This week, our bankruptcy web video series explains how a Chapter 7 or Chapter 13 Bankruptcy can stop a wage garnishment.  Justin Lawrence, the founder of Lawrence & Associates, explains how a bankruptcy can even force the company garnishing your wages to return your money to you if the bankruptcy is filed within ninety (90) days.  Time is of the essence, so watch this video and call for more information today!

In the newest video in our bankruptcy web video series, Justin Lawrence of Lawrence & Associates explains how bankruptcy filers can keep a tax refund in either a Chapter 7 or a Chapter 13 bankruptcy, and how the tax refund can be used to pay necessary bills or even for the bankruptcy itself!

This video applies to Kentucky and Ohio bankruptcy filers; if you live in another state, please confirm that the rules given in this video will apply in your state as well.

Justin Lawrence from Lawrence & Associates explains how a Chapter 13 bankruptcy can stop a foreclosure on your home, how you can keep your home when you file bankruptcy, and how you can use a Chapter 13 bankruptcy to catch up on mortgage payments and get a fresh start.

Anyone who needs to file a bankruptcy is faced with an important choice: Chapter 7 or Chapter 13? Finding out what those terms mean is as simple as going to your local library, but knowing when you can file a Chapter 7 or when you should choose a Chapter 13 requires expert legal knowledge. At Lawrence & Associates, our Northern Kentucky attorneys can make sure you file the right kind of bankruptcy for your situation, whether you are facing foreclosure from a bank like Wells Fargo, being sued for medical bills by a hospital like St. Elizabeth, or confronting a mountain of Capital One credit card debt.

Choosing the right kind of bankruptcy can mean the difference between keeping your house, keeping your car, keeping your money, or losing it all. Geography matters: Northern Kentucky and Cincinnati have very different bankruptcy exemptions, and this is a big factor in the choice between Chapter 7 and Chapter 13. Other factors include your past income and current assets. Only by knowing the asset exemptions and median income levels applicable to the Northern Kentucky and Cincinnati areas can the choice between Chapter 13 bankruptcy and Chapter 7 bankruptcy be made. For example, the median income is lower for Northern Kentucky residents than it is for Cincinnati residents, and people over median income have to file Chapter 13. Therefore, if all else is equal, someone living in Cincinnati can file a Chapter 7 with the same income that forces a Northern Kentucky resident into a Chapter 13!

What Stops You From Filing a Chapter 7 Bankruptcy?

In general, you cannot file a Chapter 7 bankruptcy if you: a) have filed a bankruptcy in the last eight years; b) have assets with significant, unexempt value that you don’t want to lose, or; c) have income over median for your household size in the Commonwealth of Kentucky. Anyone falling into any of those categories may have to file a Chapter 13 bankruptcy. Figuring out how to correctly assess the value of your property, or the correct number for median income, can be a daunting task. Further, the consequences of making a mistake are very drastic; you could lose your property or get kicked out of bankruptcy and into the arms of your creditors! The attorneys at Lawrence & Associates can make sure your bankruptcy is filed correctly so that you get the maximum benefit from your decision to file.

Why Might You Want to File a Chapter 13 Bankruptcy?

If you are behind on a secured debt such as a mortgage or a car loan, but want to keep the house or car, you will have to file a Chapter 13 bankruptcy so you can set up a payment plan. There is no such thing as a repayment plan in a Chapter 7 bankruptcy, and if you are behind on paying the debt on a car or house then you will lose it. The repayment plans afforded in a Chapter 13 Bankruptcy also go toward non-dischargeable debts such as taxes, student loans, or child support. If your current repayment schedule makes it impossible to make ends meet, then filing under Chapter 13 allows you to change the repayment schedule to suit your monthly budget.

Another reason to file a Chapter 13 bankruptcy is to get predatory car loans under control. Many Chapter 13 bankruptcy filers can reduce the amount they need to pay on a car loan if they have owned the car for more than two-and-a-half years and if the amount on the loan is more than the value of the car. Also, the interest rate on a car loan can often be reduced when the loan is paid off through a Chapter 13 bankruptcy.

How Can I Get My Bankruptcy Started?

Lawrence & Associates employs highly skilled bankruptcy attorneys, and we offer free consultations with an attorney to find out whether Chapter 7 or Chapter 13 is right for you. Get the answers you are looking for, and avoid the hassle of creditors and the confusion of following the bankruptcy laws on your own. We are Working Hard for the Working Class, and we want to work hard for you. Call Lawrence & Associates today!

The beginning of the year is always the busiest season for filing bankruptcy. Nobody likes to think about their financial troubles during the holidays, and often the holiday spending that so many businesses rely upon is the same tipping point for balanced debt to begin spiraling out of control. But the beginning of the year is also when many people get tax refunds. If the tax refund can cover the credit card bills, disaster may be averted. But if not, Northern Kentucky debtors need to figure out how to protect that tax refund in bankruptcy.

