Tax Refund Loans … Bye, Bye ! … and Good Riddance

Republic Bank and Trust Company of Louisville, Kentucky is the final bank in the country to be forced to eliminate their super high interest tax refund loans that prey on the financially strapped.  The Bank, in conjunction with Jackson Hewitt tax service have conspired for years to convince needy tax filers to pay up to 149% interest for these outlandish loans that enable tax payers to receive their tax refund money a few days early. 

The New York Times has an excellent story on how federal regulators have finally eliminated this tactic that Republic Bank has gotten by with for years.

Following is an excerpt from the story, and here is the link to the full story:

“Recent action by federal regulators means that just one bank, the Republic Bank & Trust Company of Louisville, Ky., is offering the loans this tax season. But it won’t be doing so next year, under a settlement with the Federal Deposit Insurance Corporation. (It’s possible that some smaller payday lenders, which until recently haven’t had much federal oversight, may still offer some version of the loans.) This year, according to the consumer law center, filers who get a $1,500 refund anticipation loan from Republic through the Jackson Hewitt tax preparation chain will pay $61.22, which translates into an annual percentage rate of 149 percent for a 10-day term.”

It is sad that a Kentucky bank was perpetrating this tactic, but good news that it is being eliminated.

If, as a consumer, you are faced with the option of choosing an RAL this year to receive your tax refund, JUST SAY NO !

John Rogers, Kentucky Bankruptcy Attorney

The Case of the Sequaciously Servile Lawyer

“Butler-style” representation, under which the sequaciously servile lawyer does whatever the client wants and then cites that client’s command as a shield to the improper actions has no place in bankruptcy court or in any court.”

The above alliterative quote is taken from a recent bankruptcy court case in Nevada, In Re Blue Pine Group, Inc., and it points out the responsibility that a bankruptcy attorney has not only to his or her client, but to the court.

In rare cases, if the attorney and client can not agree on a course of action, and the attorney knows that course of action to be ethically improper or legally wrong, then it may be necessary for the attorney to withdraw from representation of the client.  Most judges that I have practiced in front of understand that these situations do occur, and when explained properly, will allow the attorney to withdraw.

John Rogers, Kentucky Bankruptcy Attorney

2011 in review

The WordPress.com stats helper monkeys prepared a 2011 annual report for this blog.

Here’s an excerpt:

A San Francisco cable car holds 60 people. This blog was viewed about 2,200 times in 2011. If it were a cable car, it would take about 37 trips to carry that many people.

Click here to see the complete report.

Small Business Debt and Bankruptcy

An excellent article from the website JD Supra about Small Business Bankruptcy and debts.

It is very important to always give complete information to your bankruptcy attorney about who is responsible for the debt of your business.  For example, did you personally sign and guarantee the debt, or did you just sign the debt as a representative of your business ?  Also, it will be very important for your attorney to know the type of your business, for example, is it a corporation, LLC partnership, sole proprietership, or some other type.

If you did not save the notes or other documents you signed with the bank or other lender, you will probably want to get those to bring to your attorney to review when you meet with them.

Also, any contracts or other agreements you have with vendors will be important to provide your attorney. 

Taxes are another type of debt that you may be personally liable for even though they were incurred in the course of a business.

A careful review of all of these issues and more will result in a better determination of your options.

Kentucky Bankruptcy Attorney John Rogers

Saving Your Home and The Payment

Lexington, Kentucky bankruptcy attorney Gregory Napier has written an excellent blog post about the real culprit that prevents folks from saving their homes,even with Chapter 13 Bankruptcy:  house payments that are too big ! 

Here is an excerpt:

“I wrote recently about how one might save their home from foreclosure through a Chapter 13 bankruptcy. There is another side to that story. Chapter 13 will not help everyone keep their home. One of the issues I spend considerable time talking to my clients about is whether they can actually afford to keep their home no matter what they do regarding debt relief.”

This advice is so true !  If your budget won’t allow you to continue to make your monthly payment, then instead of doing a Chapter 13 to save your home, you may want to consider surrendering the home in a Chapter 7. Of course, loan modifications or refinances are also an option to consider to lower your monthly payment, but those can be difficult to obtain in today’s economic climate. Be sure and discuss your options with your attorney and follow their advice.

John Rogers, Kentucky Bankruptcy Attorney

Finding the Right Bankruptcy Attorney

Once you have made the decision to at least talk with an attorney or lawyer about the prospect of bankruptcy, then it becomes important to find the right attorney to help guide you.  Here are a few tips that I think are important in finding the right attorney to talk with.

If possible, ask friends or family in the community where you live if they have ever had any experiences in talking with or being represented by a bankruptcy attorney.  If this is not practical, or you don’t feel comfortable doing this, you may want to talk to an attorney in the community that you know or has represented you or a family member with another legal matter.  Chances are that attorney may not handle bankruptcy matters, but most will know of the right attorney to refer you to assist you with bankruptcy.  It is very common for attorneys that practice in one area to know who is the best attorney in another area of law that they do not practice in.  They always want to be able to steer you in the right direction.

Also, you may want to check either on the internet or the yellow pages of your local phone directory.  Most attorneys that handle cases primarily in one particular area of law, such as bankruptcy, will want consumers to know that and will advertise or make that known either through a website or yellow pages advertisements.  The internet may be the more up to date place to check, as studies have shown that most folks find out about services now through websites as opposed to the yellow pages.

