Tag Archives: Puyallup Bankruptcy

What if my income makes me ineligible for bankruptcy?

Bankruptcy is a very complex piece of legislation made more complex by the fact that some states have enacted their own versions of what is, essentially, a federal act. Despite having state bankruptcy laws in place, bankruptcy is still petitioned through the Federal Bankruptcy Court system. While it is fairly rare, it is technically possible to be ineligible for bankruptcy because of your income. As I stated, it is rare, however, the legal system is starting to see more people fitting this criteria every week.

So why would income make you ineligible for bankruptcy? To qualify for a Chapter 7 petition for bankruptcy, your income needs to be below the state median. The term ‘income’ in this situation is actually a figure that is determined by averaging your actual before tax income over the proceeding six months. If you had a high income job, and then found yourself out of work, that high income job may push you over the state median – this means your ineligible for a Chapter 7.

The bad news is that on November 1 2011, the median income in all states dropped. For one person households, the drop is only a few hundred dollars per year, but for a four person household, the drop could be as high as $4000 depending on the state you live in. Every state’s median income is derived from data collected by the Census Bureau and with unemployment high it was only natural that median income levels were going to drop. This means that more people are now ineligible to file a Chapter 7 petition than before.

On the other hand, if you are trying to file a Chapter 13 petition for bankruptcy, you may be ineligible due to too little income. In a Chapter 13 petition, you need submit a payment plan that will cover your secured and priority debts as a minimum. If you are not working or you have a very small income, you may not be in a position to submit a plan that adequately covers those debts. The trustee may then refuse to accept your payment plan. As you can see, there is the possibility for a catch 22 situation, technically ineligible for either forms of bankruptcy.

There are options available that an experienced bankruptcy attorney can consider. While you may not qualify for a Chapter 7 petition based on income, but if you are only slightly above median, there is an alternate route whereby your attorney can work through every expense. This route looks at allowable expenses such as car costs, rent, education and medical expenses, which may well modify your income enough to bring you below the state’s median. . You may also qualify for special circumstances, or totality of circumstances – the latter will look at your lost employment to determine if this is going to be a long term situation. After all, if you don’t qualify today, you may well in two or three months when your past employment has a reduced effect on your average income.

There’s a saying we hear a lot in law – “what a difference a day makes.” In law, this is very true. If you file for bankruptcy on a Thursday, you may be ineligible for a Chapter 7 – submit that same petition on the Friday, and you could be eligible. It all comes to the average of your income over the past six months. By waiting one day, you could move from one pay period to another, with the second being unemployment, and that can significantly drop your average income to below the state’s median.

That indeed may well become your final option – waiting. Of course, that is only an option if you have that time up your sleeve. This well depends on your circumstances and the amount of pressure coming from creditors. What is important to note is that bankruptcy law is always in flux. What is true today may not be true tomorrow, especially when judges enter new interpretations of the law. The smartest move anyone can make when considering bankruptcy is to engage the services of an experienced bankruptcy attorney. It is their job to keep up to date with all the latest changes in bankruptcy.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free 30 minute consultation at www.washingtonbankruptcy.com or e-mail directly [email protected]. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

Do I have to include credit cards with a zero balance on my bankruptcy petition?

While bankruptcy is designed to help people escape serious debt problems, the situation becomes interesting when it comes to credit accounts with zero balances. These are typically credit card debts, either through credit card companies or those issued by individual businesses. When filing for bankruptcy, debtors only need to include actual debts, so in theory, they do not need to list those zero balance accounts. The situation becomes a little murkier if these accounts include monthly or annual fees, and those fees will become due during the bankruptcy process.

In most instances, you can leave these accounts out of your bankruptcy petition. You should be aware that your petition for bankruptcy does become a matter of public record and that most credit providers regularly data match bankruptcy petition notices and their own records. While your account may have a zero balance, your credit provider is quite within their rights to cancel those cards to prevent you incurring new debt.

Should your credit provider not cancel those accounts, they will be available to use post bankruptcy. This can help to kick start a new positive credit history post bankruptcy so it is well worth considering paying down any credit accounts with low balances prior to filing for bankruptcy. Paying down those accounts will not guarantee they survive the bankruptcy process, however, it can be well worth exploring the option.

Bankruptcy will, especially in a Chapter 7 bankruptcy, discharge all eligible debt no matter how large or small the balance is. Paying down to zero any low value (less than $200) balances makes sense for a number of reasons, most particularly, having that account survive bankruptcy and available post bankruptcy.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free 30 minute consultation at staff1. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

3% Drop in Bankruptcies reported January 5, 2011 – Seattle Times

December 2010 bankruptcy filings decreased 3% nationally as compared to December 2009, with 113,000 bankruptcy filings in Dec. 2010.

There are about 90 bankruptcy districts in the nation.

There was a similar decrease in filings October 2009 to October 2010.

The nation recorded about 1.55 million bankruptcy filings in 2010, an increase of 8.0% from 2009.

There was an increase of 32% from 2008 to 2009, and a 33% increase from 2007 to 2008.

The number of filings in 2010 matched that for 2004.

