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Employee Deaths on the Job: What Benefits Do Ohio and Kentucky Workers’ Compensation Provide?

Posted on Thursday, May 10th, 2018 at 8:15 am    

The saddest day at Lawrence & Associates is when our attorneys sit down with a grieving widow, widower, or family member to discuss the workplace death of a loved one. Injuries are bad enough – always painful, often debilitating – but injuries can heal. When a family member dies, however, we are left with the difficult task of explaining how the Workers’ Compensation law compensates for a death the cold math and dollars and cents. Often called “survivors’ benefits,” they do anything but make the survivor whole. However, since our firm is located in the Cincinnati area and therefore workers with deceased workers’ families in both Kentucky and Ohio, we have seen big differences in how the law handles compensation for employee’s deaths. The deficiencies in the Workers’ Compensation system for these tragedies may shock you.

Worker Deaths in Ohio – What Benefits are Owed to the Family?

Ohio’s Workers’ Compensation system has three types of benefits. There is a death benefit that is paid to the deceased workers’ estate in one lump sum, a provision for payment of all medical bills incurred before death, and a benefit to dependents that is paid on a weekly or bi-weekly basis from the date of the worker’s death onward. Of these three, the medical benefit is the easiest to describe – 100% of all medical bills must be paid directly to the provider. No money goes to the deceased’s estate or family related to the medical bills.

The death benefit in Ohio is truly shocking – Ohio Revised Code 4123.66 only allows $5,500 dollars for funeral expenses, and no other amount for the deceased workers’ pain and suffering or loss of future earnings. Compare this to a person that dies in a car accident, who can sometimes get millions of dollars for pain and suffering or loss of future earnings. Assume, for a moment, that a 40 year person earns $10/hour and is killed. Even if you only paid their family for their loss of future earnings going forward with no allowance for inflation or wage raises, that 40 year old would earn $561,600 before reaching social security retirement age. The $5,500 offered by Ohio’s Workers’ Compensation system is paltry by comparison, and many commenters have observed that it makes it cheaper for a company to kill a worker than to injure the worker. Unfortunately, until Ohio’s state legislature changes this law, Ohio workers are stuck with a $5,500 death benefit.

Ohio is friendlier to the dependents of the deceased worker, so long as those dependents are spouses or children. Under ORC 4123.59, both receive two-thirds of the “average weekly wage” the worker had before he or she died. Spouses receive this money until they re-marry, at which time they receive two years of this benefit as a lump sum and then cease receiving it. Children receive this benefit until they turn eighteen, unless they are in school (in which case the benefit continues until the child turns twenty-five), or unless the child is incapable of having a job for other reasons (such as a physical or mental disability). However, fully dependent parents or siblings of the deceased worker cannot receive any benefit whatsoever.

The failings of Ohio’s system are laid bare when you consider the example of June. June was a civil engineer. She worked her way through school and, by age 30, she had an excellent job with a construction company making $120,000 per year. She was responsible for caring for her younger brother, who had severe mental retardation, and who lived with her. (Her parents had died several years before.) But June was killed in an on-site accident at age 33. Because her brother is not provided for by statute, and because June’s small family did not have the resources to care for him, he was forced to go to an assisted living facility. And because Ohio’s laws provide such a poor death benefit, June’s death was compensated only by paying $5,500 – which covered only 75% of her funeral costs. Surely there has to be a better way.

Worker Deaths in Kentucky – What Benefits are Owed to the Family?

Much like Ohio, Kentucky’s system provides for full payment of all medical bills, a death benefit, and a weekly or bi-weekly benefit to the deceased worker’s dependents. However, Kentucky’s provisions are much more generous. First, Kentucky’s death benefit is updated every year to account for inflation, and as of 2018 is currently sits at $83,336.22. This amount is paid directly into the deceased workers’ estate. Kentucky’s Department of Workers’ Claims updates the death benefit on their website every year.

In addition, Kentucky Revised Code 342.750 provides benefits to more people than Ohio’s law does. General guidelines are as follows:

  1. In Kentucky, a surviving spouse with no children gets 50% of the deceased employee’s average weekly wage. Upon remarriage, the spouse also receives a two year lump sum.
  2. If there are surviving children and a surviving spouse, the spouse gets 45% if the kids live with him or her, and 40% if not. The children get 15% for each child, not to exceed 30% total. If there are more than two children, each child gets an equal share of 30% of the average weekly wage. The child’s benefit ends when the child turns eighteen, unless they are in school (in which case the benefit continues until the child turns twenty-two), or unless the child is incapable of having a job for other reasons (such as a physical or mental disability).
  3. Actually dependent siblings, parents, and grandparents can receive 25% of the deceased workers’ average weekly wage.

Considering June’s example, above, it is easy to see that Kentucky’s system is superior. The death benefit would have more than covered the funeral expenses, and would have created a nest egg for a family member to help take care of June’s brother. And the weekly benefit for June’s brother would have continued to provide June’s family a way to care for him going forward. While both Ohio’s and Kentucky’s systems could use some tweaking and updating, Kentucky does a far better job of taking care of its’ deceased workers’ families.

If you have any other questions about Survivor Benefits in Workers’ Compensation cases, please call our Fort Mitchell, Kentucky office at 859-371-5997 or our West Chester, Ohio office at 513-351-5997. We are one of the largest workers’ compensation firms in Greater Cincinnati and we have helped over 3,000 clients. We’re Working Hard for the Working Class, and we want to help you!


