In the event you brought significant debt into your marriage which you incurred before you were married, certain states will consider that your separate debt, including Texas. If your spouse is not liable for your debt, such as it was incurred before the wedding, or they did not co-sign for the debt, an individual bankruptcy may be an option. Married debtors are able to file both Chapter 7 and Chapter 13 Bankruptcy individually. However, your spouse’s income may still influence which Chapter of Bankruptcy you ultimately file. Keep in mind that all household income, which includes your spouse, is used to determine your eligibility for bankruptcy. In the event you do file bankruptcy individually, your filing will not affect your spouse’s individual credit rating. This is a common concern for debtors seeking to file individually. However, joint debts will still include a bankruptcy indication on your spouse’s credit report.
We are proud to announce that Fears | Nachawati Law Firm Partner, Majed Nachawati, has recently been appointed as Panel Chairman on Panel 2, District 6 Grievance Committee of the State Bar of Texas. This appointment is highly prestigious, as the position is filled based up on nominations from other grievance committee members, and ultimately appointed by the Committee Chair. The Committee’s job is to make sure that attorneys throughout the state of Texas uphold the integrity of the practice of law and remain accountable to the public and their clients. As part of his new role, Mr. Nachawati will be responsible for presiding over panel proceedings, evidentiary hearings, and the summary disposition docket. He is dedicated to protecting the public through his work on the Grievance Committee and hopes to advance and improve the quality of legal services to the public during his term as Panel Chairman. Information about the firm or Mr. Nachawati can be found at www.fnlawfirm.com or by calling the firm at 1.866.705.7584.
The stress of filing for bankruptcy is extremely hard on individuals and families. Most individuals going through the bankruptcy process are stressed, tired of creditors calling and just want to get their financial situation in order. The last thing that you want to worry about the effects that bankruptcy has on your job and employment opportunities.
If you file for a Chapter 7, then most employers will not find out about the case. While Court documents are typically public information, the only way an employer will generally find out is if you tell them, or if a creditor has began the process to garnish your wages. Although there is no wage garnishment in Texas for consumer debt, filing for bankruptcy will stop withholding your wages. If you file for a Chapter 13, then there is a possibility that the judge will order your Chapter 13 payments to be deducted from your earned income. In that case, your employer will be notified.
Filing for bankruptcy has no impact on your employment. According to 11 U.S.C. § 525(b), no private employer may terminate employment, or discriminate, against an employee for filing bankruptcy. You cannot get fired nor will you be refused a position due to filing for bankruptcy. However, it may be wise to speak to your employer about your financial situation. Some people who have a lot of debt or are considering bankruptcy have a lot of weight on their shoulders. Being open and honest with your employer will allow them to create an environment that is comfortable for you to resolve your personal matters.
Filing bankruptcy does not “stop” or “freeze” your finances. The bankruptcy law recognizes that you have an on-going need to pay for gas, food, the rent, etc. This implies money is available, which can be a problem if the money is in a checking or savings account at a bank where you owe money.
When Your Bank is a Creditor
After you file bankruptcy, if you have a deposit account at a bank where you owe money, the bank has a right of setoff. Simply, the bank may be able to apply money from your checking or savings account to pay a bank-held debt, like an overdraft or a defaulted loan. The 1995 US Supreme Court case of Citizens Bank of Maryland v. Strumpf, 516 US 16 (1995) holds that a bank can freeze an account and withhold funds so that it has time to make a request for setoff from the bankruptcy court. Once an account is frozen for setoff purposes, the money is likely gone for good.
If you have a deposit account at a bank where you owe money, it is probably a good idea to switch banks before filing bankruptcy. You should keep the old bank account open, but only maintain a small balance. Remember to change any direct deposit to the new bank account and cancel all monthly direct debits.
