previous Chapter 7. It doesn't matter when it was discharged, only filed. If you are seeking bankruptcy relief, and have previously filed a Chapter 7, make sure you inform your attorney of the previous filing date.

If you need to file bankruptcy, but it is less than 8 years since your previous Chapter 7, you may need to consider a Chapter 13 bankruptcy, or take other actions to stabilize your finances. Your situation isn't hopeless, and often times a plan can be formulated to hold off your creditors.  Contact us to examine your options.

What to Bring to Your Bankruptcy Meeting of Creditors

The bankruptcy Meeting of Creditors, for both Chapter 7 bankruptcy and Chapter 13 bankruptcy, is largely a formality. The hard work in preparing and filing a bankruptcy petition is mostly complete. However, this does not mean you should show up unprepared. If certain information is not brought to the meeting, your case could be delayed, and even dismissed (in rare cases!)

The two most important things you need to bring in EVERY bankruptcy case is a valid, government-issued photo ID (normally, this will be your drivers license) and your Social Security card. You must bring BOTH. Otherwise, the Trustee will refuse to conduct your Meeting of Creditors, which will need to be rescheduled. This information is used by the Trustee to verify your identity.

If you cannot find your Social Security card (I know mine has been lost for periods of time!) you will need to bring an original document showing your complete Social Security number, with none of the numbers obscured or redacted. An original Social Security payment statement (with all of your Social Security numbers visible) will also be accepted if you are retired.

If you absolutely cannot find your Social Security card, and you do not have a pay stub or any other original proof, you will need to visit the Social Security office downtown and order a new card. They will give you a receipt with you Social Security number on it... this will be sufficient for the Meeting of Creditors.

A valid government-issued photo ID is also necessary. For most people, this will be their drivers license. A military ID card would also suffice. Something like a Costco card will NOT (remember, it needs to be government-issued). Non-drivers can still be issued a state ID card (they look just like normal drivers licenses), and this may be necessary if you have no other government-issued IDs.

A brief list of things that would be helpful to bring, but are not mandatory, include:

• your most recent pay stubs
• proof of payment to the Trustee (Chapter 13 bankruptcy cases only)
• any documents or paperwork your attorney requested you to forward before the Meeting
• your completed Certificate of Financial Management

Prepare to be at least a half-hour early so your attorney can review your petition with you one last time, and review the questions normally asked at the Meeting. If you bring your government-issued photo ID, your Social Security card, and the above-listed material, your bankruptcy Meeting of Creditors will likely be a breeze!

Credit Card Lawsuits, Part II: What Constitutes a "Response"

In a previous post, I discussed how long you have to respond to a credit card lawsuit (quick review... 20 days to respond, with 10 additional days normally given by the Court). That leads to the next question: What actually constitutes a response?

A response means formally answering the charges filed in the initial complaint by the "Plaintiff" (the credit card or collection company). This requires you to file an answer in the court where the complaint was filed. Your answer could be quite simple, but if it has any hope of succeeding, it should follow a form acceptable to the court, it should include any filing fees, and it should exert some type of defense.

The most common defenses used in credit card lawsuits are statue of limitations defenses or challenging the sufficiency of the credit card company's complaint. You should consult an attorney for legal advice regarding the raising of defenses, and also to make sure your answer is filed properly.

Regardless of your defense chosen, any response to a credit card lawsuit will need to be filed formally. This means you can not simply call the court or write a letter denying the charges. You certainly should not try to contact the judge directly. Also, contacting the law firm suing you will not be considered a proper "response", even if you speak with an attorney and begin negotiating a settlement agreement. Only a formal answer filed in the appropriate court will constitute a "response".

If you think you are not liable for the debt you are being sued on, or if you have not used the credit or made a payment in over 4 years... contact us! It might be worth filing a formal response. Occasionally, credit card lawsuits are filed too late, or without all the required documentation. Credit card companies will file the lawsuit hoping you don't know your rights!

Otherwise, there may be a better solution to dealing with the lawsuit, such as a bankruptcy or a settlement agreement. I can help with both, and I'll discuss both options in a later post.

The next posts on the subject of credit card lawsuits will deal with the hearing date and what happens when you DON'T formally respond.

Updated Median Income Limits

On April 1st, 2015, the standards for median income for all Pennsylvania bankruptcy filings was updated (as it is annually on April 1st of every year).

The median income amount for relevant household size is used in all bankruptcy filings on Form 22A-1. If the household income for all types of income earned over the past 6 months is above the median income limit, debtors (of more precisely, their lawyers) must complete Form 22A-2. Form 22A-2 is the corresponding deductions form, which may allow you to file a Chapter 7 bankruptcy even if your household income is over the median limit by deducting allowable expenses.

A debtors Median Income is an important first threshold in determining if a Chapter 7 bankruptcy can be filed, or if a Chapter 13 bankruptcy is instead required. Most types of income must be included in Form 22A-1, including commissions, bonuses (even one-time bonuses), unemployment, alimony, rental income, part-time work, or even lottery winnings. Inform your bankruptcy attorney of any source of income you receive so the calculation can be completed correctly. A safe rule of thumb: if received any money in the last 6 months that wasn't in a birthday card, you should report it to your attorney.

The new Median Income limits for Pennsylvania as of April 1st, 2015 are as follows (the highlighted amount is the amount that can be earned by a household in the 6 months preceding the date the bankruptcy is filed):

• Household of 1: $24,491.00
• Household of 2: $28,935.00
• Household of 3: $36,433.00
• Household of 4: $42,833.00
• Household of 5: $46,933.00
• Household of 6: $50,983.00

(Add $4,050.00 for each additional household member)

When meeting with your attorney to determine your median income, it is advisable to bring paystubs, bank statements, or any other documentary proof of income for the past 6 months. If this is not available, bring as much information as you can to calculate a best guess. Determining your median income for the last 6 months is one of the most important steps in filing a Chapter 7 or Chapter 13 bankruptcy.

Contact us to set up a free consultation with a Pittsburgh bankruptcy lawyer. I can calculate your means test income and let you know if you qualify for either type of consumer bankruptcy.