Workers’ Compensation Benefits in Ohio

Posted on Friday, April 20th, 2018 at 10:04 am    

Attorneys Justin Lawrence & Marisa Dyson discuss the benefits that the Ohio Bureau of Workers’ Compensation (BWC) offers injured workers during and after a workers’ compensation claim.


The significance of Parker v. Webster County Coal LLC

Posted on Monday, April 9th, 2018 at 1:20 pm    

Parker v. Webster County Coal LLC (Dotiki Mine), 529 S.W.3d 759 (Ky. 2017) is one of the most impactful Supreme Court decisions on Kentucky workers’ compensation law in recent times. Members of the Kentucky Legislature are politicking over revisions to the law as a result of the decision and practitioners for plaintiffs and defendants are arguing over how to settle claims in light of the changing legal landscape. Injured workers are left uncertain as to what benefits they are entitled.

In a workers’ compensation claim, if an injured worker is not permanently totally disabled then they are entitled to either 425 weeks or 520 weeks’ worth of income benefits, as determined by their percentage of impairment. However, prior to Parker, benefits would cease upon the date that the employee qualifies for social security retirement benefits or two years after the employers injury, whichever last occurred, pursuant to KRS 342.730(4).

The state of the law was that if an older worker got hurt, they got less benefits than a younger worker with an identical injury. The logic of cutting off benefits to an injured worker who is older was to prevent duplicate benefits in the form of retirement income and to allow savings in the workers’ compensation system. Parker did not address the absurdity that not every employee ceases working at retirement age, nor did it comment as to whom such “savings” went (spoiler alert –it’s the insurance company). Parker determined the issue of whether there was a rational basis to support a statute that undisputedly treated older and younger workers differently, but it did so in a way that perhaps the parties did not expect.

Mr. Parker was born in October, 1939, and worked as an underground coal miner for Webster County Coal LLC since 1974. In September, 2008, he slipped trying to clamber over a conveyor belt, injuring his knee and back. The Defendant challenged the injury to the spine, but ultimately the Administrative Law Judge ordered both the back and knee were compensable. Mr. Parker was awarded 4% impairment for his knee and 22% impairment for his low back injury, a combination of 26% whole person impairment. Ordinarily this would have qualified someone for 425 weeks’ worth of benefits, but with Mr. Parker being 68 years old at the time of his injury he qualified for social security retirement benefits. The Administrative Law Judge found that because Parker had received two years of temporary total disability benefits he was not entitled to any additional income benefits for his permanent disability. The Administrative Law Judge based his reasoning on KRS 342.730(4).

Plaintiff appealed arguing the unconstitutionality of KRS 342.730(4) claiming infringement of his right to due process, abrogation of jural rights and violation of the equal protection clause. Defendant countered that based on precedent these arguments were without merit.

Indeed there had previously been a failed constitutional challenge to KRS 342.730 (see McDowell v. Jackson Energy RECC, 84 S.W. 3d. 71 (Ky. 2002) and Keith v. Hopple Plastics, 178 S,W. 3d 463 (Ky. 2005). The Court justified its reason to revisit in part on the 2011 case Vision Mining Inc. v. Gardner, 364 S.W.3d 455 (Ky. 2011) but ultimately the Court decided the issue on the distinction between teachers, who participate in a retirement program separate from Social Security Retirement, and other workers in the Commonwealth . Teachers who had not had outside employment and who suffered a work related injury were not subject to the limitation of KRS 342,730 because they never qualify for Social Security Retirement benefits. The Court framed the issue as being disparate treatment between older workers who qualify for Social Security Retirement and older workers who do not.

The Court applied a rational basis test, concluding that to be the correct standard for social legislation like the Workers’ Compensation Act. It found that treating all other workers differently than teachers did not have a rational basis. The Court found the logic of avoiding duplicate benefits failed muster in the teacher scenario and found that pursuant to Vision Mining financial savings did not constitute a rational basis either.

Following Parker, it appears the Department of Workers’ claims is falling back to the tier down provision of the 1994 Act. Pursuant to that statute, an award of benefits was reduced by 10% at age 65 for one year and then reduced again by 10% annually until age 70. Once an injured worker reached 70, the benefits were no longer tiered down and they would continue for the duration of the award. Under the 1994 statute, Mr. Parker would be entitled to 425 weeks’ worth of benefits, rather than none at all.

The Kentucky legislature appears to be entertaining a much more severe reduction for the elderly workers of Kentucky. As of writing, Defense attorneys are arguing that benefits are likely going to be capped at 67 regardless of retirement benefits. Workers compensation carriers are taking this position on claims in and out of litigation to try and reduce their exposure on claims where the injury is clearly compensable.

Increasingly, people do not retire at 65. Sometimes they wish to continue their work, perhaps more often they have no choice but to work, people are living longer and retirement benefits are often insufficient. Occasionally, older workers need to support grandchildren or other people dependent for a myriad of reasons. Our 2018 society does not support a bright line rule that income benefits injured people rely on should stop at 65, 67, or any other arbitrary age. It is perhaps significant to remember the purpose of act, to provide income benefits and medical treatment for the cure and relief of a work-related injury. The focus should not be how old, it should be how hurt. If we lose sight of that everybody potentially suffers.


What Does a Bankruptcy Attorney Do in the Eastern District of Kentucky?

