Posts Tagged ‘Storm Preparation’

Storm Preparation: Only So Much

Over the last several months, I’ve blogged about issues people should consider if they think bankruptcy is on the horizon. I called it “Storm Preparation” because I have sensed for some time now that financially, things were going to get worse, and I wanted readers to think about issues ahead of time to avoid problems down the road. Just like a hurricane, it’s best to prepare for any storm. And typically, you don’t start boarding up the windows when it starts raining.

The past few days have confirmed that financial thunder clouds are within ear-shot distance. There’s Lehman Brothers, Merril Lynch and now AIG. Will there be more failures and bailouts? I’m willing to bet yes. Will this storm end any time soon? I honestly do not think so. How will any of this affect your job and your family? I have no idea. It may take some time for the ripples emanating from Wall Street to touch the farthest corners of the land. But with all of that said, we can only prepare so much.

I will not completely stop blogging Storm Preparation, but it will no longer be weekly. When issues pop up that I think readers need to know about, you will read about them here. You can find past Storm Preparation articles in the archives under Category.

But for now, keep reading and batten down the hatches. Storm’s a’comin.

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Storm Preparation: Plan B

Recently, I have foun that it is more chapter 13 clientsl contact mes within just a few weeks of a foreclosure auction. Sometimes, it’s just a few days. And even sometimes it is the next (or even the same) day. Never before have I spoken to them. Never before have they contemplated bankruptcy. And never before had they thought they would have to.

I can understand all of that. No one wants to think of bankruptcy. When you open up a high school yearbook and it says “Future Ambition” or “Future Plans” you’re never going to read: “I am going to buy a house, have kids and file bankruptcy.” Years ago, I was active in a local chamber of commerce and a fellow business owner suggested that I not tell people that I was a bankruptcy lawyer since it seemed to “make people cringe.” (Frankly, I feel the same way about dentists, but I would not tell a dentist that.) I didn’t follow their suggestion.

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Storm Preparation: Letting Go and Moving On

I write the Storm Preparation series for those folks out there who are considering bankruptcy but just aren’t there yet. I know they are out there because they tell me – usually weeks and months after following this blog (and doing their own research and homework) and getting the courage (or in some cases a summons to appear which prompts them) to call. This week’s blog is for those out there who are considering chapter 13 in order to save their home. And it’s specifically for some of the people out there who are struggling with the very real and undeniably painful prospect of losing their home. So when I say “you”, that’s who I am speaking to.

For the last several years, our financial system has been propped up with (to steal a quote from Elizabeth Warren) ‘chewing gum and bailing wire.’ Our economy grew because homes became ATMs (we also had a war…or two…but that discussion is for another day…and maybe another blog). Some people used their ATMs to acquire luxuries. But not everyone used their home equity to buy those high end items. Others used it for necessities. Others like you.

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Storm Preparation: Over Withholding

Many people over withhold taxes on their paychecks. In other words, they have more taken out so that come April 15, they will expect a nice refund rather than having to pay more to Uncle Sam. But over withholding can make preparing for a bankruptcy filing a little difficult. First, over withholding is not a good idea to begin with. And secondly, the money you’re withholding (and will ultimately get back) must be considered as part of your monthly income.

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Storm Preparation: Chapter 13 and DSOs

When BAPCPA was enacted, a new concept in bankruptcy law emerged: “domestic support obligations” or “DSOs”. Child support, alimony and other support obligations received specific consideration in bankruptcy, and in particular, chapter 13. If you are looking at the potential of a bankruptcy filing, there’s something you need to know about how domestic support obligations and chapter 13 work together.

When I meet people who are considering chapter 13, it’s not surprising that they have a lot of debt. And at times, that debt might also include child support or other spousal support payments that have not been made or are delinquent. There are many reasons why: income changed, expenses changed and those obligations fell behind. But without a court order, none of these circumstances relieve a debtor’s liability.

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Storm Preparation: Some Thoughts on What We Can Do

I didn’t sleep well last night. I tuned into the 11 o’clock news and learned about a Taunton homeowner in foreclosure who committed suicide on the day her home was scheduled to be auctioned. Since Wednesday is Storm Preparation day, the news story prompted me to get down to the nitty-gritty of things: reaching out.

I believe that one of the reasons why this situation with the Taunton homeowner strikes me so hard is because in the last several months, I have met several people who have waited a long time to reach out for help. For some, they waited too long and I have been able to help them. For others, I have been able to point them in what I hope was the right direction. And for a few, I have learned that there is nothing I can possibly do.

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Storm Preparation

As I write this, there is loud thunder clapping outside. I did not bring an umbrella to work. Obviously, I am not prepared today.

And unfortunately, I’m too busy to put together a respectable Storm Preparation blog today. So I’m going to take a short break from that for both this week and next. I’ll still have case updates and news.

Enjoy your holiday!

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Storm Preparation: Bankruptcy & Tax Returns II

When I was in college, Hurricane Gloria was bearing down on Southern New England. I went to stay with my grandparent at their house in Tiverton. As the winds were blowing (and at the insistence of my grandmother), we nailed plywood to the windows that faced the water. All that preparation eventually paid off. Back in April, I blogged about the importance of having tax returns filed. I came across a case decided on May 15 out of the US Bankruptcy Court for the Northern District of Ohio that amplifies the requirement that taxed be filed in chapter 13 cases before the first meeting of creditors has concluded. It is an important reminder of how the Bankruptcy Code is now working since BAPCPA.

The debtor filed a chapter 13 petition in October 2007 and the creditors meeting (or § 341 meeting) was scheduled for December 12, 2007. At that meeting, the IRS appeared and reported that there was no record that the Debtor having filed a 2000 or 2004 tax return. There was a separate confirmation hearing, and the Chapter 13 trustee recommended that the plan be confirmed. No one objected and the plan was confirmed. After that, the IRS moved to dismiss the case pursuant to § 1308 based on the debtors failure to file tax returns for the 4-year period preceding the petition date.

