June 25, 2018

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.

About Jonathan

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.

Do You Want to Give Money You Don’t Owe to a Credit Card Company?

This is not a trick question.

I received this letter today from American Express regarding the balance owed by one of my Chapter 13 bankruptcy clients whose case was dismissed.  The letter acknowledges that because of the age of the debt, Amex cannot sue my former client, nor can they report the unpaid balance to the credit bureaus.  Yet they are giving him the opportunity to “settle” this debt for 45% of the balance.

Can you think of any reason why anyone would pay Amex anything on this stale account?  I can’t.  But I wonder how many people agree to make payments and possible waive the statute of limitations bar to collections.  If you get a letter with a notice that the debt is stale, don’t even think about making a payment.

Can You File Bankruptcy if You Have Been the Victim of Identity Theft?


If you have been a victim of identity theft, you can file bankruptcy but you need to be prepared for potential complications.

Identity theft is a big problem in 2018 and a number of large retailers and even credit bureaus have been hacked. Personal and financial information about millions of Americans is available for sale on the “dark web” and criminals use this stolen data to open credit card accounts, sign for personal loans, and even buy houses and cars. You will not know that there was a problem at all until the bills start to arrive.

I have personally been a victim of identity theft twice. One time, a thief got hold of my credit card number and charged $5,000 to a custom suit maker in Hong Kong. In another instance, a fraudster hacked my American Express account and purchased (and picked up) a high end desktop Mac. In both of these situations the credit card company accepted my fraud report and canceled all charges. [Read more…]

How the Georgia “Wildcard” Exemption Can Save You Thousands When You File Bankruptcy

When you file either a Chapter 7 or a Chapter 13 bankruptcy, you are allowed to declare certain property as “exempt.” Exempt property does not count as an asset for bankruptcy calculations. This is why you will not have to give up household items like your clothes, kitchen utensils and furniture when you file bankruptcy.

Exemption analysis can be one of the more confusing parts about filing bankruptcy. The Bankruptcy Code says that every state has the option of creating its own list of exemptions or state legislatures can defer and use a list of exemptions set out in the Bankruptcy Code.

The Georgia legislature has chosen to “opt out” of the federal scheme and the Georgia legislature has passed a list of exemptions which can be found at the Official Code of Georgia, section 44-13-100. [Read more…]

Why You Must Pay Your Mortgage Directly After Filing Chapter 13

If you are behind on your mortgage, you can use Chapter 13 to stop a pending foreclosure and repay missed payments over the 5 year term of your Chapter 13 plan. However, filing your Chapter 13 case is only the first step in saving your home.

In Atlanta area Chapter 13 cases, your repayment plan will include a section which says that you agree to send in your regular mortgage payments as they come due during the term of your Chapter 13 plan. Your Chapter 13 trustee payment includes payments to the mortgage company to repay missed payment. Ongoing, future payments, must be paid directly to the mortgage company outside your plan.

Making your mortgage payments directly to your mortgage lender is part of your plan obligations.  Both your mortgage payment obligation and your obligation to pay your trustee start immediately after you file your case.  In fact, you will not be able to get your Chapter 13 case confirmed (approved) by the judge if your post-petition mortgage payments are not up to date. [Read more…]

Georgia Supreme Court Rules in Favor of Mortgage Lenders Over Homeowners in Important Decision

A 2017 ruling by the Georgia Supreme Court most likely represents a significant weakening to a consumer protection provision contained in Georgia’s home foreclosure law.

Georgia law allows what is known as a non-judicial foreclosure. This means that if you fall behind on your mortgage payments, your mortgage company does not have to go to court to seize possession of your home.

Instead, buried deep in the fine print of your mortgage paperwork is language that allows your lender to foreclose on your property simply by giving you written notice and thereafter advertising a foreclosure sale in the legal newspaper of the county where the property is located.

In Georgia, a lender can seize your house in less than 40 days if you are in default. Compare this to a home foreclosure process that typically lasts a year in a judicial foreclosure state like Florida. [Read more…]

What Happens After Your Chapter 13 Plan is Confirmed?

When your Chapter 13 plan is confirmed, it means that the bankruptcy judge assigned to your case has formally approved your plan of reorganization and all creditors are bound to the terms of your plan.

In the Northern District of Georgia, a hearing on the confirmation of your plan will be scheduled automatically a the time you file your case. Usually, these hearings are scheduled for about 2 to 3 months from the date you file your case. Therefore, you can think of the first 2 or 3 months of your plan as a kind of probation period.

