Diamond Speaks His Mind on Bankruptcy and Related Topics

MEANS TEST TWEAKED, SCORE TWO POINTS FOR THE CONSUMER

The "Means Test" became law as part of the Bankruptcy Consumer Protection Act Of 2005.  The test is mandated by the bankruptcy code including a long, vague and confusing explanation of exactly how to set up the test, which was left to the Office of the United States Trustee.  The backbone of the test is derived from the Internal Revenue Code.  The test has gone through more than a few changes as people in charge attempted to make the test fit the statute and has been subject to a number of court rulings both by the Bankruptcy Courts and the Courts of Appeal.  Two (2) changes that have recently taken place are:

     The Court of Appeals for the Fifth Circuit, the Appellate Court that Texas is subject to has recently ruled on whether or not a debtor is entitled to an "Ownership Expense" deduction when the vehicle is paid for.  The Court ruled that a debtor is entitled to an ownership expense deduction regardless of whether or not there is a debt against the vehicle.

     Is a debtor entitled to an additional deduction with a vehicle that has high mileage?  Obviously a car that has low mileage costs less to operate than a vehicle with high mileage.  The Office of the United States Trustee has determined that a debtor is entitled to an extra deduction for vehicles that have over 200,000 miles on them.  Exactly how much of a deduction is unclear at this point and is apparently determined on a case by case basis.

The result of the foregoing is that the bar has been lowered to some extent as to whether or not a debtor can be eligible to file a Chapter 7 bankruptcy rather than a Chapter 13 bankruptcy.

 

 

Copies Vs. Originals at Your Bankruptcy's 341 Meeting

Required by law, the first request that a trustee for a Chapter 7 or a Chapter 13 bankruptcy makes of a debtor is to see his driver's license and social security card in order to establish the identity of the debtor.  The trustee is fulfilling his obligation to identify the debtor by seeing an original driver's license, because it has a picture of the debtor and then matches the social security number against the name on the card and then compares the same against the bankruptcy paperwork.  There are, of course, other forms of identification that will work just as well such as a military identification card.  What will not work is a copy of any of the items mentioned, they must be originals.

If a debtor does not have these items with him/her, at least in El Paso TX, is that, in a Chapter 13 bankruptcy case, the meeting is continued to a later date, which means you have to take another day off of work and in the case of the Chapter 7 bankruptcy you must bring the originals by the Trustee's office within several days after your 341 Meeting, not as bad as having the meeting continued, but still inconvenient.  This may seem petty, still copies vs. originals will delay your bankruptcy moving forward.

A NEW EVIL HAS EMERGED - DEBT RELIEF STOREFRONTS

Oh my God, today I spoke with a woman who was considering bankruptcy as a way to get out from under her credit card debt.  She like most people would rather pay off her debts than file for bankruptcy especially when you can wrap your arms around your debt total.  I applaud your ethics and values.  Sometimes, based on how much you owe in credit card debt it could take years and years and years to pay off especially due to mounting interest rates.  Some of these debt relief storefronts are no better in helping you than the exorbitant interest rates charged by the credit card companies.  Getting back to this woman I spoke to today, her debts today were approximately $6,000.  The company she was (at least I hope it's in the past now)  considering working with was going to charge her on top of her  monthly payment towards her credit card debt  - a service charge of $300 per month during the lifetime of the  payment schedule.  She was told that it would take approximately 24 months.  What is wrong with this picture?  A $6,000 debt without additional interest charges would cost this woman more than $13,000.  People do the math!!  I know how it feels to have bills you can't pay and to have creditors breathing down your neck.  I know how badly that can make you feel and so you think anyone that will work with you is a blessing.  NOT................  Read, read, read the fine print........... You're not buying a car ............. you're paying off debts.   DO THE MATH. 

If you choose to handle your credit card debt through a debt relief agency seek out a non- profit agency.  Or consider filing bankruptcy, Chapter 7 where you erase entirely your credit card debt as well as all unsecured debts if you qualify.

Pay Day Loan Companies Are Cunning!

Lots of people seeking help from a bankruptcy lawyer to file a Chapte 7 (eliminate unsecured creditors) or a chapter 13, have one or more payday loans.  Payday loans are difficult to deal with for both the client and the bankruptcy lawyer.  The companies that offer these loans seem to know every trick in the book to continue  receiving payments, as well as avoiding having their addresses known so they cannot be notified of a bankruptcy filing.  The only way to prevent such a lender from collecting on their loan is to close the bank account upon which the lender collects its funds.  Merely having a zeo balance does not seem to work, inasmuch as many people have accounts that have overdraft protection or at the least, will incur a charge for every returned check.  Closing their bank accounts presents a few challenges to many clients for reasons such as automatic withdrawals for monthly payments and/or direct deposits of checks. If you are going to stop these folks from collecting, you must promptly close your account and open a new account at a different bank.

 

 

 

 

 

Bankruptcy, The Answer For Your Business?

 

Have you ever wondered why doctors and lawyers ‘practice' their profession?  I have.  Today you have to be lucky to find a doctor that focuses on ‘healing' and an attorney that focuses on ‘selfless problem solving'.  It has been my experience that the word ‘practice' gives professionals the freedom to make choices that may not best serve our needs.  It's important to sift through the rhetoric and do your homework.

I 'm Sidney Diamond wife and I can often be his worst critic.  He leaves his clothes everywhere, almost never closes a cabinet door and is constantly misplacing his keys.  He's also brilliant and has more integrity than anyone I know. 

Case in Point:  I sat in on a free initial consultation with a potential client this week.  The gentleman was devastated about his state of affairs and at his wits end.  He started his business over 10 years ago, incorporated his business and now due to the economy his industry came to a screeching halt. I was impressed by how prepared he was for this meeting.  He wanted to know if he should consider filing a business Chapter 7 or a Small Business Chapter 13.  He had corporation papers, his lease, credit card statements, tax information; he knew the answers to all the questions asked and had all the documents that Sidney asked for.  He had several years left on his lease (which he did not personally guarantee), credit card debt and bank loans (which he did not guarantee).  Basically his business was in debt for almost $100,000 and the business had no assets to protect.  

Sidney recommended closing the business and walking away.  Bankruptcy was not recommended in his situation.  It was amazing to see the relief on his face.  His reality is still scary, he worries how he'll continue to feed his family, pay his mortgage and find employment.  Lucky for him he found sound legal advice.