The West, however, indicated ongoing growth in filings, with Hawaii up 22%, Utah increasing 19%, California up 19% and Arizona up 18%.

Bob Lawless, a University of Illinois College of Law professor believes that the slight decrease in filings might be a reflection of the increased difficulty in obtaining credit advances over the past couple of years.

As reported by Make Baker of the Associated Press, See The Seattle Times, 1/5/11 Page A-9 Business.

Unemployment up in two-thirds of metropolitain areas re: November 2010

Unemployment rates rose in more than two-thirds of the nation’s largest metro areas in November, a sharp reversal from the previous month and the most since June.

The Department of Labor recited on January 2, 2011, that unemployment rates rose in 258 of the 372 largest cities, fell in 88 cities and remained the same in 26 cities. That was worse than the previous month, in which rates fell in 200 areas.

Areas with weakness in the housing market are seeing growing unemployment e.g. California, Nevada, Florida and Georgia. Las Vegas, Atlanta, San Francisco and Miami also saw increases in unemployment.

November 2010 unemployment rose to 9.8% from 9.6% over October 2010.

Many laid-off workers are giving up on job searches.

Washington may have made some small gains during this time period, but remains at 9.2% unemployment for November 2010.

We Emphasize Washington State Bankruptcy Law

Welcome to The Law Offices of James H MaGee, Washington Bankruptcy Attorney

If you are in debt and are considering filing bankruptcy in the State of Washington, we have assembled a great deal of useful, free bankruptcy information for you. We recommend that you start on the bankruptcy basics page.

We offer appointments in Tacoma, Renton, Olympia, Chehalis, and Bremerton. Evening appointments are available on Monday, Tuesday and Wednesday by prior arrangement. Please click the link to our contact page for telephone numbers and directions to our offices.

If you have decided to proceed with bankruptcy, we have prepared a bankruptcy form that will consolidate the information necessary to file your case. Please complete the bankruptcy form and bring it with you to your consultation appointment.

In order to file your case with the Bankruptcy court, you must complete the first of two mandatory seminars. The first seminar is entitled, “ Pre-Bankruptcy Credit Counseling“. You may attend both of the seminars either on-line or via telephone. We describe both seminars for you on our site; please read the explanation and instructions on our site completely before contacting the seminar vendor.

Our site contains an easy to understand guide to the differences between the various bankruptcy chapters: Chapter 7, Chapter 13, and Chapter 11.

We understand that filing bankruptcy is a big step, and that you probably have questions about various aspects of bankruptcy. We prepared an extensive list of frequently asked questions about bankruptcy to help answer your questions about filing bankruptcy in Washington state.

Your choice of bankruptcy attorney is very important to the success of your case. We discuss the benefits of choosing the James H MaGee firm as your bankruptcy attorney on our site.

If you are a creditor with questions about how bankruptcy will affect a debt owed to you, there are creditor resources here for you.

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Auto Sales in trouble (again!) likely never to regain 2005 peak of 17.4 million

Buyers are only just easing back into the market, reports the Seattle Times, January 5, 2011, page A-7.

Auto sales peaked at 17.4 million back in 2005 and dropped to 10.6 million in 2009. The peak was fueled, in part, by big incentives – like employee-discounts-for-everyone schemes popular in 2005.

GM vice president of U.S. sales for GM Don Johnson says GM expects sales eventually will creep back to 15 or 16 million, but not much higher.

The average vehicle on the U.S. roads is now 10.2 years old, the oldest since 1997, and a full year older than in 2007.

Cars made up 49.8 percent of sales in 2010, while truck sales made up 50.2 percent,a nd trucks and SUV sales keep growing: in December 2010, they were 54.3% of total sales.

Credit Report Nuts and Bolts, Part 6 of 6: Who can see your credit report?

Creditors – can look at your report whenever you apply for credit, such as a mortgage, car loan, or credit cards.

Employers – can look at your report, but only under certain circumstances and only if you give them written authorization. Employers are allowed to look at your report to evaluate you for hiring, promotions, and other employment purposes – but I understand that it is done only with your permission in most states. A few states, such as Washington and Hawaii, have banned employers from using credit reports unless a good credit record is related to a job’s qualifications. (I will try to blog on this Washington state law in a later post)

Government agencies – some can look, but only if searching for hidden income or assets – usually only certain agencies can do this such as those trying to collect child support.

Insurance companies – home and auto insurers now use specialized credit scores to decide whether to issue you a policy and how much to charge for it.

Landlords – when deciding whether to rent you an apartment or home.

Utility companies – when deciding how much of a utility deposit (if any) to seek – but not in deciding whether to extend utility services.

Student loans – Usually, I am told by the NCLC’s Guide to Surviving Debt, that a credit score is irrelevant to obtaining government student loans, but it could be a factor in obtaining private (not government guaranteed) student loans. There may be an exception though, for Parent PLUS loans wherein parents–or professional students such as dental, law school, and medical school students–are seeking student loans in order to finance a child’s education.

Divorce, child custody, immigration, citizenship applications, registering to vote and other legal proceedings – your credit report should not be used against you, subject to a few limitations and circumstances.