Traveling Without Credit

Many clients often ask how they will be able to do ANYTHING after bankruptcy as in their eyes; the whole world operates on “credit”. My friend, and author of “Bounce Back from Bankruptcy”, Paula Langguth Ryan, wrote a free how-to guide for traveling without credit. Paula put much time and research into figuring out various companies’ policies on accepting cash v. credit, and what ways consumers can book reservations for everything from car rentals to hotels to plane tickets without using credit. This resource is a great place to start planning a trip for anyone looking to avoid credit card traps and pitfalls.

Making reservations without credit has increasingly become an easier task with the influx of technology. Sites like PayPal allow you to pay online for various goods and services simply by linking to your checking account; no credit needed. In addition, services like Uber provide traditional transportation style services you might otherwise use a cab for, but in an untraditional, tech savvy way through booking and paying for services via an App on your Smartphone. The good and the bad about the “changing of the times” is that increasingly there are options available to consumers to pay for their goods and services that do not involve the need or requirement to have credit. Even major retailers like Target have debit card options in addition to their credit card options.

Of particular note, there are also several ways to appear as though you have a credit card when in fact you do not; VISA/AMEX gift cards are a perfect example of this. These cards act as credit cards because they have the necessary “VISA” or “American Express” designations, but they do not actually provide you credit, just access to money you pre-pay onto the card. This is not only a great way to operate in a “credit” world without credit, but it’s a great way for people who are in financial recovery, to get back on their feet placing themselves on a budget. Setting aside a pre-paid VISA card for certain expenses, loading it with a certain amount of money at the beginning of the month and then not being able to use it once the money runs out, is  a great way to teach young people about living on a budget, and to help you control your own spending habits. Beware however, some of these cards charge $3-6 purchase fees and may even have monthly maintenance fees associated. Always read the fine print.

 

Tiffany Franc is an attorney in PK Law’s Corporate and Business Services Group. She provides Chapter 7 and Chapter 13 legal advice and representation to individuals, and advice on bankruptcy alternatives, including debt restructuring and rehabilitation, to consumers facing debt collection, garnishment, liens and foreclosure and is trained in handling short sales and mortgage loan modifications. Ms. Franc can also assist businesses and individuals with navigating bankruptcy as a creditor.

In addition, Mrs. Franc represents clients in adoption proceedings (adult, step-parent, 2nd parent, interstate (ICPC) and finalizations in MD of out-of-state or out-of-country placements), child custody/access and child support matters, absolute and limited divorce hearings, prenuptial agreements and settlement negotiations in family law matters.

Tiffany can be reached at 410-832-5450 or tfranc@pklaw.com.

The “Get Out of Debt Guy”-fellow bankruptcy blogger!

I recently came across a blog called “Get Out Of Debt Guy”, authored by Steve Rhode, blogger and former bankruptcy debtor. While his website is much more than articles about bankruptcy, the one thing that stood out to me were his refreshingly positive articles and Q&A’s about filing bankruptcy. In fact, he makes the statement “If you file for bankruptcy your life will get better.” As a bankruptcy attorney I spend my days pitching bankruptcy to clients, explaining how it is the best option for them to get a speedy and cost effective result, yet they are skeptical and want to avoid the process at all costs. In this article, Steve discusses 27 myths about bankruptcy and he is spot on with his answers. I almost feel like he bugged my office and took the words right out of my mouth!

The key to avoiding the pitfalls discussed in these myths is to have effective legal representation. While you do not have to have an attorney in order to file for bankruptcy, having one can help you avoid several pitfalls.

“I’ll lose my home or car”- while this is generally a bankruptcy myth, there are occasions it is a reality. Debtors who do not properly schedule or value their assets and/or know their state’s respective exemption laws, could lose their house, car, jewelry, cash etc.

“I make too much money to file bankruptcy” – while this is never the case, you may make too much money to file for Chapter 7 bankruptcy. The only way to know whether or not this applies to you, is to have an experienced practitioner run a “Means Test” for you, using the correct analysis of your income (here’s a hint, it’s not just what’s on your most current paystub!), and the correct expense analysis (another hint, it’s not always what you actually spend spend).

“Bankruptcy can’t eliminate taxes”- there are restrictions and some or all of your tax debt may not be eliminated. There are rules, including the 3 year, the 2 year and the 240 day rule; not even every bankruptcy attorney can accurately advise on tax issues because of the complicated nature of tax dischargeability.

These are just a few of the pitfalls an experienced bankrutpcy practitioner can help you avoid.

