Friday, May 17, 2019

Chapter 13 Scam

Lately, I have had several clients come to me, who have been told by other bankruptcy lawyers, that they must file a Chapter 13. After a few questions, I determined they could have achieved their goals with a Chapter 7. I think this is often a scam and I know which particular lawyers in town are doing it.

A Chapter 13 is far more difficult and expensive for the client than a Chapter 7. It takes 5 years and involves a very intrusive process over that time, while the expenses can be very high. Meanwhile, a Chapter 7 is normally a flat fee and only takes a few months (most of the time).

A Chapter 13 results in much higher fees for the lawyer and this is the only reason these lawyers are pushing their clients into Chapter 13, when Chapter 7 is available. My fee for Chapter 7 fee is normally $890.00. Chapter 13 costs range from $3,500 - $5,000, or more.

We Can Convert Wrongly Filed Chapter 13 to Chapter 7 

You are entitled to convert your Chapter 13 to a Chapter 7. Our firm has converted several Chapter 13 cases to Chapter 7. We are glad to do so for you. Certain ethics rules apply in seeking new counsel and we'll immediately educate you about that when you call.

(614) 284-4394

Tuesday, May 14, 2019

Wage Garnishment Blues

Wage Garnishment Blues

When you owe a creditor money, they may go to county courts and sue you for that money. If you don't pay, then they can garnish your wages. It is pretty simple for them--its just a form they fill out at the Court essentially.

From your standpoint, you can contest the original lawsuit. If you lose, you must pay. Most people do not contest the lawsuit. In fact, most people look the other way until the wage garnishment hits. That is what really gets their attention.

Bankruptcy can stop the wage garnishment in its tracks. Its really that simple. However, the realities of enforcing the bankruptcy at the county court take an experienced attorney. You will have to file documents with the Court, explain things to the clerks, and your own human resources department.

That is what we offer. If you have a wage garnishment issue, we can help. Call now: (614) 284-4394

Saturday, May 4, 2019

Fear of Bankruptcy

Many people are afraid of bankruptcy. Many of my clients are afraid of losing their cars, houses, or other assets. Some are afraid of damage to their credit reports. Below I'll discuss those two issues in brief. You will need to consult with us for a full explanation of how the law applies to your individual situation.

Fear of Lost Assets (car, house, etc.) 
Chapter 13 bankruptcy does not have this issue. However, it is true, that in a chapter 7 bankruptcy, the law puts you through a "liquidation" of assets. That basically means the selling of assets and using the funds to pay creditors. However, Ohio law provides a robust series of "exemptions." Those exemptions prevent property from being liquidated in a chapter 7 bankruptcy. I know how to apply those exemptions. I know what the trustees who examine those exemptions are looking for. I have personally never represented a client who lost their car in a chapter 7 bankruptcy that I filed for them.

Generally speaking, I cannot make a promise to you on this, but you should not avoid a bankruptcy consultation with my firm for fear of losing your car. If it is a possibility, we'll be sure to explain that to you in detail before you file your bankruptcy case.

Fear of Credit Report Damage 
The credit report is a complex subject. There are great explanations out there on how it works and what effects it in several books. This is not a full-throated explanation of the credit reporting system. Just a brief description of how bankruptcy will effect it.

This is somewhat of an oversimplification, but for the purpose of this discussion, there are three main ways to get a good credit score: 1) pay your bills on time, 2) have a good debt-to-income ratio, and 3) own real estate.

Your credit score will reflect that you filed bankruptcy for around eight years. However, bankruptcy is just one of many factors taken into consideration in your credit score. As long as you are strong in the three factors above, in the long term, your score will be strong.

If your credit score is really good, it is likely a bankruptcy will bring it down for at least a few months. However, if you remain strong in the three categories above, it will come back up.

If your credit score is really bad, it is likely a bankruptcy will have no effect or even improve your score (in the long term). This is because a bankruptcy will wipe out your debts, thereby improving your debt-to-income ratio. If you pay your bills on time and manage your debt wisely, your credit score will improve. Eventually, you'll get to a place where you can purchase some real estate and develop a strong score.

But what if you are somewhere in the middle? The bankruptcy's effect on your score is probably going to be negative in the short term. Where you end up in the long term is the same though: generally speaking, if you pay your bills on time and manage your debt wisely, your credit score will improve.

In my follow-up conversations with clients, I have been told that they begin receiving offers for credit and car loans almost immediately after filing bankruptcy. I have been contacted by multiple car loan companies that seek specifically to work with recent bankruptcy filers.

