Wednesday, February 29, 2012

Can a Guardian or Conservator File for Bankruptcy on Behalf of the Protected Person?

A guardian is responsible for managing the personal affairs of another individual such as living arrangements and health care. A guardian does not have authority to manage the assets of that individual, unless that individual does not have any assets aside from monthly income. If this individual has significant debts, it might be in the that individual's best financial interest to file for bankruptcy, and the guardian would be able to file for bankruptcy on their behalf.

If the protected person has assets, an appointed conservator would be the only individual with authority to file for bankruptcy on the protected person's behalf, as the one charged with managing the individual's property and business affairs. A conservator is bound by the standards of care under the Prudent Investor Act, and if this standard is met and bankruptcy is appropriate, a conservator would be able to file for bankruptcy on behalf of the protected person.

Be aware, however, if the protected person owes a debt to the guardian or conservator, there is a potential conflict of interest that could arise in the context of either a bankruptcy petition, or the probate and family court. Further, guardians and conservators are required to file annual reports with the probate and family court, and filing for bankruptcy on behalf of the protected person would likely be met with scrutiny by a judge.

All of this assumes, of course, that the protected person is eligible for bankruptcy. To see if you or someone you care about are eligible for a Chapter 7 bankruptcy, check out our Means Test Calculator.

Should you have questions about your options under the United States Bankruptcy Code, contact Attorney Matthew P. Trask for an initial consultation.

Should you have any questions about guardianship or conservatorshipcontact Attorney Jonathan R. Eaton, or call 508.655.5980 to schedule an initial consultation.

Thursday, February 16, 2012

Are my Firearms protected from my Creditors in a Bankruptcy case?

It’s no secret that Kelsey & Trask, P.C. is a Second Amendment friendly law firm. While most of our firearms practice is dedicated to licensing and firearms law compliance issues, firearms and Second Amendment issues come up in many of our other practice areas as well.

Firearms are often a good investment; they hold their value well, do not depreciate significantly, and for certain items, can appreciate significantly in value, particularly for Curio & Relic items and other historical firearms. Many firearms owners do not keep these items purely for their investment potential, but rather for personal protection or because their employment requirements requires them to keep and maintain a firearm.  In either instance, whether or not you can keep your firearms if you file for bankruptcy is an important question.

How are firearms treated in bankruptcy?

Like any other asset, firearms must be disclosed to the bankruptcy court and are subject to acquisition by the trustee if they are not exempt under the Federal or Massachusetts exemptions. There are a number of exemptions that may be used to establish the exemptability of firearms. Ultimately, the amount of the allowable exemptions may be affected by the debtor’s desire to exempt other personal property, but generally speaking, the following exemptions are available to protect a debtor’s firearms:

Federal Exemptions:

11 U.S.C. § 522(d)(5): $1,150.00, which is federal catch-all exemption and may be applied to any personal property owned by the debtor;

11 U.S.C. § 522(d)(5): Up to $10,825.00 of unused home equity not already exempted under 11 U.S.C. § 522(d)(1);

11 U.S.C. § 522(d)(6): $2,175.00 for tools and equipment used in business. For this exemption to be applicable to the debtor, the debtor must establish that the items are necessary for the debtor’s trade, employment or business.

Massachusetts Exemptions

A debtor filing for bankruptcy in Massachusetts may elect either the Federal exemptions or the Massachusetts exemptions. Massachusetts exemptions applicable to firearms ownership are as follows:

M.G.L. c. 235 § 34(10): The uniform of an officer or soldier in the militia and the arms and accoutrements required by law to be kept by the officer or soldier is fully exempt under the law. For this exemption to be applicable to the debtor, the debtor must establish that his status as an “officer or soldier” (e.g., a police officer, a National Guard member, or member of the U.S. Military) who, per the requirements of his or her duties, must personally purchase and maintain firearms for the performance of their duties.

M.G.L. c. 235 § 34(5): $5,000.00 for tools and equipment used in business. Like the federal exemptions, for this exemption to be applicable to the debtor, the debtor must establish that the items are necessary for the debtor’s trade, employment or business.

M.G.L. c. 235 § 34(17): Up to $6,000.00, representing the debtor’s aggregate interest in any personal property, not to exceed $1,000 in value, plus up to $5,000 of any unused dollar amount of the aggregate exemptions provided for the exemption of household furnishings, tools of the trade and a motor vehicle.

If you are facing bankruptcy and have personal and other property, such as a home and retirement accounts that you want to ensure is protected through the bankruptcy process, contact Attorney Matthew P. Trask to learn more about how to protect your assets and find your financial freedom.

Monday, February 13, 2012

Credit Counseling Requirements in Bankruptcy

If you are planning to file a Chapter 7 or Chapter 13 bankruptcy, you must complete two court-approved courses:

  1. A court-approved pre-petition credit counseling course no more than 180 days before your bankruptcy filing. 
  2. A court-approved post-petition financial management course must be completed within 45 days after your § 341 Creditor’s Meeting.

If your case is filed without proof of completing the credit counseling course, you must file proof of completion within 15 days, or your case will be dismissed. Failure to take both of these courses in a timely manner will result in the dismissal of your case or the denial of your discharge. However, a debtor may request permission from the court to extend these deadlines if exigent circumstances exist that make it impossible to complete the course by the prescribed deadlines.