It’s not often in the media that I find accurate information on bankruptcy, as well as someone who is a vocal advocate for the process that isn’t an attorney selling their services. I find Mr. Rhodes site to be refreshing, informative and very accurate. Of course with anything, laws vary state to state and anyone with questions about bankruptcy and debt relief should consult a legal professional in their state to ensure the accuracy of Steve’s, or anyone else’s published information.

Tiffany Franc is an attorney in PK Law’s Corporate and Business Services Group. She provides Chapter 7 and Chapter 13 legal advice and representation to individuals, and advice on bankruptcy alternatives, including debt restructuring and rehabilitation, to consumers facing debt collection, garnishment, liens and foreclosure and is trained in handling short sales and mortgage loan modifications. Ms. Franc can also assist businesses and individuals with navigating bankruptcy as a creditor.

In addition, Mrs. Franc represents clients in adoption proceedings (adult, step-parent, 2nd parent, interstate (ICPC) and finalizations in MD of out-of-state or out-of-country placements), child custody/access and child support matters, absolute and limited divorce hearings, prenuptial agreements and settlement negotiations in family law matters.

Tiffany can be reached at 410-832-5450 or tfranc@pklaw.com.

What is an asset in bankruptcy?

WHAT IS AN ASSET IN BANKRUPTCY?

Bankruptcy requires Debtors inventory and value their belongings at replacement value (i.e. if you replaced that 10 year old sofa with the same 10 year old sofa, what would you pay?). While it sounds like a fairly simple and straightforward request, rarely do Debtors understand the implication of what an asset is, especially in the bankruptcy context. Here are some examples:

Cash-change in your couch cushions, ash tray or piggy bank; rainy day fund in your mattress, what’s in your purse or wallet.

Bank Accounts-This may be an easy one-its bank accounts! But don’t forget those online only banks, accounts you opened just to get that free Ravens towel. What about PayPal? Has a friend or family member recently given you money and used PayPal, or have you sold something on eBay you were paid via PayPal and the money is sitting in your account there. Let’s also not forget joint accounts, this means ANY bank account your name is on, even if just for convenience purposes or as a “Pay on Death” recipient.

Security Deposits-landlords, public utilities, earnest money down payments, deposits for future vacations, deposit on a lease.

Household Goods & Furnishings-Towels, knick-knacks, curtains, dishes, bedding, irons, and all furniture. I think of ‘goods’ this way-can you buy it at Bed, Bath & Beyond? Then it’s likely a household good! There’s a little section of the bankruptcy form that says “including audio, video and computer equipment” so don’t forget those! Surround systems, boom boxes, video cameras, computer accessories and printers etc.

Books, pictures, and other art objects, antiques, stamp, coin, record, tape, CD and other collections or collectibles-books, CDs, DVDs, VHS (what is that?), Bible, wall art, posters and pictures. Any antiques, collections, collectibles, stamps or coins should be individually appraised to assure their value is correctly listed.

Wearing Apparel-everything from your hats to socks and all the in between (yes your underwear too, except they probably don’t have a resale value!). Don’t forget your dress clothes, suits, coats, belts and SHOES (my personal favorite). It’s important to remember that most clothing does not have a high resale value.

Furs & Jewelry-this includes faux fur and costume jewelry! If there are big ticket or unique items (i.e. antique or unique setting) have the jewelry appraised (and not a “for insurance purposes” appraisal). Probably a best bet to go to a pawn shop for jewelry appraisals.

Firearms, Sports, Photographic, and other hobby equipment-pretty self explanatory but don’t forget all of the memory cards for your camera, golf clubs, scrapbooking supplies. Think about your hobbies and what you own that is related to them. Firearms should be itemized by make and model, but should also include any ammunition kept on hand.

Interests in insurance policies-check all life insurance policies you own to see if they have a cash value, sometimes called a surrender or refund value. These are often called “whole life” policies. But if you are the beneficiary of a life insurance policy owned by someone else, you should discuss this with your bankruptcy counsel as well.

Annuities-Lottery annuities, personal injury settlement annuities, retirement annuities.

Education IRA-now called a Coverdell ESA or 529 Plan.

Interests in IRA, ERISA, Keough, or other pensions or profit sharing plans-This means everything from 401k to IRA, pensions and any other retirement plan.

Stocks and interests in incorporated and unincorporated businesses– Stocks on the stock market or stocks in a defunct business the debtor started years ago. Employee Stock Option Plans.

Interests in partnerships or joint ventures-even if defunct and out of business.

Government & Corporate Bonds and other negotiable and nonnegotiable instruments-savings bonds for your children apply here; also promissory notes in your favor, a contract entitling you to payment or property.

Accounts Receivable-Anyone that owes you money, including your Mom, Sister, neighbor, former employer, tenant etc.