When Your Bank is Not a Creditor
When a bankruptcy is filed, the clerk of the court sends a notice to the bank regarding the case. It usually takes a few days for the bank to receive notice, however some larger banks compare the list of recent bankruptcy filings against their accounts. If an account holder has filed bankruptcy, some banks will freeze the account immediately, whether it is owed money or not. Wells Fargo Bank reportedly does this, calling it an “administrative hold.” However, many courts are finding that Wells Fargo’s practice is a violation of the automatic stay, since Wells Fargo does not turn the money over to the bankruptcy trustee nor seek direction from the bankruptcy court. See Mwangi v. Wells Fargo Bank, N.A., 432 B.R. 812 (B.A.P. 9th Cir. 2010); see also In re Weidenbenner, 521 B.R. 74 (Bankr. S.D. N.Y., 2014)(distinguishing Strumpf saying that because Wells Fargo was not a creditor in the debtors’ case, it had no setoff right and could not freeze the debtors’ bank accounts).
A troubling trend has now turned into a full-blown minority opinion in the bankruptcy world. Some bankruptcy and appellate courts are reading the Federal Bankruptcy Code to exclude late-filed tax returns from the definition of a “tax return.”
It has long been held that recent income tax debts are not dischargeable in bankruptcy, but older tax debts (that otherwise qualify under the Bankruptcy Code) may be discharged. Some courts, including the First, Fifth, and Tenth Circuit Court of Appeals, now find that changes to the Bankruptcy Code in 2005 exclude certain late-filed returns from discharge. These courts point to a “hanging paragraph” located at the end of Section 523(a) which defines a “return” as a tax filing “that satisfies the requirements of applicable nonbankruptcy law (including applicable filing requirements).” That paragraph specifies that returns filed by the IRS with debtor cooperation under 6020(a) are “returns,” but those filed by the IRS without debtor cooperation under 6020(b) are not.
Recently the First Circuit in the case of In re Fahey, — F.3d — (1st Cir. Feb. 18, 2015), joined other courts in finding that “applicable filing requirements” includes meeting the tax filing deadline. In other words, a late filed return, even by as little as one day past the deadline, is not a “return” and is therefore not a dischargeable debt in either Chapter 7 or Chapter 13.
The First Circuit joins the Fifth Circuit (McCoy v. Mississippi State Tax Comm’n, 666 F.3d 924 (5th Cir. 2012)) and the Tenth Circuit (In re Mallo, 2014 WL 7360130 (10th Cir. Dec. 29, 2014)) in finding that the plain language of the Bankruptcy Code directs this interpretation. Basing its decision on plain language, the Fahey court found that a tax deadline is an “applicable filing requirement,” thereby rendering a return filed outside that time nondischargeable unless filed under 6020(a). The dissent in Fahey points out that permitting only late-filed returns under section 6020(a) absurdly rewards the tax debtor who sits on his hands and awaits IRS invitation to complete the return while punishing the debtor who voluntarily files his own return even one day late.
When something bad happens in your bankruptcy case, who gets the blame?
The responsibility for your bankruptcy case is first and foremost squarely on your own shoulders. Your attorney works on your case. It is not your lawyer’s case – it is your case. Sure, when something goes wrong you can complain about your attorney. You may even sue your attorney or cry “foul” to the office of chief disciplinary counsel. Unfortunately, none of that will get you out of trouble.
Just ask Teresa Giudice who is suing her former bankruptcy lawyer for $5 million. The Real Housewives of New Jersey star claims it is the malpractice of her attorney that is responsible for her sentence of 15 months in federal prison for fraud. Giudice’s husband, Joe, was also convicted of federal fraud. But claims of malpractice or a lawsuit against her lawyer will not stop Ms. Giudice or her husband from serving their sentences.
Pointing the finger at your attorney is not usually a defense to a criminal act; in fact, it is often evidence of your own culpability and guilt. Your bankruptcy petition and schedules are signed under threat of perjury. Testimony at a 341 Meeting of Creditors or in court is given under oath and recorded. Signing your name and giving testimony are your own free acts, so be sure that you are stating the full and complete truth.
Consider the case of James Roti. After a creditor obtained a $400,000 judgment against him, Mr. Roti hid his assets and lied to his creditors, to the federal bankruptcy court, and to the bankruptcy trustee. Roti was charged with bankruptcy fraud. At trial Roti testified that his lawyer put him up to it. He argued that he should be acquitted of bankruptcy fraud charges because he was following the advice of counsel, and that his attorney managed the scheme’s details.