Posted on Tuesday, March 20th, 2018 at 2:35 pm    

Hiring a bankruptcy attorney can be expensive. Although Lawrence & Associates doesn’t charge any upfront fees for a Chapter 13 bankruptcy, many other Northern Kentucky* law firms charge up to two thousand dollars before the bankruptcy is filed. All law firms charge the court’s filing fees and any costs related to credit counseling or credit reports up front, and these expenses generally run in the range of $350, depending on the number of people filing bankruptcy. And Chapter 7 bankruptcies always have fees that must be paid up front, before the bankruptcy is filed. For Lawrence & Associates, a Chapter 7’s fees and costs are generally around $1,350 depending on the number of people filing bankruptcy. (This includes the court’s filing fee and the cost of pulling a credit report.) Again, other Greater Cincinnati law firms charge a wide range of fees that can go as high as $3,000. Other kinds of bankruptcy can be even more expensive.

So what does the bankruptcy attorney do to justify these fees? When you are shopping between local law firms and deciding who you should hire, how can you compare what services are being offered to know whether your hundreds or thousands of dollars are being wisely spent? We’ve recently written articles that give potential clients tips about how to choose an attorney based on reviews, history with the bar association, membership in attorney organizations, and the attorney’s actions at the consultation. This article will discuss the various, generally reoccurring parts of a bankruptcy attorney’s job to give some insight as to how attorneys earn their keep.

Pre-Filing Work – Gathering Documents and Filling out Schedules

I often tell my clients that 90% of bankruptcy work is preparing things to be filed correctly. If a bankruptcy is well prepared, it leads to far easier hearings and often a quicker resolution for the client. If a bankruptcy is poorly prepared, it can lead to seizure of the client’s assets, failure to discharge some debts, or even allegations of bankruptcy fraud. Attorneys earn their fee before the bankruptcy is even filed, even if that is not where the majority of their time is spent.

There is a long list of documents that Lawrence & Associates’ clients are asked to gather before the bankruptcy is filed. Many of these documents are inaccessible to anyone but the client, or getting a copy of the document would take far longer for the attorney than it would for the client. They include copies of:

  • Driver’s License and Social Security Card
  • Credit Counseling Course Certificate
  • List of Creditors Not on the Credit Report
  • Six Months’ Bank Statements
  • Six Months’ Proof of Income for the Household
  • Recorded Deed, Mortgage, and PVA Value for any Real Property
  • Certificate or Memorandum of Title for any Vehicles
  • Proof of Insurance for any Vehicles
  • Two Years’ Tax Returns
  • Life Insurance Policies
  • Divorce, Child Support, or Child Custody Orders/Agreements

Each of these documents plays an important role in preparing for the bankruptcy. Each must be provided to the Trustee within seven days after the bankruptcy is filed, so it is crucial that the attorney gather them ahead of time. It is important for the attorney to not only review these documents and use them to prepare the bankruptcy forms and schedules, but also to understand how the information within them can affect the bankruptcy filing. The bankruptcy rules are formed by Section 11 of the United States Code, and those rules fit together to form the best bankruptcy possible for our client. Knowing how to fit the rules together is often like trying to make a puzzle when you know you have all the pieces, but don’t know what the eventual picture should look like. Again, this is where the attorney earns his or her keep!

At Lawrence & Associates, we recently joined the 21st Century and set up a portal for our clients to use when submitting paperwork and other information about their bankruptcy. Many attorneys still have clients schedule one or more appointments during business hours to come into the office to provide this paperwork and information. We decided that, since most of our clients are working and struggling to make ends meet, it was harmful to ask them to take time out of their workday for a function that could be performed outside normal business hours if it was done online. For clients who are not comfortable using the online portal, we still schedule face-to-face appointments in the office. In addition, we are willing to do consultations either over-the-phone or face-to-face.

After the bankruptcy paperwork is prepared, all bankruptcy attorneys must have a face-to-face appointment to sign all the bankruptcy documents and file them with the court. This meeting is mandated by the bankruptcy rules. During this meeting, the bankruptcy attorney should fully explain what is in all the documents, what will happen after the bankruptcy is filed, and what effect they expect the bankruptcy to have on your assets, debts, and credit score. Expect this meeting to take from one to three hours, depending on the complexity of the bankruptcy.

The 341 Creditors’ Hearing, the Confirmation Hearing, and other Court Hearings

All bankruptcies have at least one hearing, called a 341 hearing or creditors’ hearing, and this is often the most nerve wracking part for the client. However, it is nothing to worry about if the bankruptcy has been well-prepared! These hearings are typically scheduled for a ten to fifteen minute period of time, and a month’s notice is given prior to the hearing so everyone can take off work. At the hearing, the client will be placed under oath, but all the questions are generally simple confirmations of the client’s asset and debt situation – “Is it true the 2013 Camry is the only car you own?” – or canned questions that are asked of everyone regardless of their situation – “Have you lived in Kentucky for the last two years?” It is common at these hearings for the Trustee to tell the attorney that he or she would like to see more documentation, or would like to see a change in the bankruptcy filing. Such requests are generally easy to accomplish, and have a minor effect (or even no effect) on the bankruptcy itself. It is the attorney’s job to comply with the Trustee’s requests.

Chapter 13 bankruptcies also have confirmation hearings, but it is very rare that a client would have to attend one of those. In fact, in Northern Kentucky it is very rare for the confirmation hearing to have to occur at all! Generally, good communication between the attorney and the Trustee eliminates the need for this hearing.