Debtor objected and claimed, among other things, that he did file the return. He argued that he paid a service to file the returns and was unaware they were not filed until he appeared at the § 341 meeting. Even though he learned of it, neither he, nor his attorney asked that the meeting be held open.

The case was dismissed. In re Perry, Bankr.N.D.Ohio, 07-18293

So how could this have been avoided? The first and most simple answer is that the debtors attorney should have required the debtor to produce 4 years of tax returns before the case was even filed. I require it of my clients. Why? To ensure that they have complied with § 1308 of the Bankruptcy Code and to make sure that their cases do not get dismissed for failing to comply with it. The second, and perhaps not so simple but nevertheless important way the dismissal could have been avoided (or at least delayed) is by either the debtor or debtor’s counsel requesting that the § 341 meeting be held open. Under § 1308, the Chapter 13 Trustee may hold a § 341 meeting open for “120 days after the date of that meeting” “for any return that is past due as of the date of the filing of the petition.” In other words, debtor’s counsel should have asked to have the meeting held open.

If you’re thinking about chapter 13, get those tax returns filed. And that means all of them. If you fail to do so, or if your attorney fails to ensure that the § 341 meeting is helped open, speak up and ask that it be held open. Failing that, your chapter 13 case will be dismissed.

During that hurricane, I stood with my grandfather on his lawn and watched debris fly hundreds of feet above us. As a retired merchant marine, he had a fearless view of ocean weather that many found disconcerting. Nothing ever hit the plywood, but my grandmother was happy the windows were protected. It was better to prepare before the storm, and than to pay later.

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Storm Preparation: Acceptance

The fifth – and last stage of the Kubler-Ross grief process is acceptance. In researching and preparing for this blog, I had one nagging question in my head: how the heck do we get there? How does someone get to a point where they accept that they must seek the protection of a US Bankruptcy Court from their creditors? The answer is simply not easy and the only way I think I could describe it to you is to share my own journey through grief…and how I got to acceptance.

The “event” in my life will be undefined. There are those who may know me – or know of me – and will know or assume they know what I am discussing. What my “event” was is not important for the purposes of discussing acceptance as the last stage in the grief process. Besides, there are so many events in our lives – and certainly in mine – that have lead me through the five stages that have been the topic of Storm Preparation over the last few weeks. With that said, think what you will about how and why I found myself in a difficult period in my life.

When I was going through a particularly difficult time in my life, I was talking to a (very former) friend about my difficulties. He simply told me “it is what it is.” At the time I heard those words, it was so very unhelpful. I may have even told him that.

In retrospect, now that that period in my life is far in the past, I can examine it and say “it was what it was.” It wasn’t fun. It wasn’t easy. But had I not experienced it, along with all of the blessings, the pains and the costs that went with it, I am not so sure you’d be reading this very blog because I’m not so sure I’d be writing it today. It was not a life-ending event, but it was life altering. The event, or the “happening” did not define me, but it sure did put me on the path I find myself on today. And for me, it’s not a path I have any regrets of being on.

I wish I could say with any real clarity that I knew how I got to this place. I went from “what the hell was I thinking?” to “I wish I had been thinking at the time.” I went from “why didn’t I know better?” to “wow, I was blind.” I went from “how did I let things get so out of control and ridiculous?” to “I will never let something like this happen again.” Time has marched on. It was what it was.

That’s really all I can say about acceptance as it relates to facing bankruptcy. I almost feel like I did not say anything. But then again (after proofing it for the upteenth time), perhaps I did. I am not sure any of my clients actually reach acceptance while I am still actively involved in their bankruptcy case. But I think they do. I hope they do.

Perhaps a way of looking at acceptance – or perhaps even getting there – is to look towards the future. It’s possible, if not very probable, that you will move well beyond the financial problems that have led you to this blog. No, it might not be on the same road you first contemplated or perhaps hoped for. You never know: you might find yourself on a better road, with friendlier neighbors and a brighter future. I know I did, and it’s because of that that now I can share my “acceptance” with you.

Storm Preparation is a weekly series appearing on Wednesdays and offers tips and information to people who think they may need bankruptcy protection in the future. Questions, comments or suggestions can be addressed to info@mcleodlawoffices.com.

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Storm Preparation: Depression

Our journey through the Kubler-Ross model takes us to stage four: depression. If I wrote that people who are overwhelmed by debt may be depressed, and implied that this might be some new-found discovery, some might congratulate me on my mastery of the obvious. Unfortunately, depression and debt is not something that I think can be easily explained. I think the only thing I can do is point it out.

Let me start by stating that I believe that it’s a tad too arrogant for anyone to suggest that people who are prone to depression are also prone to debt problems. It’s a broad sweeping generalization that ignores the specific issues of every day life that everyone faces. And it’s even more arrogant to suggest that people overwhelmed with debt are getting what they deserve. By seeking a discharge of their debts, honest debtors who have fallen into unfortunate circumstances are not among them.

The fact is, people get into debt problems because of things they should have controlled better. Perhaps it was a refinance that seemed like a good idea at the time. Perhaps they did everything conceivable to avoid financial collapse, yet by doing so, only made it inevitable.

Folks also get into financial trouble because of things they could not control at all. Perhaps it is a tenant on the second floor who is not longer paying rent – or condo fees. Perhaps a spouse has left the home, or has died. Perhaps they went to the doctor to get a mole on their back removed, only to discover that it metastasized to the spine. At the risk of sounding indelicate, crude and unprofessional sometimes (and this is something I remind my clients of often), shit happens.

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