Friday, February 18, 2011

Sharing is Caring - Tumblr and QR Codes

At Kelsey & Trask, P.C. we try to use the latest technology to stay current on the newest laws, to help our clients communicate with us more efficiently and to stay connected with our friends, other professionals and our clients. You probably already know how to find us on Facebook, LinkedIn and Twitter, and to download our iPhone Apps.

And now we've added two more ways to connect with us faster: QR Codes and a Tumblr page.

QR Codes:

A QR Code is a two-dimensional barcode readable on any smart phone with a camera. Just download a QR Code Reader (I use Neo Reader, which is free) and you can use the camera in your phone to read the Code. For example, if you scan the Code to the right you would be taken to our mobile News & Media webpage.

We've also incorporated QR Codes into our latest business cards (pictured below). If you scan the Codes on our business card you will be taken to our mobile contact page. From there you can get directions to our office, call us, or download our contact information straight to your phone's contacts (via VCard downloadable on most phones).

For some other examples of how business are integrating QR Codes into their business cards check out dzineblog's 20 QR Code Business Cards Design Inspiration. To generate your own QR Codes for free online we use delivr's QR Code Generator.

Tumblr is the latest in sharing online, allowing users to share blog posts, photos, videos, and links quickly and easily. You can follow other Tubmlrs and repost their content, just like on Twitter, but unlike Twitter you can share more than 140 characters.

To follow us on Tumblr visit If you have a tumblr login then click on follow in the upper right hand corner to have our content streamed right to your tumblr dashboard.

Monday, February 14, 2011

How do I Rebuild my Credit after Bankruptcy?

A common question from our bankruptcy clients after they receive their discharge is: "How do I rebuild my credit?"

First and most importantly, time heals all wounds. Only time can fully repair the damage that bankruptcy (and being significantly behind on a lot of credit card debt beforehand) inflicted.

The best thing you can affirmatively do right now is to start developing a history of on-time payments to creditors that report to your credit bureaus. Pay your bills early, or if anything, pay them on time.

Because of the way the bankruptcy system works and the way creditors report reaffirmed debts, you will not get credit for on-time mortgage payments or car payments. Therefore, it is necessary to establish a new account that you can make solid, on-time payments on. We recommend applying for a secured credit card or gas card. Before you apply, take the time to confirm that the card management company reports to all three credit bureaus every month. If they don’t report every month, or if they do not report to all three, go elsewhere. Use the card, but pay it off on time, every month. Carrying a small balance (less than $100 is OK), but never utilize more than 50% of the available credit.

If you have a mortgage, then as soon as feasibly possible, refinance your mortgage. Paying off the current loan and keeping a new loan current will, once again, give you credit for on-time mortgage payments.

As soon as you feasibly can, refinance your car loan, or sell your car and purchase a new car. Again, the key is to obtain a new loan that will report to the credit bureaus. Post-bankruptcy, many current secured lenders will not report payments to the credit bureaus. Of course, be sure to keep that loan current.

Obtain copies of your credit reports approximately 90 days after receiving your discharge. Ensure every debt is reported as “Discharged in Bankruptcy” or something similar. If they are not, send a letter to the creditor and the credit bureau requesting that information be reflected accurately. Remember, your credit report is a list of your “debts”, and right now, you have no debts aside from your house and car. Make sure your credit reports accurately show that, although you had debts discharged in bankruptcy, you should not currently owe any money to dischargeable creditors.

Besides paying the above-described loans on time there are also a number of things you should avoid doing:

1. Avoid opening credit accounts with co-signers, if possible. Having a co-signer on an account indicates you are a greater credit risk.

2. Avoid financing with finance companies or sub-prime lenders, if possible. Doing business with these companies can actually lower your credit score.

3. Avoid future financial risk. Bulk up your savings account. Develop a budget, and stick to it. That way, when emergencies or unexpected expenses come up, you can pay in cash, rather than increasing your debt.

4. Some industry experts recommend that you obtain a small personal loan, and use the funds to open a CD account. Pay the loan on time, and when the loan is paid off, you will have some funds in savings, which you can take out once the CD matures. Of course, this only works if you can fit these payments into your budget. Setting up a workable budget should be your first priority.

Sunday, February 13, 2011

What happens if I make a Mistake on my Bankruptcy Schedules?

Despite the fact that some lawyers like to consider themselves infallible, the reality is that we all make mistakes. This is even true of our clients sometimes.

If you have made a mistake on your bankruptcy schedules, there is a general right to amend as allowed by the Federal Rules of Bankruptcy Rule 1009. The rule allows for amending of schedules any time before the case is closed so long as Notice is given to the trustee and any entity affected (usually meaning notice to all creditors).