Finally, there may be many more hearings for a bankruptcy depending on whether additional issues arise. Such hearings are uncommon in Chapter 7 bankruptcies, but common in Chapter 13 bankruptcies. Such hearings may arise when creditors object to confirmation or discharge, when our client has to object to a creditor’s fraudulent proof of claim, or when our client needs to temporarily suspend plan payments. It is the bankruptcy attorney’s duty to represent the client at all such hearings, even if they occur months or years after the fee is paid. Particularly for Chapter 13 clients, several years may go by between hearings. Chapter 13 clients should never worry about being charged by their attorney for calling with simple questions about their bankruptcy payment.

In all hearings, it is wise to have an experienced bankruptcy attorney who files a lot of claims. Knowing the bankruptcy rules is one part of successfully navigating bankruptcy hearings, but knowing the Trustee is just as important! Chapter 7 and Chapter 13 Trustees have their own viewpoints on what is reasonable and what is not, on how laws should be interpreted, and on what is best practice in bankruptcy cases. By knowing the Trustee’s proclivities, the attorney can simplify and speed up the bankruptcy, and can often maximize the amount of income the client can keep (in a Chapter 13) or the number of assets the client can keep (in a Chapter 7).

If you have any other questions about what a bankruptcy attorney should be doing for you, please call our Fort Mitchell, Kentucky office at 859-371-5997. We are one of the largest bankruptcy filers in Northern Kentucky and we have helped over 3,000 clients. We’re Working Hard for the Working Class, and we want to help you!

*Northern Kentucky includes the following counties: Boone, Kenton, Campbell, Gallatin, Grant, Pendleton, Bracken, Mason, and Robertson. Each of these counties reports to the federal court in Covington.


Man Claims to be the CEO of Lawrence & Associates

Posted on Wednesday, March 7th, 2018 at 12:29 pm    

We need your help!

Unfortunately someone in another country by the name of Thomas Lawrence is claiming to be the CEO of Lawrence & Associates on Facebook. According to Facebook’s Community Standards, there is nothing wrong with this person claiming to be our CEO, but it is hurting our firm’s online presence.

From the reviews and harsh messages, we have gathered the following information: Apparently Thomas Lawrence is political in India and is proposing something that has upset a lot of people in the country. Since his Facebook profile says that he is the CEO of our business, a lot of people in India that disagree with what he is doing have left Lawrence & Associates’ Facebook business page over 50 one-star reviews with remarks like: “We hate those who are working against the development of trivandrum..our capital city…proud to be a trivian..” and “Pathetic…As they are a lobby against the Capital of God’s own Country , Trivandrum.” Obviously this has nothing to do with our business here in Fort Mitchell, Kentucky, but Facebook does not see anything wrong with the reviews and is ignoring our request to take them down.

We are asking you, our past and present clients (people who have actually used our services) to please take the time to leave your own review about Lawrence & Associates on our Facebook page in order to drown out these awful reviews that have nothing to do with our company.

They have found our Google page and are leaving bad reviews on Google Maps for us as well. The majority of the bad reviews are on Facebook, but If you could please leave a review for us on both sites that would be great.

Thank you for your time and consideration. Links to Facebook Reviews & Google Reviews are below:


New Bankruptcy Rules

Posted on Wednesday, March 7th, 2018 at 10:37 am    

On December 1, 2017, a series of new Federal and EDKY bankruptcy rules went into effect. Most of these changes are procedural and will not have a direct impact on a clients’ eligibility or decision to file one chapter of bankruptcy over another. However, these changes must be carefully considered and implemented by counsel to ensure clients’ plans are confirmable and successful.

The changes will be applicable to all cases filed on or after December 1, 2017 but shall also be applied to pending cases where appropriate. While vague, the governing rule means that most likely, none of the amended rules regarding deadlines will apply to cases filed prior to December 1, 2017, but the use of new forms and service of process should be implemented into any case immediately.

The new rules that will have the largest impact on greatest number of debtors include:

Rule 3002: The Bar Date

The bar date for non-governmental units, including secured and unsecured creditors, is now reduced to 70 days from the date of the petition. Debtors’ counsel has a duty to ensure that secured proofs of claim are filed in order to protect their secured assets and therefore this much shorter deadline should be monitored closely.

Rule 3007: Objection of Claims

Under the new rules, Debtors’ counsel must follow substantially different guidelines in order to object to a filed claim. The Objection itself must be accompanied by a Notice of Objection to Claim which conforms to Official Form 420B. The objection must be mailed to the person and address listed on the proof of claim.

Rule 3012: Valuation of Claims

Requests for valuation of secured claims may be made by motion, in a claim objection, or in a Chapter 13 plan unless the creditor is a governmental unit. If the creditor is a governmental unit, the request for valuation can only be made by motion following the bar date or claim or through a claim objection. To comply with this Rule, Debtor’s counsel must careful monitor claims and the new, shorter bar date. If any claim is valued in the plan and the creditor fails to file an objection, confirmation will make such valuation binding. Most importantly, Rule 3012 now requires such creditors to be served in such a manner under Rule 7004; this applies to service of the Chapter 13 plan, a Motion for valuation, or a claim objection requesting valuation.