In the Northern Kentucky and Cincinnati, trustees always watch for bankruptcies filed during the first half of the year that do not properly protect a tax refund. Although the debtor’s tax refund can be appropriately reported and exempted in a Chapter 7 or Chapter 13 bankruptcy filing, do-it-yourself filers or inexperienced attorneys often fail to complete this crucial step. If the tax return is not properly reported or exempted, the trustee can seize the refund and use it to pay creditors. It is therefore very important to get an experienced bankruptcy attorney to properly file and protect the tax refund.

How can the Tax Refund Be Saved in My Bankruptcy?

A tax refund must be listed as an asset in the bankruptcy filing, even if the tax return has not been filed yet and even if you don’t know how much the refund will be. A reasonable estimate of the refund must be given, although you can also say you don’t know exactly how much the refund is. Trustees in Chapter 7 or Chapter 13 carefully review refunds for debtors that have minor children. Having minor children causes the earned income credit to be applied, and this generally provides for a high tax refund. However, the entire earned income credit can be protected from the bankruptcy trustee – again, this is something only an experienced lawyer knows how to do properly!

Chapter 7 trustees in Northern Kentucky are typically more likely to be aggressive in pursuing a high tax refund than a Chapter 13 trustee, since the Chapter 7 trustee can seize the refund outright if it is not exempted properly. This is, in part, how a Chapter 7 trustee gets paid. In Cincinnati, both the Chapter 7 and the Chapter 13 trustees are fairly aggressive in pursuing tax refunds.

There is no specific exemption in the bankruptcy code for a tax refund, so the wildcard exemption has to be used. In Cincinnati, this is a big problem because the wildcard (or miscellaneous) exemption used in Ohio is small. In Northern Kentucky, this is less of a problem because Kentucky law allows debtors to use the federal wildcard exemption. The federal wildcard exemption is very large and most tax refunds will be protected by it.

However, in Kentucky the federal wildcard exemption is also used to cover many other assets, such as the money in the debtors’ bank accounts, any firearms in the home, and any equity the debtor has in a second car. Thus, it is possible that, without proper legal advice, even a modest tax refund could go beyond the limits of the exemption and be taken by the trustee.

How Can Lawrence & Associates Help Protect My Refund?

Experienced bankruptcy lawyers make a big difference. In our consultations, Lawrence & Associates will explain how your tax refund can be spent on reasonable and necessary household expenses to protect it from seizure by the trustee. The lawyers at Lawrence & Associates have spent years learning exactly which expenses can be used to offset the tax refund and which cannot, thus avoiding the risk that the trustee will take the refund or delay the bankruptcy. Details matter, and our attorneys and paralegals are trained to find the details in your life that keep thousands of dollars of tax refunds in your bank account. Lawrence & Associates has been very successful over the years at putting money back in our clients’ pockets by offsetting their tax refunds with our attorney’s fees and thus protecting the debtor’s hard-earned cash from seizure by the Chapter 7 trustee.

You should not put off filing for bankruptcy if your debts cannot be repaid under your current interest rates, or if you are behind on payments and in danger of being sued or having a vehicle repossessed. Lawrence & Associates can help Northern Kentucky and Greater Cincinnati clients protect their assets. We are Working Hard for the Working Class. Call us today and learn how we can help you!

At Lawrence & Associates, we file Chapter 13 bankruptcies in Northern Kentucky and Cincinnati every day, but we rarely file Chapter 11 bankruptcies. The Chapter 11 system is vastly more complicated than the Chapter 13 system, although both bankruptcies are, at their hearts, reorganizations of debt. Creditors in a Chapter 11 get to vote on the reorganization plan proposed by the debtor, where creditors in a Chapter 13 do not, and Chapter 11s have far more procedural hurdles. Although Chapter 11 bankruptcies are generally considered big business bankruptcies, in reality some individuals are also forced to file Chapter 11 bankruptcies as well.

When Does Your Unsecured Debt Force You To File Chapter 11?

Unsecured debt includes credit card bills, medical bills, student loans, pay day loans, and many other categories of debt. As a rule, you can only file a Chapter 13 bankruptcy if your unsecured debts total less than $360,475.00 (as of the date of this writing). Student Loans become a major issue under this rule, as they can often total in the hundreds of thousands of dollars all by themselves. Unsecured debt alone can sometimes force an ordinary person to file in the same Chapter 11 system normally reserved for the likes of multi-national corporations.