Both the credit counseling course and financial management course are offered by a number of agencies and organizations. Courses may be completed on-line, over the telephone, and in person. Costs range from approximately $25.00 to $50.00 per course. Many courses offer significant discounts if you purchase both the pre-petition credit counseling and post-petition financial management courses as a package in one transaction. I advise nearly all of my clients to go this route.

If you are married and filing a joint petition, you and your spouse can take the course together. Many providers offer a joint fee, and will allow you to save on both the cost of having to purchase two separate courses, and the time of having to complete the courses separately.

There are exceptions to the credit counseling and financial management course requirements. If you are disabled, and the nature of your disability prevents you from completing the course, the requirement may be waived with permission of the Bankruptcy Court. Similarly, if the debtor lacks the requisite mental capacity to understand the nature of the information provided in the course, the requirement may be waived. Finally, military debtors in active service in a designated combat zone are not required to complete the course.

A list of Massachusetts approved credit counseling and financial management agencies is provided here.

Thursday, February 9, 2012

Can someone else pay my legal fees for my bankruptcy?

If you are facing financial difficulties, one of the biggest hurdles is coming up with the retainer for your bankruptcy attorney to represent you through the preparation and submission of your bankruptcy case.  For a fortunate few potential clients, they will have family and friends in a position to pay their attorney on their behalf.  Before you accept money from a family member for your bankruptcy, or enlist the help of friends to pay for your attorney, it is important to know the potential pitfalls of doing so.

Under the means test guidelines required to file Chapter 7 bankruptcy, or used to determine the plan commitment period for a Chapter 13 bankruptcy, the court will consider all income received by the debtor in the six months immediately before filing “from all sources”.  This means that if you received money from another source with the intention of filing bankruptcy, the funds you received will be considered income received by the debtor during the applicable income inclusion period. 

Depending on the level of your current income, and the amount of assistance you receive with your legal fee, the additional contribution conceivably may raise your annualized income as calculated for means test purposes above the allowable limits, and disqualify you from filing a Chapter 7 bankruptcy, or require that you repay your creditors with a monthly payment for 5 years instead of only 3. 

Even if the assistance received was not enough to render you ineligible for Chapter 7, it still must be disclosed to the bankruptcy Court, both on the means test form (Official Form B22A) and on the Disclosure of Compensation of Attorney for Debtor.  The Attorney Disclosure is a document filed with the Court and reviewed by the trustee to look at the amount charged by the Attorney to represent you in the case, some specifics about the terms of your representation, and the source of the funds.  If the information provided for the means test does not match the information provided on the Attorney Disclosure, the trustee may seek to dismiss your case, or at the very least, look at your case with an undue level of scrutiny.

Monday, February 6, 2012

The Interplay of the Automatic Stay, Child Support, and Alimony

One of the most significant benefits of filing for bankruptcy is the Automatic Stay. In short, the Automatic Stay halts other existing court proceedings that the individual filing for bankruptcy is involved in, as well as any collection efforts for the individual's debts, until the bankruptcy proceedings are resolved.

In certain situations, the Automatic Stay might not prevent other court proceedings from continuing, at least in part. For example, in any family law case involving child support and custody, issues involving visitation or current child support are not subject to the Automatic Stay, but issues involving past due child support will be continued until the Automatic Stay is lifted at the end of bankruptcy proceedings. It is possible that a judge in this instance will actually not hear any issues at all until the Automatic Stay is lifted, but the circumstances might be such that the issues of visitation or current support need to be addressed in a more timely manner.

It is important to understand that although the Automatic Stay will halt court proceedings, any existing order for current child support or alimony will still accrue. In other words, an individual that is obligated to pay child support or alimony each week will not be relieved of this after a filing for bankruptcy, whether the person filing for bankruptcy is the individual who is supposed to pay the alimony or child support, or the individual who is to receive the alimony or child support. The Automatic Stay should, however, suspend efforts to collect any arrearage.

Additionally, for individuals that file for bankruptcy who are to receive alimony or child support payments and are owed an arrearage, any past due child support or alimony obligations and any current child support or alimony obligations are exempt from the bankruptcy proceedings, meaning that a bankruptcy trustee may not use this support to pay other creditors.

Should you have any questions about family law matters or bankruptcy, contact Attorney Jonathan R. Eaton by calling 508.655.5980 to schedule a one hour initial consultation.

Thursday, February 2, 2012

Why Bring an Attorney to the 341 Meeting?

Each petition under Chapter 7 and Chapter 13 of the United States Bankruptcy Code will have a meeting of creditors, commonly referred to as the "341 Meeting". If you are represented by an attorney at your 341 Meeting, your attorney will sit next to you when your case is called by the trustee. Usually, your attorney will not be required to speak much, as the trustee will ask you questions directly. Although the lion's share of the work that your attorney will put into your case will be prior to your 341 Meeting, there are certainly advantages of your attorney being with you.

Having your attorney there gives you certain advantages over going alone. First and foremost, you are benefiting from the attorney's experience and knowledge as to the intricacies of a complex field of law. Your attorney will know how to treat each of your assets and debts, and what the trustee is looking for, as well as how to fill out your schedules.

Second, an attorney will know how to explain areas where your case might be interpreted against your interests if not properly and carefully explained to the trustee.

Third, your attorney is another set of eyes that can refresh your memory if you forget anything on your schedules. The trustee has the ability to ask about anything that you have filed, and having another person familiar with your case sitting next to you can help if your memory fails you.

To speak with Attorney Matthew Trask about bankruptcy call 508.655.5980 or email us.

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