Form 3015-4(b): Adequate Protection

Previously, Adequate Protection payments could be established through the Chapter 13 Plan. Now, a Debtor must file and serve and order for adequate protection with the plan using Local Form 3015-4(b). However, filing an Agreed Order with a creditor after the initial filing can also serve this purpose.

New Local Forms:

There are now established Local Forms (Local Forms 4001-3-1 and 4001-3-2) for a motion and order to obtain credit to purchase a vehicle post-confirmation.

Additionally, avoidance of judicial and non-PMSI liens can now be accomplished through the Chapter 13 plan or by Motion. Local Forms 4003-2(a) and 4003-2(c) are orders that can be recorded with the county clerk to conveniently compel the release of such liens.

The December 1, 2017 changes to the Bankruptcy code, and specifically, Chapter 13 procedures, require debtors’ counsel to careful monitor filed claims and shorter timelines. With the correct routines and procedures put in place in everyday practice, these changes can be implemented easily and prove extremely beneficial to consumer debtors.


How Are Kentucky Bankruptcy Trustees Paid, and How Does That Affect My Bankruptcy?

Posted on Thursday, February 22nd, 2018 at 2:38 pm    

Bankruptcy Trustees come in several flavors. The Covington Division of Kentucky’s federal bankruptcy courts alone have three Chapter 7 bankruptcy trustees, one Chapter 13 bankruptcy trustee, a United States Trustee, and occasional special trustees that might be appointed to oversee especially complex cases or cases in which other trustees might have a conflict of interest. Covington’s bankruptcy court covers all of Northern Kentucky*, but does not cover Cincinnati, Ohio, or the counties around Lexington or Louisville. There are a lot of bankruptcy trustees out there!

For this article’s purposes, we are concerned only with the Chapter 7 and Chapter 13 bankruptcy trustees in the Covington Division. Knowing how these trustees are paid, and how they are incentivized, can greatly affect whether you decide to file a Chapter 7 or a Chapter 13 bankruptcy.

Chapter 7 Trustees Get Paid Either Very Little, or a Whole Lot

When a Chapter 7 filed, the Covington Division charges a $335.00 fee as of January 2018. All Northern Kentucky based Chapter 7 Trustees make a flat fee of $75.00 from that filing fee. Chapter 7 bankruptcies are divided into two kinds of cases: “no asset” bankruptcies, and “asset” bankruptcies. In a no asset Chapter 7 bankruptcy, the debtor’s personal property is protected by property exemptions that protect those assets from seizure by the Trustee. This means the debtor’s property is safe, and the Trustee is stuck with only a $75.00 fee for all his or her work.

Chapter 7 bankruptcies with assets are where the question of fees gets interesting. While the filing fee and the flat fee described above remain the same, the Trustee can also get paid a percentage of any assets seized from the debtor. Hearing about assets getting seized sounds scary, but remember that a good bankruptcy attorney will be able to tell you before you file that no assets will get seized. The Trustee’s allowed compensation on seized assets is set forth in federal law, and the Trustee is paid in a stair step method as follows:

  • The Trustee is paid 25% up to the first $5,000;
  • The Trustee is then paid 10% on any amount in excess of $5,000 but not in excess of $50,000;
  • The Trustee is then paid 5% on any amount in excess of $50,000 but not in excess of $1,000,000, and;
  • The Trustee is then paid “reasonable compensation” not to exceed 3% on any amount in excess of $1,000,000.

Let’s assume the debtor in a Chapter 7 bankruptcy has two cars, but can only protect one using the property exemptions. The Trustee will take possession of the other car, and sell it. If the car sells for $20,000.00, the Trustee will get paid 25% of the first $5,000.00 (which is $1,250.00), and then 10% of the next $15,000.00 (which is $1,500.00). That adds up to $2,750.00 of fee for the Trustee, and the remainder of the car’s sale price goes to the bankruptcy’s unsecured creditors.

Notice that the fee schedule for Chapter 7 Trustees has no maximum on the amount that a Trustee can earn. Therefore, anyone with a large, seize-able asset might wind up paying a Chapter 7 Trustee very richly indeed. The types of things that can be considered a seize-able asset might surprise you. We’ve written before about how a personal injury lawsuit can be considered a bankruptcy’s asset, and how a large verdict or settlement designed to compensate a badly injured person can wind up being partially drained by the Trustee’s fee. Chapter 7 Trustees used to be held to a “reasonableness standard” – i.e. any fee they take had to be reasonable, even if the fee schedule mathematically produced a higher result. However, at least Covington based Chapter 7 Trustee has argued that he should no longer be required to take only reasonable fees. If that view holds out, a Trustee’s fees could run into the tens or hundreds of thousands of dollars.

For most people reading this article, a Chapter 7 bankruptcy will cost $335.00 in fees, and that is it. The Trustee will be paid out of that. But make sure – absolutely sure – that your attorney has confirmed no assets can be seized, or you could wind up paying the Trustee a lot of extra money out of your own pocket.

Chapter 13 Trustees Are Paid Out of the Monthly Payments into the Bankruptcy

Chapter 13 Trustees are also paid according to federal law, and unlike Chapter 7 Trustees, their fees are far more consistent. Every Chapter 13 bankruptcy is an “asset” bankruptcy, because the main reasons people file Chapter 13 bankruptcies is to stop foreclosures, stop repossessions, or because they have high income. Therefore, you don’t see the wide variation in fees earned that you see for Chapter 7 Trustees.