In Massachusetts, there is also a local rule (Rule 1009-1), which requires that in some cases if your amendment involves adding a creditor or changing your exemptions, then you must file a Motion with the Court requesting approval of the amendment. As a practical matter, filing a Motion to Amend for any amendment may be the safest way to get the Court's approval quickly.

The most important thing to understand here is that if you discover a mistake on your schedules or petition, immediately file (or have your attorney file) an amendment to ensure that your case proceeds smoothly and you do not get accused of providing false information.

Thursday, February 10, 2011

4 Facts Your Divorce Attorney Should know about Bankruptcy? Fact #1: The Automatic Stay

Immediately after a Bankruptcy Petition is filed, the court enters an Automatic Stay Order prohibiting the creditors from taking or continuing any collection or legal action against the debtor. The automatic stay is a useful tool in temporarily stopping foreclosure proceedings brought by mortgage holder(s), as well as collection efforts, collection calls and lawsuits filed by creditors.

The Automatic Stay also puts an immediate stop to some portions of a pending divorce, modification, or contempt proceedings. Specifically any actions relating to debts or the division of assets cannot be ruled on by the Divorce Court while the bankruptcy is pending, unless the Bankruptcy Court is first asked for permission by filing a Motion for Relief from the Automatic Stay. Even issues relating to the collection of child support or alimony may be stayed or considered under the jurisdiction of the Bankruptcy Court while a petition is pending.

The penalties for violating the Automatic Stay can be significant, including fines and attorneys fees and it is therefore very important to seek Relief from the Automatic Stay before attempting to move forward with any issues that may be in the jurisdiction of the bankruptcy court. In order to avoid costly mistakes for divorce clients, we encourage divorce practitioners to consult with bankruptcy counsel when there is the potential that one party in the divorce will file for bankruptcy.

Of course, issues relating to custody are not affected by the Automatic Stay and can continue, though this may require a bifurcation of the probate matter.

Click here to read the other 3 Facts:
Fact #4: Jurisdiction over your Assets
Fact #3: Jurisdiction over your Debts
Fact #2: Domestic Support Obligations.

Wednesday, February 9, 2011

4 Facts Your Divorce Attorney Should know about Bankruptcy? Fact #2: Domestic Support Obligations

U.S. Bankruptcy Code Title 11 Section 101 14(A) defines a "domestic support obligation" as:
"a debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable non-bankruptcy law notwithstanding any other provision of this title, that is

(A) owed to or recoverable by
(i) a spouse, former spouse, or child of the debtor or such child's parent, legal guardian, or responsible relative; or
(ii) a governmental unit;

(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child's parent, without regard to whether such debt is expressly so designated;

(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of--
(i) a separation agreement, divorce decree, or property settlement agreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and

(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child's parent, legal guardian, or responsible relative for the purpose of collecting the debt.”

Domestic Support Obligations are generally non-dischargeable debts (except in some cases in a Chapter 13 after partial payment). This means that even if a spouse or former spouse files for bankruptcy, the Divorce Court can still order them to pay alimony or child support, and can still make orders relating to the collection of alimony and child support. This information is very important because it often means that an ex-spouse filing for bankruptcy can actually be helpful when alimony or child support is owed. Since the debtors other debts are now stayed and likely dischargeable, the alimony and child support will be easier to pay.

In addition, our previous post highlighted one of the ways that the category of "domestic support obligation" can be used to avoid problems such as the discharge of joint debts by categorizing certain payments as alimony.

Understanding what is and what is not a "domestic support obligation" can be very important in drafting and enforcing Divorce Agreements. In order to avoid costly mistakes for divorce clients, we encourage divorce practitioners to consult with bankruptcy counsel when there is the potential that one party in the divorce will file for bankruptcy.

Click here to read Fact #1: The Automatic Stay.

Tuesday, February 8, 2011

4 Facts Your Divorce Attorney Should know about Bankruptcy? Fact #3: Jurisdiction over Your Debts

The Divorce Court has the power to divide not just assets, but also debts. Just as the Court can assign the property titled to one spouse to the other spouse if the equities require, the Court can also order one spouse to pay the debts of the other spouse. But the Bankruptcy Court has the power to discharge debts. So what happens if the Divorce Court orders a spouse to pay a joint credit card debt, but the Bankruptcy Court gives that same spouse a discharge of that debt.

For purposes of this example, let's assume that the Husband and Wife were each ordered to pay half of a joint credit card debt. The Wife then files for bankruptcy and the credit card debt is discharged. Both the Husband and Wife were liable for the whole debt to the credit card company, but now only the Husband is liable to the credit card company. If the payment ordered by the divorce court is not categorized as a domestic support obligation (discussed in our next post) then the Wife no longer owes the debt to the credit card company or the Husband, and the Husband is left having to pay the entire debt.