This is probably because the vast majority of bankruptcy filers are determined to get on the right track after filing. The default rate for bankruptcy filers is relatively low. Plus, creditors know you cannot file again for quite a while.

Conclusion: If you are considering bankruptcy, come have a consultation with us or a reputable credit counseling company like It is likely your fears will be alleviated.

Monday, April 22, 2019

Will I Lose My Car in Bankruptcy?

Will you lose your car in bankruptcy?

It is very rare. When you file a bankruptcy case, the Court will create a "bankruptcy estate." This is a fictional entity, like a corporation. The estate is made up of all assets you own, including your car.

In a chapter 7 bankruptcy, the estate is liquidated -- meaning that your assets are sold and the money is used to pay creditors. This is where people are afraid of losing their car. However, usually there is no need to fear.

Ohio law provides "exemptions" that exempt your property from the liquidation. The exemptions are specific amounts that apply to specific types of property. The Ohio exemption for cars is $3,700.00 and it only is needed to apply to equity. Equity is the difference between how much your car is worth and how much you owe on the car. You do not need an exemption to cover secured debt. So here are some examples:

1. You have a car worth $10,000.00. You owe $12,000.00 on it. There is no need for an exemption, because there is no equity. There will be no liquidation in this case.

2. You have a car worth $10,000.00. You owe $8,000.00 on it. Therefore, there is $2,000.00 in equity in the vehicle. The exemption of $3,700.00 covers the entire $2,000.00 in equity. There will be no liquidation in this case.

3. You have a car worth $10,000.00. You owe $5,000.00 on it. Therefore, you have $5,000.00 in equity in the car. The $3,700.00 car exemption does not cover the equity in the car. However, there is another exemption of $1,290.00, called the "wild card" exemption that you can use to cover the gap. There would only be an amount of $10.00 not covered by secured debt or an exemption. This is too little money for the estate to liquidate. There will be no liquidation in this case, as long as the wild card is not being used for something else.

4. You have a car worth $10,000.00. You own it outright. Therefore, you have $10,000.00 in equity in the car. The $3,700.00 exemption does not cover that much equity, even when the wildcard is added in. It is likely the car would be liquidated. However, I would not recommend giving up here. There are some options, but you will need a seasoned bankruptcy attorney to deal with this kind of issue.

Call us any time with questions!
(614) 284-4394

Wednesday, April 17, 2019

Fraudulent Debt & Bankruptcy

If somebody who owes you money files bankruptcy, you may be able fight the discharge of your debt if it was acquired through fraud. Debt that is acquired through fraud is not dischargeable in bankruptcy.

Under 11 U.S.C. § 523(a)(2)(A). Section 523(a)(2)(A) excepts from discharge any debt:
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition. 11 U.S.C. § 523(a)(2)(A). 

Under section 523(a)(2)(A), the creditor bears the burden of proving by a preponderance of the evidence, that: 1) the debtor obtained money through a material misrepresentation that, at the time,
the debtor knew was false or made with gross recklessness as to its truth; 2) the debtor intended to deceive the creditor; 3) the creditor justifiably relied on the false representation; and 4) its reliance was the proximate cause of the loss. In re Bradley, 507 B.R. 192, 205 (B.A.P. 6th Cir. 2014) (citing Old Republic Title Co. of Tenn. v. Looney (In re Looney), 453 B.R. 252, 259 (6th Cir. BAP 2011); and Rembert v. AT&T Universal Card Servs., Inc. (In re Rembert), 141 F.3d 277, 280–81 (6th Cir.1998)). 

To prove fraud under Ohio common law, a plaintiff must prove the following elements: (a) a representation or, where there is a duty to disclose, concealment of a fact; (b) which is material to the transaction at hand; (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred; (d) with the intent of misleading another into relying upon it; (e) justifiable reliance upon the representation or concealment; and (f) a resulting injury proximately caused by the reliance. Schafer v. Rapp (In re Rapp), 375 B.R. 421, 431 (Bankr. S.D. Ohio 2007) (citing Burr v. Board of County Comm’rs, 491 N.E.2d 1101, 1102 (Ohio 1986)). 

11 U.S.C. 523(a)(6) also allows you to  fight the discharge of any debt acquired  through malice or willful injury. That section states, in pertinent part, as follows: "a discharge under section 727. . . of this title does not discharge an individual debtor from any debt . . . for willful and malicious injury by the debtor to another entity or to the property of another entity." Under this section, the elements of willfulness and maliciousness are both required to be proven in order to support a claim for nondischargeability. United States v. Vandrovec (In re Vandorvec), 61B.R. 191, 196 (Bankr. D. N.D. 1986). 