A Chapter 13 Trustee’s fee is a percentage on all payments made into the Chapter 13 plan, and that percentage is set by the U.S. Attorney General’s office. The Trustee cannot deviate from that percentage, and is therefore incentivized to make sure the payments into the plan are the maximum allowed by law. Conversely, a good Chapter 13 bankruptcy attorney will attempt to make a Chapter 13 plan payment the minimum required by law.

The Chapter 13 Trustee for the Covington division of Kentucky’s bankruptcy courts is the Chapter 13 Trustee for the entire eastern half of the state. As of January 2018, that Trustee is will only approve Chapter 13 plans if the plan payments calculate an 8% payment to the Trustee on all payments into the plan. While we cannot say for certain that the Trustee actually takes the 8% fee, that is the best guideline we have as to the percentage taken by the Trustee.

Therefore, if a Chapter 13 Plan requires 36 months of payments in the amount of $400.00 each month, that is a total of $14,400.00 in payments over three years. Of that $14,400.00, we can expect the Chapter 13 Trustee to take a fee of about $1,152.00, with the remainder going to various creditors. Again, the amount of the monthly plan payment is subject to a lot of factors, and a good attorney often finds it necessary to look at everything from your mortgages to your credit card statements to find the exact amount. But once that amount is set, so too is the Chapter 13 Trustee’s fee.

If you have any other questions about this topic, please call our Fort Mitchell, Kentucky office at 859-371-5997. We are one of the largest bankruptcy filers in Northern Kentucky and we have helped over 3,000 clients. We’re Working Hard for the Working Class, and we want to help you!

*Northern Kentucky includes the following counties: Boone, Kenton, Campbell, Gallatin, Grant, Pendleton, Bracken, Mason, and Robertson. Each of these counties reports to the federal court in Covington.


Filing Bankruptcy to Avoid Foreclosure in Northern Kentucky

Posted on Wednesday, February 7th, 2018 at 11:17 am    

The following post is part of our Law Student Blog Writing Project, and is authored by Raphael Jackson, a law student from the Chase School of Law.

Some Kentucky residents at a certain unfortunate period in their lives may find themselves in a position in which they must consider the option of going into bankruptcy. If these people happen to be homeowners, then it often may be the case that they can no longer afford their primary residence, and thus find themselves facing foreclosure as well. If you or a loved one are in this position, then you may want to know all the options available to you, specifically whether it would be beneficial for you to file for bankruptcy to stop foreclosure.

Bankruptcy and Foreclosure

Black’s Law dictionary defines Bankruptcy as being in the condition of not having enough money to pay back what one owes. When you purchase a home through a mortgage, you possess a lien. A lien is a legal right for the lender to maintain possession of the property until the mortgagee pays the entire debt. If you find yourself in a state of bankruptcy and are no longer able to repay the debt you owe on a mortgaged property, the lender (the bank in many cases) may take possession of the property. The action of repossession by the lender, by means of a legal proceeding to terminate the mortgagor’s interest in the property, is known as a foreclosure. The purpose of the proceeding is so that the lender can recover the balance of the loan from the borrower by forcing the sale of the property. The purpose of the forced sale is to recuperate the balance owed to the lender.

Foreclosure

The Commonwealth of Kentucky and the State of Ohio are two of the twenty-two states which require the lender to gain permission from the courts in order to proceed with a foreclosure action. Foreclosure, by this means is known as judicial foreclosure. In Kentucky the respondent has 20 days to reply to the foreclosures notice. In Ohio the borrower has 28 days to respond to the summons and complaint. Failing to respond, or responding late, may result in a default judgment against the borrower. If your home is worth more than the balance that you owe on your mortgage, then your home is considered to have equity. Your home equity among other things will determine whether you should file for either Chapter 7 or Chapter 13 bankruptcy.

Bankruptcy

The U.S. bankruptcy code court outlines five types of bankruptcy. The two types that are most relevant to this topic are Chapter 7 and Chapter 13 bankruptcy. The courts refer to Chapter 13 bankruptcy as the wage earners plan. The wage earners plan enables individuals to settle their debts in full or in partial. One of the advantages is that an individual who files for Chapter 13 may save their properties from foreclosure. As of the time of this writing, an individual is eligible for Chapter 13 so as long as his or her unsecured debts are less than $394,725 and their secured debts are less than $1,184,200. Chapter 7 Bankruptcy in contrast is essentially a petition for the liquidation of the individual’s assets, or a sale of the assets of the debtor in order to fulfill his or her obligations to creditors. The option of Chapter 7 is available to individuals, partnerships, corporations or business entities.

Three to Five-Year Installment Plan

Under Chapter 13, the debtor may pay his creditors in installment plans that can range from three to five years. The length of the payment plan is determined by the debtor’s monthly income in relation to the median income of their state of residence. For instance, if the debtor makes more than the state median then the plan is generally for five years. During this five-year installment plan the federal law forbids creditors from starting or continuing collection efforts.

Kentucky State and Federal Income Tax Discharge, Interest, and Penalties

Another benefit of filing for bankruptcy is that it can assist the petitioner with income tax debts. After filing for Chapter 13, the debtor can discharge any of his income tax debt if he or she meets two deadline conditions: 1) More than three years have passed since the tax return for the tax was due; and 2) more than two years have passed since the tax return was filed with the IRS and or the state. Under Chapter 13, however, you are shielded from the IRS and State during the period in which you are paying off the tax debt. Additionally if your salary is below the state median and you file for chapter 13 bankruptcy, in most cases your income on all unsecured debt is dischargeable. In some cases, penalties and interest can be erased as well. Kentucky petitioners find that the most advantageous of the provisions they are granted is the automatic stay. An automatic stay is when the enforcement of a debt, judgement, lien or claim against you is temporarily suspended.