It is possible for Separation Agreements or Divorce Judgments to avoid this problem by using assets to pay (or offset) debts, instead of trying to reassign debts. If enough assets are not available to do this then payments such as alimony, which are domestic support obligations, can be used instead to accomplish this same goal and avoid the discharge problem.

This issue can be further complicated when the debt that is at issue is a mortgage or secured debt. In order to avoid costly mistakes for divorce clients, we encourage divorce practitioners to consult with bankruptcy counsel when there is the potential that one party in the divorce will file for bankruptcy.

Click here to read Fact #2: Domestic Support Obligations.

Monday, February 7, 2011

4 Facts Your Divorce Attorney Should know about Bankruptcy? Fact #4: Jurisdiction over Your Assets

Many attorneys specialize their practice in order to better serve their clients. While concentrating on a particular practice area can help attorneys focus on making themselves the best in their field, sometimes it causes them to lose sight of the bigger picture. Divorce cases do not occur in a vacuum. When divorcing spouses face financial troubles it is important to consider the possibility of a bankruptcy and how this could affect the different aspects of a divorce.

We have put together this list of four important facts that divorce attorneys should be aware of, to help them better assist their clients who may also be facing a bankruptcy (or have a spouse who may be forced to file for bankruptcy).

Fact #4: Jurisdiction over Your Assets

When a Debtor files for Bankruptcy, they submit their assets to the jurisdiction of the Bankruptcy Court. This means that when a Debtor files for bankruptcy during a divorce case, the assets that would normally be divided in a divorce case are first subject to the jurisdiction of the Bankruptcy Court. While some assets may be joint, the spouse is merely considered another creditor with rights to the joint property that may be subject to the rights of other creditors as well.

A Bankruptcy Judge may allow the Divorce Court to make decisions relating to the division of property, but this is at their discretion, and the Bankruptcy Judge also has the right to make these decisions directly. This power applies even if the divorce has already become final. The bankruptcy laws allow the trustee to take back any items which were transfered up to two years prior to the bankruptcy filing if the transfer was not for fair value (11 U.S.C. § 548(a)(1)) or up to one year prior to the bankruptcy filing if the transfer was to an insider (11 U.S.C. § 547(b)(4)(B)). This means that the Bankruptcy Court can undo a Separation Agreement or Judgment of Divorce in favor of transferring assets from the ex-spouse to other creditors.

Finally, it is important to understand that filing for bankruptcy means that a debtor gives up their rights to decide what happens to their non-exempt assets. The bankruptcy trustee stands in the shoes of the debtor. This means that they can settle a divorce case giving up any rights the debtor may have in their spouse's property. The duty of the trustee is to the creditors not to the debtor.

These are all important consequences of filing for bankruptcy that should be considered when a bankruptcy is filed during or after a divorce case. If you are in a divorce or were recently divorced make sure you discuss this with your bankruptcy attorney. If you are getting divorced and considering bankruptcy, make sure your divorce attorney understands the consequences of filing bankruptcy or consults with a bankruptcy attorney.

Click here to read Fact #3: Jurisdiction over Your Debts.

Tuesday, February 1, 2011

Should damage to my credit keep me from filing bankruptcy?

Assuming your bankruptcy goes to discharge without objection, you will now find yourself with the daunting task of rebuilding your credit, post-bankruptcy. A Bankruptcy appears on your credit report and will negatively impact your credit score. Because bankruptcy negatively impacts your credit, borrowing money may be more difficult, and when possible, may be more expensive.

A bankruptcy filing remains on your credit report for 10 years, and individual debts discharged in bankruptcy for 7 years following your discharge. Therefore, whenever you apply for credit, a new loan, or undergo a background check, a previous bankruptcy will be visible to the loan officer, hiring manager or credit card company.

But what is the alternative?

If you have a significant amount of debt and can't make the payments then your credit is already damaged. If you are making the payments but can only make the minimum payments, then you may be able to save your credit but only if you are able to find a way to pay down your debts.

A good guideline for deciding if you are a potential candidate for bankruptcy is to consider how long it will take you to pay down your debts. If you make a realistic budget of all of your income and expenses and pay all of your excess income towards your debts, how long will it take you to pay them off? If the answer is five or more years, then you may be a good candidate for bankruptcy and should consult with an attorney to find out more about your options.

As long as you cannot pay down your debts you won't be able to borrow or use your credit anyway, so filing bankruptcy may be a better alternative. This is especially true if you are only paying minimum payments and have no realistic chance of paying down your debts in the foreseeable future.

How filing (or not filing) affects your credit is only one factor in making a decision about whether or not to file a bankruptcy and you should consider how your credit might be affected by your debts regardless of whether or not you file a bankruptcy.

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