You may want to know if the attorney is Board Certified in Consumer Bankruptcy Law by the American Board of Certification.  This organization is the only certification group in the United States that give board certification in bankruptcy law.  Generally, an attorney that has taken the steps needed to obtain certification will have a deep knowledge of bankruptcy law and how it can assist you.  Also, you may want to know if the attorney is a member of the National Association of Consumer Bankruptcy Attorneys.  This voluntary professional association is the largest group to assist in the professional development of lawyers that primarily represent consumers seeking relief under the bankruptcy law.  This group has two meetings per year where attorneys discuss new and changing areas of the law and discuss developing ways to assist their clients.  Again, generally, if an attorney is a member of this group, he or she has taken a special interest in staying current on legal issues to best represent their clients.

Finally, when you finally meet with the attorney, ask them how many cases they typically handle per month.  This will give you a good indication of their experience level and how they may best help you.  Just as when deciding on a surgeon, you would not want an attorney that only handles 1 or 2 bankruptcy cases every few months.  It would most likely be best to have someone who appears in court regularly and has the broad experience to assist you.

These are some general guidelines to use when searching for a bankruptcy attorney.  We will discuss more in upcoming posts.

John Rogers, Kentucky Bankruptcy Attorney

 

 

 

 

 

Changing or Conversion from Chapter 13 to Chapter 7 After Filing

(The Conversion of St. Paul)

One of the most common questions that we get here in the office from clients or potential clients who are considering filing Chapter 13 bankruptcy regards changed circumstances while you are in Chapter 13 bankruptcy.  What will happen if our income goes down?  What will happen if we lose our jobs?  What if we decide to surrender the house or vehicle we are trying to save by filing Chapter 13 bankruptcy?

The good news is that the bankruptcy law allows you to convert from a Chapter 13 to a Chapter 7.  In other words, you are not forced to stay in Chapter 13.  This right to convert is not automatic.  The courts have said that you do have to ask the bankruptcy judge for permission, and as long as you are eligible for Chapter 7, then it is “almost” automatic that you are allowed to convert to Chapter 7.  Generally, there must not have been any fraud involved in your reasons to convert from Chapter 13 bankruptcy to Chapter 7 bankruptcy. 

As I said above, you will still have to qualify for Chapter 7 bankruptcy under the income means test requirements and all other requirements in order to convert to Chapter 7 bankruptcy. The date of any prior Chapter 7 or Chapter 13 filings is also important to know and can affect whether you can convert a Chapter 13 to Chapter 7.

Filing Chapter 13 bankruptcy is a huge commitment, and it is comforting to know that you do have the option of converting to Chapter 7 during your case if you don’t think you can stay it in.  In other words, filing Chapter 13 bankruptcy is not involuntary servitude.  There is an “escape valve”, and it is called conversion !

If you think Chapter 13 bankruptcy is an option for you, always discuss with your attorney the option of converting from Chapter 13 to Chapter 7 and why that may come up during your case.

Why are there differences in credit scores ? The CFPB tells us why !

 

The agency newly created by Congress to help us understand the complexities of financial products, The Consumer Financial Protection Bureau (CFPB), issued their report yesterday on why the credit score you purchase may be different from the credit score the bank uses.  The report can be found here and the CFPB press release announcing the report can be found here .

We have all known for years that these discrepancies exist, and now, for the first time, the reasons are explained to us.

The report is fairly lengthy, but is a good explanation of the differences between the credit report a bank or financial institution “pulls” on you and a credit report that you obtain yourself over the internet or by mail.

This knowledge can help you understand why a bank or financial institution may take adverse action on your loans or lending capacity, even when you think your credit score that you had obtained doesn’t warrant that adverse action.

 

 

Don McNay: Just Say No to Adult Children Wanting Money

One of the main financial problems that I see from older folks is when they have continued to give money to adult children to the point where it causes them to not have the money to pay their own bills.  My friend, Don McNay has written recently on this recurring problem, and it is worth repeating her:

Don McNay, CLU, ChFC, MSFS, CSSC is founder of the McNay Settlement Group in Richmond, KY.

An award winning, syndicated financial columnist, McNay is the author of Son of a Son of a Gambler: Winners, Losers and What to Do When you Win the Lottery and The Unbridled World of Ernie Fletcher. You can write to him at don@donmcnay.com or read other columns at www.donmcnay.com

Inherited Real Estate Property Before Filing Bankruptcy

 

When consulting with a bankruptcy attorney, it is very important to share with the attorney a complete listing of all the “real property” that is owned. This may seem very easy and straightforward. Often, we have folks that forget to tell us about real property that they have inherited. They don’t think about that inherited property being property that “they” own. The issue often becomes murkier for them when they own the inherited property with other family members, possibly brothers and sisters.

Even if you have inherited real property, also known as real estate or land, you still have what is known as a “property interest” in that real estate or land. Also, any structures that have been built on that land, such as houses, barns, and the like, are also considered part of the land and are valued with the land and you have a “property interest” in them as well.

For example, if you own the real property with family members, say 2 brothers, then you would only have a one-third interest in that land, but, nevertheless, it is a considered a property interest under the bankruptcy law. It must be disclosed to your attorney and listed in a bankruptcy petition.

Often, folks will only tell us about inherited real property when we start asking them questions about any inheritances that they may have received in the past. I don’t believe they are intentionally not telling us about the real property, it just seems that they don’t think of it as really

“theirs”. When we do find out about the inherited real property, and ask why they didn’t tell us about it when asking earlier if “they” owned any land, they often say they just did not consider that “their” property, in the sense that they owned it outright.

The role of the bankruptcy attorney, and the questions they ask, can be very crucial in discovering all of the real property interests of a debtor. It is always best to share with your attorney any thing of value that you own or even have any dealings with whatsoever.

Kentucky Bankrupty Attorney John Rogers