[One of the advantages of debt cancellation through Chapter 13 is that the petitioner is not required to file an IRS form 1099c, also known as a cancellation of debt form. If a debt is forgiven, the 1099c form requires the debtor to report the forgiven debt as income. This income is in turn then taxable by the IRS. The reason that the forgiven debt is reportable as income is because it is a prior loan obligation that you are no longer obligated to pay.

However, a debt that is erased by bankruptcy is not forgiven. Rather, the operation of law cancels the debtor’s legal liability to pay for the debt. The debt still exists, and the creditor would still like to be paid. But the bankruptcy court’s discharge prevents the creditor from making any attempts to collect. Since the debt is not forgiven, and in fact still exists, there nothing that the IRS can tax. Bankruptcy is perhaps the only methods of erasing a debt that works this way, so the tax advantage is unique.]*

A specialized attorney will best assist you in determining your particular circumstances so do not hesitate to contact one as soon as possible.

Lawrence & Associates has been helping Northern Kentucky residents save their homes for more than ten years, and we are now one of the largest bankruptcy firms in the state! Give us a call to schedule a FREE consultation with an attorney, by phone or in-person! We’re Working Hard for the Working Class, and we want to help you!

*Note to the reader: The law student that assisted with writing this article did not provide this section at the time this article went to press. Therefore, the bracketed section has been filled in by management.


Pros and Cons of Filing a Chapter 7 Bankruptcy before Divorce

Posted on Thursday, February 1st, 2018 at 10:05 am    

Divorce can be an unfortunate situation for a married couple in endless ways and will almost always have a detrimental effect on the parties’ financial situations. Frequently, one or both individuals seeks relief from United States Bankruptcy Court for a Chapter 7 case after the conclusion of the divorce. Although the immediate stressors of the marriage and divorce lessen, the financial strain can be worse. By considering a joint Chapter 7 bankruptcy prior to the divorce, a couple can receive unexpected benefits that offer at least some small relief to an otherwise difficult situation.

The following pros and cons should be considered by individuals who find themselves facing financial hardships and potential divorce.

Cost and Time

Pro:

With most attorneys, the cost of filing a bankruptcy is the same for an individual or married couple. By filing the bankruptcy jointly, a divorcing couple cuts the cost in half as well as the time and preparation involved. There will be one filing fee, one fee for attorney work time, one set of documents, one court hearing, etc.

Con:

Cooperation. Filing a joint Chapter 7 will require the divorcing couple to work together to ensure their attorney has all the necessary documents and will require that they attend at least a couple meetings and court hearings together.

Debt Liability

Pro:

Probably one of greatest benefits to filing a Chapter 7 case prior to divorcing is that all debt liability is wiped away for both Debtors on all applicable debts. Should the parties file after the conclusion of the divorce, the property settlement will typically trump a subsequent bankruptcy and could leave one of the individuals liable for the ex-spouse’s debts. For example, if the family court orders the husband to pay the wife’s credit card debt, he cannot avoid doing so by filing a Chapter 7 Bankruptcy after the fact. If the couple files a joint bankruptcy prior to the divorce, neither party has any such debt.

Con:

If one spouse chooses to file an individual bankruptcy prior to the divorce, the other spouse could be left liable for all the debt. This could be financially devastating and ultimately push that spouse to a bankruptcy anyway.

Exemptions

Pro:

Filing a joint bankruptcy prior to divorce allows a couple to double the exemption limits. In a bankruptcy, a couple can have a certain amount of value in assets. Equity in a car or house can sometimes exceed the allowed exemption. By filing jointly and using a double exemption, the couple can better protect their assets through the bankruptcy.

Con:

The couple will ultimately still have to agree on the division of any such equity in their subsequent property settlement!

Attorney Fees:

Pro:

Filing a bankruptcy prior to the divorce will protect each individual’s divorce attorney from being listed as a creditor subject to discharge in a subsequent case. This is a pro for both attorneys and Debtors. Divorce attorneys are given the reassurance that they will be compensated for the work they do and Debtors will benefit from an attorney who is more willing to offer lower retainer fees and payment plans.

In applicable situations, family law attorneys would be wise to refer their clients to a local bankruptcy attorney for a consultation prior to the initiation of the divorce proceedings. Taking such action can offer tremendous benefits to the couple, can simplify the divorce case, and can provide protection for future legal work on the divorce case.

In contrast, individuals considering a Chapter 13 bankruptcy should seek to finalize their divorce first. A Chapter 13 typically lasts 3 – 5 years and is based heavily on household income, expenses, and secured debts that need to be paid. Couples who are in a Chapter 13 together prior to divorcing typically incur additional attorney fees to bifurcate the original case and put them in their own Chapter 13 cases.


Jingle Bells or Jingle Blues?

Posted on Tuesday, January 16th, 2018 at 12:31 pm    

The following post is part of our Law Student Blog Writing Project, and is authored by Thomas Rovito, who is pursuing his Juris Doctorate at the Ohio State University.

