No…not Debtors’ Prison (unless it is child support or some taxes). It is not all that unusual that someone who files a Bankruptcy case goes to jail later, or someone already in jail or prison wants to file a Bankruptcy case. For example, take the person who is in financial trouble and gets behind on child support. He or she may file a Bankruptcy case, and then be held in contempt and sent to jail in the support case. There is nothing in the Bankruptcy Code that prevents someone in prison or jail from filing and proceeding with a Bankruptcy case. It certainly will take some planning and cooperation. For example, when the individual has to appear in Bankruptcy Court or the first meeting of creditors, their lawyer has to get permission for the person to appear by phone, and set up the call with the jail or prison. It is also much more likely that someone in prison or in jail for an extended time will not be able to proceed with a Chapter 11 or Chapter 13 case, since they typically require regular income and much more participation in the case. The lawyer probably has to be willing to meet at the jail or prison, and/or get get signed documents back and forth. Relatives may have to be recruited for this. These are merely nuisances or obstacles, but there are no legal prohibitions against someone in prison or jail filing for Bankruptcy.
Beware Of Trap Of No-Interest Or Low-Interest Balance Transfer And Cash Advance Offers
‘Tis the Season … of very attractive offers from credit cards for cash advances or balance transfers at 0% interest or a very low interest rate (“teaser rates”). I get them just 
about every day from credit cards I have and ones I don’t have. The most aggressive bank sends me about two offers a week, and gives me the option of a 0% rate for about 6 months, or a 1.9% rate for a year. This sounds like a great deal because these rates are certainly far below the regular interest rates on all my credit cards. If I have a $10,000 balance on a high interest card and $10,000 in available credit on the card making the offer, it seems like a no-brainer! They may even raise my limit to give me more room to pay off high balance cards. How could this not be a great idea?!?! Well, let’s look at reality. Let’s start with the basic principle that if lenders and credit card issuers are heavily pushing these offers it is not because of the benefits to you. It is because there is a very good rate of return (i.e. profit) for them. Breaking it down a little more…. Continue Reading
My Friend Is In Financial Trouble And Wants To Put His Money In My Bank Account.
The short and easy answer: Don’t do it!! We get this question all the time from either the person who has money problems or the friend or relative who is asked for the use of their bank accounts. If you are asked by someone to let them use your bank account to hold money, it does not necessarily mean that they have really bad intentions. It could mean they expect garnishments and want to make sure they have enough money for food and electricity until they get a long term plan. On the other hand, yes, it sometimes means that the person is just trying to hide money and wants you to participate in a scheme. No matter what led your friend or cousin to ask to use your bank account for their money, the answer should always be the same – “no.” Simply stated, nothing good can come out of this for either of you. If your friend is concerned about a garnishment or the bank holding up their money, it is best in the short term that they just keep it in cash rather than get others involved. You should also encourage them to see a lawyer either to deal with the specific creditor or to discuss whether Bankruptcy is an option. Even getting in this situation is a sign of larger financial problems. Continue Reading
Should I Tell Creditors I Am Planning To File For Bankruptcy?
This question comes up fairly regularly. Is it a good idea, or totally useless, to tell your creditors that you are planning on filing for Bankruptcy, have hired a Bankruptcy lawyer, or you are going to file for Bankruptcy at some point. There is really no firm answer either way as it depends on the circumstances, but I feel strongly that telling your creditors that you are going to file a Bankruptcy case at some point is, at best, a waste of time. At worst, it can speed up the creditor filing a lawsuit, garnishing wages and accounts (if they have a judgment) or repossessing a vehicle. There is simply no reason to let creditors or collectors know your future plans, or to have an extended conversation with them about anything if you really are going to file. If and when you do file for Bankruptcy, they will receive notice from the Court. In addition, there is no legal significance of hiring a Bankruptcy lawyer or doing anything other than actually filing the case. Rarely will collectors stop their efforts until you actually file the case, and at that point you can merely give them the case number and date the case was filed. Continue Reading
Can I Be Arrested If I Don’t Pay My Debts?
Although Debtors Prison was a reality in the United States a couple hundred years ago, and still exists in other countries, you cannot go to jail or prison, or even be lawfully arrested, merely for owing a debt. It does not matter whether it is a $100 debt to a friend or a $1 million business debt. Although the police often get called for such things, they will almost never get involved and they tell the creditor it is a civil matter. Unfortunately, many unscrupulous lenders will lie and threaten people with arrest if the debt is not paid immediately or in the near future. I just read about one person who received a call from the alleged collection agency who told her they were actually in the Judge’s office and he was going to sign a warrant for her arrest if the debt was not paid over the phone immediately. Collectors are violating the law by making any threats of arrest! In addition, if you get a call like this the chances are also high that it is an outright criminal scam to get you to give the criminals your credit card, debit card or bank account numbers. Never, never, ever give your card or account numbers to any collector (or person who claims to be a collector or creditor) over the phone!! Continue Reading
Money and Marriage: Avoid Divorce and Bankruptcy!