To avoid this trap, talk to an attorney. Consider taking out a loan on any equity in your home or car, and using that secured loan to pay down unsecured student loans. (Bear in mind that, if you take out a debt in the process of filing bankruptcy, you will absolutely be required to pay the full amount of the new secured debt, at its regular interest rate, regardless of what bankruptcy you file.) This can be a wise decision because student loans are usually non-dischargeable, meaning you can’t get rid of them in bankruptcy. Since you’ll have made part of your unsecured debt secured in this process, you may be able to stay in a Chapter 13 bankruptcy if you managed to pay your unsecured debts to less than $383,175.00. Again, talk to an attorney before taking any action so there are no unforeseen issues in bankruptcy.

When Does Your Secured Debt Force You To File Chapter 11?

Secured debts typically take the form of mortgages, car loans, judicial liens or other debts taken out at the time something is purchased for the purpose of paying for the item. The secured debt limit for a Chapter 13 bankruptcy is $1,149,525.00; any higher, and you will have to file a Chapter 11 bankruptcy. If you are looking to reduce secured debts in order to fit into a Chapter 13 bankruptcy, one of the only ways to do so is to give up property secured by a debt. Upon doing so, the debt will become unsecured and no longer count toward this total.

If You Have Questions, Call Lawrence & Associates!

Lawrence & Associates has helped many clients file Chapter 13 bankruptcy, and we’d be happy to help you. We are Working Hard for the Working Class, and we want to work for you! Give us a call for your free consultation, today!

Lawrence & Associates has told you before about creditor harassment, and with a list of things the creditor can and cannot do. We’ve also talked repeatedly about illegal scams where someone calls and pretends to be a debt collector in order to swindle you out of money. This post is slightly different. Here, we talk about the debt collector’s threat of fraud and related threat of jail time. Fraud allegations are different because a debtor really can go to jail for actual fraud. However, because debt collectors generally don’t understand the real meaning of the word fraud, the threat of jail time for fraud charges is almost never a real concern for every day debtors like you. Here’s why:

What Is Fraud?

So what separates an average joe who can’t pay his credit cards on time from a criminal who is defrauding business of its hard earned money? In a word, intent. One must actually intend to commit fraud, because a necessary element of fraud is the knowledge that a representation made is false. For judges and prosecutors, there is no question that someone has not committed fraud simply because they find themselves unable to pay their bills. The real question is whether the person with the unpaid bill, at the time he or she took out credit, knew that the debt would never be paid back. As a practical matter, that is difficult to prove in the context of taking out a loan. It is one thing to show that a bad check was written when the check writer knew the account balance was too low. It is another thing entirely to say that someone signing for a loan never intended to pay it back. None of us have a crystal ball.

As a practical matter, most creditors don’t even try to prove fraud. The bar is simply too high, and the likelihood of winning too small. Further, the fact that some debts won’t be paid back is factored into the creditor’s business model. That is why credit card companies and banks are billion dollar businesses despite the bankruptcies filed on their loans every day. Rather than prove fraud, these companies simply sue for money. The difference is profound. Fraud is criminal and involves jail time. A civil suit for money is a matter of a garnishment or lien against property.

There Is a Way Out of Crippling Debt

Debt Consolidation Companies aren’t always a solution, but bankruptcy is always the nuclear option to debt problems. Although you don’t have to worry about debtor’s prison or fraud, you do need to worry about your credit score, your debt-to-equity ratio, and many other variables that determine the kind of life you live. Although it is counterintuitive, bankruptcy can drastically improve these factors and your ability to live the life you deserve.

Lawrence & Associates has helped many clients who have been hassled by debt collectors, and we’d be happy to help you. We are Working Hard for the Working Class, and we want to work for you! Give us a call for your free consultation, today!

We’ve written previously about some common sense tips for selecting the right attorney for your case. That article, while general, received good reviews. We’re going to revisit the issue here to help people in the Northern Kentucky and Greater Cincinnati areas get all the information they need about a new attorney before hiring him or her.

Go to the Bar Associations

We mentioned previously that all Kentucky attorneys are required to be registered with the Kentucky Bar Association, which handles disciplinary matters (such as bar complaints) for Kentucky attorneys. But there are many other organizations for attorneys in this area, and many of those include specials CLEs (continuing legal education) in various practice areas that attorneys can go to. For this reason, you can sometimes feel comfortable with an attorney by knowing he or she takes part in voluntary attorney organizations.

For example, in addition to the Kentucky Bar Association, there is a Northern Kentucky Bar Association and a Cincinnati Bar Association, both of which offer CLEs and host meetings that allow attorneys in the same practice areas to get together and talk about the latest developments in the profession. Both groups also offer attorney referral services that vet an attorneys basic qualifications for each practice area before they make a referral. These are great places to start looking for an attorney!

The local and regional bar associations can tell you something else very important about an attorney as well. If you see an advertisement for an attorney in Covington, but cannot find him or her in the Cincinnati or Northern Kentucky Bar Associations, check further abroad. Is the attorney a member of the Louisville Bar Association instead? If so, you’ve just discovered an out of town attorney masquerading as a local attorney to pick up business. For obvious reasons, you don’t want an attorney that you can’t visit without making a three hour round trip. Pass the out of town attorney up and get someone local, who is familiar with the lay of the land.