The Sixth Circuit Court of Appeals (which covers Ohio) has qualified that a willful and malicious injury occurs only if a debtor (1) desires “to cause the consequences of his act, or” (2) “believes those consequences are substantially certain to result from it.” Markowitz v. Campbell (In re Markowitz), 190 F.3d 455, 464 (6th Cir.1999). See alsoIn re Bradley, 507 B.R. 192, 205 (B.A.P. 6th Cir. 2014); JP Morgan Chase Bank, NA v. Algire (In re Algire), 430 B.R. 817 (Bankr. S.D. Ohio 2010). “[B]ecause the word ‘willful’ modifies the word ‘injury,’ § 523(a)(6) requires a ‘deliberate or intentional injury, not merely a deliberate orintentional act that leads to injury.’” Westbury Village Assoc. v. Zweifel (In re Zweifel), 555 B.R. 659, 664 (Bankr. S.D. Ohio 2016) (quoting Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998)).

Monday, April 15, 2019

Wage Garnishment

If you have a wage garnishment, generally bankruptcy is going to be an effective tool to stop it. Wage garnishments are filed in county courts in Ohio: both municipal and common pleas. Once a bankruptcy is filed, federal law requires the county proceedings to stop.

However, you have to properly notify the county court. To do that, you have to file the proper documents. Generally, I will make an appearance for my client and go on as their attorney of record in the case. Then I'll file the proper notices.

Even then, there can be multiple hassles. The Clerk may still need to return funds garnished previously. All funds garnished after the bankruptcy is filed must be returned. The Court may also refuse to put a stay on all collections. In this case, you need an attorney who knows what the courts are looking for in order to fully impose the bankruptcy in the case.

Give us a call for advise about your situation: (614) 284-4394.


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Wednesday, October 1, 2014

Should You File Bankruptcy?

Nobody files for bankruptcy protection because they want to. It is a serious decision and scares many people. As I will discuss below, there is no shame in making the right decision for you, your family, and your community.

There are many reasons not to be scared of bankruptcy. Once you consult with an experienced attorney and weigh your options, there is no reason to delay or be scared once you decide it is the right decision for you.

Here are a few questions to ask yourself right off the bat:

1.      Have you consulted with a reputable financial adviser?
2.      Do you feel your financial situation is uncontrollable?
3.      Are you not answering your phone or sick of getting calls about debt collection?
4.      Are you using credit or borrowed money to pay for necessities?
5.      If I asked you “how much debt do you have?” would you be able to answer that question?

Each of these questions are important when deciding to file for bankruptcy protection. Generally, you need to think of it on a 7-10 year timeframe. After about 7 years, your bankruptcy will likely not appear on your credit report any longer (although it will be a public record). The harshest consequence of filing bankruptcy (in my opinion) is that it appears on your credit report, although there are other personal issues I discuss with my clients as a counselor.  

That being the case, will your financial situation improve in the next 7 years? If you are only making the minimum payments on credit cards, racking up new debt to pay for necessities, and not in control of your finances—then most likely your financial situation will still be bad in7 years.  

If you file bankruptcy now, most of your debt will be gone immediately. In 7 years, the bankruptcy damage to your credit will begin to repair. So essentially, after that period, the harshest consequence to filing bankruptcy is mitigated. Again, the courts and Congress have made the point of bankruptcy law clear: it is to get people a fresh start so that they can be productive members of society.

Depending on other circumstances, you may see improvements in your credit worthiness after filing bankruptcy within a year or so. I have written about how retirees and other categories of people have no reason not to file bankruptcy if they cannot live a productive life with their current debt.

The point of bankruptcy is to invoke some ancient rules that go all the way back to the Old Testament. These rules are designed to make you and your community better by offering you the opportunity to become a productive citizen again. We want you working gainfully, not just paying off old debts for the rest of your life.

Thanks to a follower on Facebook, I have decided to do an update to this article. She questioned the 7 year time frame I speak of above. Here is how it is put by Free Credit

"Credit reports and scores were designed to assist lenders in deciding who was more or less likely to fulfill their financial obligations.  When someone files for bankruptcy, it's extremely damaging to their credit score as it's a failure to meet all (or almost all) of their financial obligations.  While through discipline and hard work, it is possible to quickly bounce back from the financial implications of a bankruptcy, the credit implications will last for at least seven years.  During that time period, it is unlikely that a person will be approved for new loans or credit accounts, and if they are the terms are likely to include high fees and interest rates."

As I wrote above, the credit damage begins to repair. Essentially, the bulk of the negative effects are worn off by the point. So I stand by my 7 year time frame, although it is definitely 10 years for the full recovery.

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