How Holiday Credit Card Debt Could Impact Your Kentucky Bankruptcy

The consumer advocate news outlet NerdWallet estimates that the average American will spend $660 for holiday gift transactions. Two other statistics to note include that the number of Americans in credit card debt after the holiday season has been increasing, from 48% of shoppers in 2015 to 56% of shoppers in 2016, and that 27% of Americans did not have a holiday shopping budget in 2016; of those who did have a budget, 24% exceeded it. These statistics beg the question on what would happen if a shopper stocks up on Christmas presents using his credit card, and then subsequently files for bankruptcy. Will those retail store creditors turn into the Grinch and seek the return of gifts from family and friends, or would something else happen?

The answer is in the Bankruptcy Code. But before jumping headlong into the primary source material, secondary sources can provide guidance on this topic. For instance, the Administrative Office of the United States Courts has provided an overview of Bankruptcy Basics to introduce lay people to the topic. The Ohio State Bar Association and the Kentucky Bar Association both have pamphlets on bankruptcy. In addition, third-party sites, such as Findlaw and Nolo, have easy-to-use resources.

While the Bankruptcy Code is full of legal terms of art and abstract legal concepts, they can be broken down to individual and applicable ideas. For instance, there are six different forms of bankruptcy, but in most cases only Chapter 7 Liquidation or Chapter 13 Adjustment of Debts of an Individual with Regular Income would apply to individual consumers with credit card debt. In Chapter 7 bankruptcy, which is means-tested to prevent abuse, a trustee liquidates the debtor’s assets for cash to pay creditors, unless the specific piece of property is exempt, to give the debtor a fresh start. In Chapter 13 bankruptcy, a debtor may retain valuable assets, such as his home or vehicle, and structure payments to creditors in accordance with his income. Chapter 7 bankruptcy is typically quicker, taking about four months to obtain discharge, to Chapter 13’s duration of three to five years. All Northern Kentucky bankruptcies are filed in federal court in Covington, Kentucky.

The objective of the debtor should be to obtain a discharge, which “releases the debtor from personal liability for certain specified types of debts.” But not all debts are created equal. There is also a material difference between secured debt (“[d]ebt backed by a mortgage, pledge of collateral, or other lien; debt for which the creditor has the right to pursue specific pledged property upon default,”) and unsecured debt (“debt for which a creditor holds no special assurance of payment, such as a mortgage or lien; a debt for which credit was extended based solely upon the creditor’s assessment of the debtor’s future ability to pay”). For more information on this distinction, please refer to 11 U.S.C. § 506. While most credit card debt is unsecured, it is important to note that some credit card companies and department store cards retain a security interest, or purchase money security interest, within their contracting agreement with the consumer, often in the fine print of the bottom of the credit card agreement. This security interest would act like collateral on outstanding transactions, and would give the credit card company or department store the right to repossess the property if it was not paid in full. While most credit card debt is unsecured, larger luxury purchases such as televisions, are likely covered by a security interest, and can be repossessed.

So how do these concepts apply to a consumer who builds up debt during the holidays? First, the consumer should look at the distinction between secured and unsecured debt. If the consumer has secured debt, or debt with collateral, then potential creditors could attach the property (like a home, car, or improvements on a vehicle) in the event of default. On the other hand, If the consumer has unsecured debt, which is the category of most consumer credit card purchases, then the creditor cannot attach the assets in event of default; however, the creditor may use a debt collector to compel payment, report the failure to credit agencies–reducing the debtor’s credit score and increasing the cost of future loans, or go to court to garnish the wages of the debtor. In addition, the ultimate disposition of the debtor’s credit card issues would also depend on whether the credit card company or department store retained a security interest in the property; if so, there is the possibility the property could be repossessed.

There is a matter of timing for debts to be considered dischargeable. Under 11 U.S.C. § 523(a)(2)(C), “debts owed to a single creditor and aggregating more than $675 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable.” In plain English, this means that debts to a single company that add up to more than $675 for goods not necessary for the support of the debtor (for example, food, water, shelter), are presumed to allow the creditor to collect against the debtor. Thus, if you exceed more than $675 in holiday credit card debt on luxuries, and not essentials, it may impact future bankruptcy proceedings.

In addition, it is important to note that the bankruptcy court may deny discharge in a case if there are fraudulent conveyances, or an attempt to shift assets from the debtor to third-parties for the purpose of avoiding paying creditors. To learn more about this topic, please see 11 U.S.C. § 727; Fed. R. Bankr. P. 4005. In addition, the trustee of the estate or a creditor may petition the bankruptcy court to revoke a discharge “if the discharge was obtained through fraud by the debtor.” See 11 U.S.C. § 727(d).

Ultimately, a decision to file for bankruptcy is serious, as it may place your assets in jeopardy and drastically impact your credit rating. On the other hand, if it is structured correctly, bankruptcy can provide you with relief from creditors, especially after the holidays with consumer credit card debt, while preserving your most precious assets, such as your home or car. It is important to note the distinction between secured debt (secured by collateral) and unsecured debt (that is not secured by collateral) before engaging in holiday transactions, in addition to determining whether your credit card company retains any security interest in your transactions by reading the fine print of the credit card agreement. This information, when coupled with sound budgeting, fiscal discipline, and adequate financial disclosure, can make the difference between jingle bells or jingle blues this holiday season.

Lawrence & Associates has offices in West Chester, Ohio and Fort Mitchell, Kentucky. We’re Working Hard for the Working Class, and we want to help you!

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