Alimony, maintenance, support and property settlements to which the debtor is or may be entitled-This is a pretty broad one as it includes things you “may be entitled.” If you have a divorce or other domestic case pending at the time of your bankruptcy, you should provide all of the pleadings to your bankruptcy attorney and any and all relief you are asking of the divorce court should be included in this line item. Child support, including arrears is listed here as well.

Other liquidated debts-This can include tax refunds (if amount known) or any money that is owed to you in a fixed sum.

Equitable or future interests, life estates, and rights or powers exercisable for the benefit of the debtor other than those listed in Schedule A-as a Debtor you should ask your parents and grandparents whether they have put you on the Deed to their house, even as a remainderman interest on a life estate. If they don’t know, ask whether they’ve had estate planning or Medicaid planning done, this may be a good indication that an attorney has maybe performed some Deed work that could affect your client. Also disclose whether you affirmatively know if you are the beneficiary under a Trust or Will of another person.

Contingent and noncontingent interests in estate of a decedent, death benefit plan, life insurance policy or trust-if a close friend or relative has recently died, you need to find out post haste whether or not you are a beneficiary of any of their property and this needs to be disclosed, even if the property is not distributed to you yet.

Other contingent and unliquidated claims of every nature– includes tax refunds (if amount unknown) but most importantly it includes any suit or right to bring a suit against someone that you have at the time of filing. Recent car accident and you’re negotiating with insurance? Disclose it. Slip & fall at work and you have a workers comp claim? Disclose it. Signed up for one of those class action law suits that you hope to get $1.00 from in 10 years? Disclose it. Even if you haven’t ACTUALLY sued anyone, if you sustained any injury at all to person or property, the incident should be disclosed. If you have seen an attorney about an incident and they told you your case was worthless, it should be disclosed. These can also include claims for contract, torts, employment and sexual harassment.

Patents, copyrights and other intellectual property-if you have an agent or have had a contract to sell an idea, song, book etc., this applies to you.

Licenses, franchises and other general intangibles-Professional licenses, liquor licenses, franchise agreements.

Customer lists or other compilations containing personally identifiable information-Usually only applicable if you’ve ever owned your own company.

Automobiles, trucks, trailers and other vehicles and accessories, boats, motors and accessories-vehicles should be listed by year, make and model and should include an indication their mileage and condition. Utility trailers, campers, RVs and any other kind of vehicle accessory should be listed. Picture your garage, shed and backyard and determine whether anything you see fits in this category.

Office equipment, furnishings and supplies-if you have a home office all items should be listed, though many probably fall under the “household goods” category as well.

Other personal property of any kind-pre-petition garnished wages or bank accounts; website domains, PSLs at M&T Bank Stadium, season tickets to sporting event, gift cards, tools.

 The important thing to remember is that NOT disclosing an asset is a felony (as is any other lie you tell in bankruptcy)! Disclose everything to your bankruptcy attorney, it may change their analysis of your case, but they are best suited to help you strategize how best to approach your case given that information. Once you have failed to disclose, there is no going back.

 

Tiffany Franc is an attorney in PK Law’s Corporate and Business Services Group. She provides Chapter 7 and Chapter 13 legal advice and representation to individuals, and advice on bankruptcy alternatives, including debt restructuring and rehabilitation, to consumers facing debt collection, garnishment, liens and foreclosure and is trained in handling short sales and mortgage loan modifications. Ms. Franc can also assist businesses and individuals with navigating bankruptcy as a creditor.

In addition, Mrs. Franc represents clients in adoption proceedings (adult, step-parent, 2nd parent, interstate (ICPC) and finalizations in MD of out-of-state or out-of-country placements), child custody/access and child support matters, absolute and limited divorce hearings, prenuptial agreements and settlement negotiations in family law matters.

Tiffany can be reached at 410-832-5450 or tfranc@pklaw.com.

Restitution from Sallie Mae for Servicemembers

The Servicemembers Civil Relief Act is a law designed to provide extra legal protections for servicemembers entering the service, being deployed or otherwise called to active duty. The law also requires a cap on the interest rate charged on student loans during a servicemembers active duty period (6%).

A recent audit of leading student loan provider Sallie Mae, revealed that only 7% of servicemembers otherwise eligible for the interest rate cap, were actually granted the cap. Out of this revelation, and potential litigation, came a settlement between Sallie Mae and the Department of Justice to the tune of $60 million. The settlement provides refunds to 60,000 servicemembers, including refunds for unfairly charged late fees as well as substantial civil penalties for Sallie Mae’s alleged violations.