Among the biggest causes of Bankruptcy is divorce. Not only can it lead to significant legal fees, the spouses usually find themselves paying for two households rather than one 
while still making the same combined income. One party may not have the ability to keep paying for their house on a single income. The problems not only hit lower and middle income earning couples, they can also lead to problems for the relatively wealthy. In a circular way, it is also money problems that lead to marital discord and divorce. In a recent article on Clark Howard’s website, Farnoosh Torabi listed some tips for avoiding problems. Here is a brief summary of the tips:
- One person should be the “Chief Financial Officer” for the home to manage household finances. However, the other spouse should not be in the dark, and the job can be rotated every few months.
- Automate finances as much as possible (but do not pay monthly bills via auto-debit). Each party can then check online for account balances, etc.
- Each spouse should have full access to accounts, passwords, statements and bills even though one serves as the “CFO.” Stay transparent, and use a free site such as Mint.com to create a budget and track spending.
- Each person should have their own small bank account for personal use, even though most finances will be run through a joint account. (SR Note: If one party has financial problems, such as outstanding judgments, it may be important to maintain separate accounts so a joint account will not be subject to garnishment).
- Make big financial decisions by committee and discuss any large purchases before making them.
Although I often disagree with Clark Howard on various issues, his website is a source of a lot of good information on budgeting and other consumer issues.
Photo Credit: Clarkhoward.com.
How To Prepare For An Audit By The U.S. Trustee.
As we discussed in this prior post, 
the United States Trustee’s office will randomly audit Chapter 7 and Chapter 13 cases (as many as one in every 250 cases), and will audit other cases because there is something in the Schedules that makes that case stand out from the “average” Chapter 7 or 13 cases. This could be a higher than average income, very high expenses or some other factor. In this post, we will focus on how to prepare for each of these kinds of audits. There is one universal principle that applies across the board: Make sure all Schedules are completed honestly, accurately and completely when they are filed! By the time you get to an audit, it may be too late to correct any errors, whether or not they are intentional and it could certainly look a little suspect. Any successful Bankruptcy case starts with getting the Schedules as accurate as possible, and good lawyers will make sure they spend time reviewing them with you and asking questions about them. Continue Reading
The U.S. Trustee Wants To Review My Case! Should I Be Worried?
If you find that your Bankruptcy case is being reviewed by the United States Trustee it is not necessarily a bad sign but it is something you will want to discuss with your lawyer. It might seem especially scary if the first you hear about it is a notice of a Rule 2004 Examination or request for documents, with no explanation of what they are looking for. Even worse, the last time the U.S. Trustee reviewed one of my cases, they electronically filed a motion to extend the time to object to my client’s discharge at about 11:45 p.m. – fifteen minutes before the midnight deadline. This was after the first meeting of creditors and the Chapter 7 Trustee had already entered a no-asset report. We did not know exactly what the U.S. Trustee’s office was looking for, but it was a higher income Chapter 7 client with several rental properties. The attorney for the U.S. Trustee took the Rule 2004 deposition and told us at the conclusion that he had no issues in the case and we expect a discharge soon. Continue Reading
How Long Can I Stay In My House After Foreclosure?
If you have gone through the foreclosure process, maybe because you have decided to leave an expensive house and debt behind, and you are still living in the house, you are probably wondering how long you can stay in the house before you have to move. The answer is…it depends. Primarily, it depends on the laws of your state. Because this blog focuses on Georgia, I will describe the process here and many states are probably similar. The one thing I can tell you is that I am pretty sure in no state can someone simply show up at your house the next day and put you, your family and all your property out on the street. There are a few factors that determine how long you can stay in the house. Generally, within a few days after the foreclosure sale you will hear from the new owner of the property, or someone acting on their behalf. The majority of foreclosure sales end up with the lender taking the property back and they often have real estate companies or foreclosure management companies handling the properties. The person will let you know when they expect you to be out of the house, or even propose a cash for keys deal. In some cases, such as when an investor purchases the property, they may offer to lease you the house for a while. On the other hand, what if the new owner wants you out as soon as possible? Continue Reading
Can Non-US Citizens File A Bankruptcy Case?
The Bankruptcy Code has specific code sections that list the requirements to be eligible to file a Bankruptcy case. What is not included in the list of requirements is that the 
individual is a United States Citizen, or even in the country legally. Generally, if you have a residence or business in the United States, and have debt, you can file a Bankruptcy case here. While even illegal (unlawful/undocumented) residents can file a Bankruptcy case, keep in mind that the filing of a petition and popping up in the government computers may trigger an enforcement action or or negative consequences related to your immigration status.
Further Reading: Bankruptcy Code Section 109 – Who May Be A Debtor.