While in this probationary period, you have all the benefits of bankruptcy – namely the automatic stay that protects you from creditor action – while the Chapter 13 trustee watches to see if you have the capacity to meet your plan obligations. This is also the time when creditor claims are filed and either creditors or the trustee can object to your proposed plan. [Read more…]

What is the Secret to Making Your Chapter 13 Plan Work?

 

After 25+ years representing hardworking but financially struggling men and women in the Atlanta area, I can report to you that the #1 secret to surviving Chapter 13 is living below your means. This can mean you have to make some difficult choices.

Chapter 13 Trustees are Increasingly Demanding

When you enter Chapter 13, you need to eliminate the “wants” in your life in exchange for the “needs.” I advise my clients that if you find yourself meeting with a bankruptcy lawyer, everything needs to be on the table. And this includes your cars, home, furniture, jewelry and just about any other type of property you are financing. You will also find that your Chapter 13 trustee likely has a much more restrictive view of what constitutes a true “need:”

  • if you find yourself paying more than $300 per month for a car or truck, you need to consider giving that vehicle back to the creditor and buying a car for cash or financing a vehicle and keeping the payment below $300 per month
  • if you are financing vehicles, furniture or jewelry for your children or other relatives, you should be prepared to surrender that property and let your relative work out a deal on his/her own
  • if your budget includes out of pocket payments for your children’s college expenses, expect push back from the trustee. The trustee’s position will generally be that your child needs to use loans and grants to finance his/her own higher education and that your child may need to seek a less expensive education. Trustees generally do not agree with including someone else’s education costs in your budget
  • if your budget includes private elementary or high school for a child, you will need to produce evidence that your child has special educational needs that make public school insufficient
  • do not plan on keeping time shares or other non-essentials when you file Chapter 13

[Read more…]

Relief From Your 72 Month Car Loan

cram downFinancial experts bemoan the “crisis” in student loan debt (over $1.2 trillion as of 2015) and the rising rates of credit card debt ($733 billion as of 2015) but no one seems to be talking about yet another debt bubble – the huge rise of auto loan debt.

In 2012, total auto loan debt in the United States passed $1 trillion. Currently, the average household owes over $27,000 to vehicle lenders. More problematic, many of these loans extend well beyond 3 or 4 years. According to Edmunds.com, as of 2014, over 60% of auto loans were for terms over 60 months, with nearly 20% of these loans using 72 to 84 month terms.

60 months, of course, equals 5 years. 72 months equals 6 years, and 84 months equals 7 years.

Why a Long Term Vehicle Loan Means Trouble

You may ask “why should I be concerned about signing a 60 or 72 month car loan if I can afford the payment?” The answer, in a word, is “depreciation.”

Cars and trucks are depreciating assets. This means that they go down in value with each day and each mile of wear and tear. When you sign off on a 5 year or longer loan, you won’t be break even on your loan for at least 3 years. All your payments through at least year 3 (and most likely longer) will be applied to interest only. And my experience has been that folks who pursue long term vehicle loans often have less than perfect credit such that their interest rates are 7%, 8% or even higher.

This means that if your vehicle breaks down, or if you want to replace your car or truck 3 or 4 years into the loan, you will have to come out of pocket to satisfy the loan. If your vehicle is totaled in a wreck before the break even point, you will have to come out of pocket to pay off the loan because insurance companies pay property damage settlement based on “low retail” value.

If the dealership offers to “roll your existing payment” into a new loan, you’ll end up paying even more, because the new loan will include the leftover finance costs from the original loan plus the unfavorable terms from the new loan.

In essence, a 5 year or longer car loan equals a long term rental, except that you bear all the risk of loss. In case I am not being clear, a 5 year or longer loan is a toxic loan, and almost never a good idea. Even 4 year loans are less than ideal. [Read more…]

Georgia’s Likely New Pre-Garnishment Notice Not All Good News

wage garnishment; bank account levyGeorgia may soon have a new law governing wage garnishments and bank account levies.  But the news is not all good.

You may recall that back in September, 2015, I reported that federal judge Marvin Shoob had issued a ruling that invalidated on Constitutional grounds bank account levies in Gwinnett County, Georgia. A man named Tony Strickland sued the Gwinnett County clerk of court after his bank account containing workers compensation and Social Security funds was seized by a credit card company that had sued him. Mr. Strickland argued, and Judge Shoob agreed, that the credit card company had an affirmative obligation to notify debtors like Mr. Strickland that certain funds (like workers’ compensation benefits, Social Security benefits, welfare payment and similar benefits) were exempt from garnishment. [Read more…]

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