The settlement is pending approval from a Judge but thereafter, a system will be put in place for aggrieved servicemembers to make their claims against the settlement fund. For servicemembers experiencing other financial turmoil, the value of their claim against the settlement fund should be closely evaluated. If you are contemplating bankruptcy, you need to disclose your estimated share of the settlement fund as an asset in your bankruptcy case and work closely with a bankruptcy attorney to determine whether your right to monies is exempt under applicable State or Federal law.

It should be noted that Sallie Mae is still being investigated by the Consumer Financial Protection Bureau. Further lawsuits, followed by subsequent settlements, could stem from the CFPB  investigation as well, which in turn could mean additional settlements and funds for affected servicemembers.

-Factual details derived from HuffingtonPost.com & NY Times

-See full story here.

 

Tiffany Franc is an attorney in PK Law’s Corporate and Business Services Group. She provides Chapter 7 and Chapter 13 legal advice and representation to individuals, and advice on bankruptcy alternatives, including debt restructuring and rehabilitation, to consumers facing debt collection, garnishment, liens and foreclosure and is trained in handling short sales and mortgage loan modifications. Ms. Franc can also assist businesses and individuals with navigating bankruptcy as a creditor.

In addition, Mrs. Franc represents clients in adoption proceedings (adult, step-parent, 2nd parent, interstate (ICPC) and finalizations in MD of out-of-state or out-of-country placements), child custody/access and child support matters, absolute and limited divorce hearings, prenuptial agreements and settlement negotiations in family law matters.

Tiffany can be reached at 410-832-5450 or tfranc@pklaw.com.

The Biblical Case for Bankruptcy

Most people who file bankruptcy do not have to do so simply because they lived beyond their means, there is usually a loss of income, a medical issue that has occurred, or a minor default on one credit card. Once such a default gets reported to the credit reporting agencies, it causes a snowball effect that all other credit cards and lines of credit skyrocket your interest rate in excess of 20% so that your monthly minimum payments become unmanageable. But most debtors, even after experiencing these types of unexpected, and oftentimes uncontrollable, set-backs, cannot reconcile filing bankruptcy with their moral and religious beliefs.

It’s my belief that the foundation of all spirituality, whether manifested in religion or otherwise, is repentance and forgiveness. To this end, I often find myself helping clients forgive themselves for getting into a situation where bankruptcy is their way out. I have no magical advice in this regard, it is very fact specific to a person’s situation, but the key is that you must forgive yourself in order to give yourself the permission you are looking for from your soul, to file bankruptcy.

In the Bible, bankruptcy is not specifically addressed as it is a concept developed by man and not God. However, there are parallels to the bankruptcy system in various religious doctrines.

Psalm 37:21
The wicked borrows and does not pay back, but the righteous is gracious and gives.

Ecclesiastes 5:5
It is better that you should not vow than that you should vow and not pay.

Deuteronomy 15:1-2
“At the end of every seven years you shall grant a release. And this is the manner of the release: every creditor shall release what he has lent to his neighbor. He shall not exact it of his neighbor, his brother, because the Lord’s release has been proclaimed.”

It may seem at first blush that the above quotes only serve to strengthen the point that bankruptcy is contrary to religion. However, borrowers must remember that when you borrow or “vow”, you must do so with the intention to pay back. But under Deuteronomy, once you’ve had a debt for 7 years that isn’t paid back, you should be entitled to a “release”. Such release is received through bankruptcy.

If you are in financial trouble, you must start by forgiving yourself for the position you are in, then avail yourself of the legal system that exists to help you through these times and thereafter repent by supporting financial literacy efforts in your local community and by giving back to non-profit organizations that support financial literacy. You can help fund and support programs that will allow future generations to have more education to make better financial decisions because the fact of the matter is, many bankruptcies occur simply because individuals live beyond their means and make poor financial decisions. In this light, you may not be paying your creditors back directly, but you will be paying them back by helping to provide them with a more educated consumer who hopefully will not make decisions that lead them into bankruptcy and increasing the loss to creditors on future discharges of debt. 

 

Tiffany Franc is an attorney in PK Law’s Corporate and Business Services Group. She provides Chapter 7 and Chapter 13 legal advice and representation to individuals, and advice on bankruptcy alternatives, including debt restructuring and rehabilitation, to consumers facing debt collection, garnishment, liens and foreclosure and is trained in handling short sales and mortgage loan modifications. Ms. Franc can also assist businesses and individuals with navigating bankruptcy as a creditor.

In addition, Mrs. Franc represents clients in adoption proceedings (adult, step-parent, 2nd parent, interstate (ICPC) and finalizations in MD of out-of-state or out-of-country placements), child custody/access and child support matters, absolute and limited divorce hearings, prenuptial agreements and settlement negotiations in family law matters.

Tiffany can be reached at 410-832-5450 or tfranc@pklaw.com.