The jury rejected Roti’s defense of “not me, him” because it is not a defense at all. In fact, Roti freely admitted committing bankruptcy fraud. Roti was convicted of bankruptcy fraud and of concealing assets from the bankruptcy trustee. He was sentenced to 21 months’ imprisonment.
If you are considering lying, hiding assets, or some other dishonest act during bankruptcy – don’t do it! Once you are discovered you will pay the price and no amount of blaming your attorney will help you.
Recently Bankrate.com released a survey suggesting that many American adults are walking the edge of financial disaster. Bankrate surveyed more than 1,000 adults and discovered that 37% had credit card debt that equals or exceeds their emergency savings.
Credit card debt is old news to most Americans. According to Federal Reserve statistics from December 2014, Americans owe more than $880 billion on credit cards. The average American household (with a credit card balance) owes more than $15,000 to credit cards.
What this all means is simple: many Americans are living day-to-day hoping that nothing goes wrong. One thing is for certain: unexpected expenses should be expected. A 2014 survey by American Express found that half of all Americans had experienced an unforeseen expense in the past year: 44% reporting an unforeseen health care expense and 46% for car trouble.
Does this sound like you?
There are many ways to turn your finances around, including reducing or eliminating monthly expenses; paying off credit cards; contributing to a savings account; or taking extra work or a second job to pay down debts. If your finances are seriously upside down, it is a good idea to obtain a free consultation with a bankruptcy professional before taking extreme actions to correct your finances. Certain provisions of Bankruptcy Code can actually work against the well-intended debtor. For instance:
- Reducing or eliminating monthly expenses prior to filing bankruptcy may result in an increase of disposable income, which can lead to a greater repayment for unsecured creditors who may be otherwise discharged outright.
- A debt that is paid off immediately prior to filing bankruptcy may be recouped by a Chapter 7 bankruptcy trustee. This is a common trap, especially when the repayment is to a friend or family member.
- Contributing to a savings account may lead to non-exempt property that may be taken by a Chapter 7 trustee and distributed to creditors.
- By temporarily increasing your income to pay down debts, you are also increasing your average income for the six month period prior to filing bankruptcy. This can mean disqualification from filing Chapter 7 or increased monthly payments in a Chapter 13.
Debt is serious business and major changes in your family finances should be made only after consulting with a seasoned professional. While it is important to “right your ship” and provide for a better financial future for your family, don’t make things worse by acting rashly. Call today for a free consultation with an experienced bankruptcy professional, consider your options, and make the best plan for your family.
Every state has a statute of limitations for filing a foreclosure action. A statute of limitations is a state law that tells the lender that a foreclosure must be filed within a certain time after default on a promissory note. If the foreclosure is not filed by that date, it is not valid and may be stopped or dismissed by a court. A statute of limitations is an “affirmative defense” and must be raised by the homeowner in defense of a foreclosure action. If it is not raised, it is generally considered “waived” and will not be considered in future lawsuits.
The time limit depends on the type of action and the claim that is involved. There are different statutes of limitations for oral contracts, written contracts, personal injury, and fraud. Generally, the statute of limitations for home foreclosures applies to written contracts (i.e. promissory notes). Some states (e.g., New Jersey), have a specific statute of limitations for foreclosure.
Each state has its own statute of limitations, which ranges from three years to 15 years. Most states fall within the three to six year range. The statute of limitations clock for a mortgage foreclosure usually starts when the default occurred, which is generally dated from the last payment.
A foreclosure must be initiated before the expiration of the statute of limitations period. For example, if the expiration of the statute of limitations is March 30, 2015, and the foreclosure is started on March 15, 2015, then the statute of limitations does not apply, even if the foreclosure is not completed before March 30, 2015. However, if the foreclosure action is dismissed or stopped by the lender after March 30, 2015, the time will have expired and the statute of limitations defense is effective against a future foreclosure.
If you have a home that is under threat of foreclosure, consult with an experienced bankruptcy attorney and consider your options. In some cases, a statute of limitations defense may save your home from foreclosure.