Other Attorney Organizations

In addition to the bar associations, there are many other voluntary organizations you may want to call to get the scoop on your new attorney before you retain him or her:

• Kentucky Justice Association – this statewide group focuses on the art of the jury trial, and its members are often regarded as the best of the personal injury attorneys in the state. Most members work with clients who have been in car wrecks, or who have products liability or medical malpractice cases.
• Ohio Association for Justice – this is the Ohio version of the Kentucky group, above.
• National Association of Consumer Bankruptcy Attorneys – this organization includes many attorneys that file Chapter 7 and Chapter 13 bankruptcy for average debtors.
• Avvo.com – this is not an attorney organization exactly, but it attempts to rate attorneys by allowing clients and other attorneys to give feedback. Attorneys have a profile, which must be claimed. If an attorney does not claim his or her profile, or has not put any work into developing this profile, it may be an indication that the attorney is too overwhelmed with work. There is also a question and answer area where potential clients can pose questions to attorneys.
• Justia.org – this website is similar to Avvo.com.

There are many, many more organizations out there. No attorney can be a member of every single one, so don’t visit just one and give up on an attorney because he or she doesn’t have a membership. Look around a bit, and you should find out what you need to know.

Referrals from Attorneys

If you have used an attorney in the past, and were happy with that attorney, go back to him or her! Even if you need a different kind of attorney, chances are that your old attorney will know a new one who can help. Never underestimate the power of a word-of-mouth referral to get the right attorney for you.

If you’ve never used Lawrence & Associates before, we’d be happy to work with you. If you have but need a new kind of attorney, we’d be happy to refer you to someone new. We are working hard for the working class, and we want to work for you. Call today!

Everyone knows it is dangerous to co-sign for debt. Often, relatives with good credit ratings are asked to co-sign for relatives with bad credit ratings or too little credit. If one person defaults on the debt, then the other is responsible for the loan. It does not matter that the original person is available to be sued or garnished; the lender has the option of going after either co-signor, at any time, for any reason, once a payment is missed. What many of our Northern Kentucky clients do not understand is the impact this will have on their credit and their ability to discharge the debt in a bankruptcy.

Effect of Co-Signing on the Innocent Co-Signor

Let’s assume Cincinnati wants a car, and Kentucky (who has good credit) co-signs on the loan. Cincinnati has the car in his or her name. Cincinnati then defaults on the payments. The car lender is now calling Kentucky and wanting to sue. What are Kentucky’s options?

Obviously Kentucky, as the co-signor, has the options to start making the payments, but most people don’t have the cash to pay for a new car they don’t even own. If a lawsuit is filed, the innocent co-signor’s wages can be garnished, bank account can be garnished, or a judgment lien could be put against his or her home. The co-signor can file a bankruptcy to discharge the debt. Even though a lien against a car is typically secured, since Kentucky doesn’t own the vehicle this debt is unsecured the lien is unsecured as far as Kentucky is concerned. That means the debt can be discharged in a Chapter 7 bankruptcy. However, the bankruptcy will hurt a co-signor’s credit rating just as if the debt belonged to the co-signor directly. Further, all the co-signor’s debts will have to be included in the bankruptcy, not just the co-signed debt. In short, none of the co-signor’s options are particularly good.

Student Loans

Where student loans are involved, the co-signor’s options are even worse. In Northern Kentucky, parents are often asked to co-sign on student loans. This is very dangerous! A student loan cannot be discharged in bankruptcy, regardless of whether it is federal or private. Private student loan lenders are aware of this, and creditor harassment in pursuing collection on a private student loan is common. Like with other loans, the student loan lender can pursue garnishment against wages or a bank account, can put a judgment lien against assets such as a house or a car, and – in the case of a federal lender – can even seize tax returns.

For this reason, co-signors on a student loan must file a Chapter 13 bankruptcy to avoid garnishment or attachment of a judgment lien. This means the co-signor must be in a bankruptcy for three to five years and make payments on the student loan to get it paid off. This is difficult for anyone, and can be impossible for some depending on the size of the student loan on the amount of the co-signor’s income.

Think Before You Co-Sign on a Debt!

Not every co-signor gets stuck footing the bill. If you find yourself in trouble because you co-signed on a debt, let us help. Lawrence & Associates takes pride in represeting Northern Kentucky and Greater Cincinnati residents just like you. We are Working Hard for the Working Class, and we can help. Call today!

Many of our clients are facing the same problem: there isn’t enough money to go around, and they are robbing Peter to pay Paul. Some clients come in for bankruptcies after some financial calamity and are juggling credit cards just to put food on the table. Others come in for an injury, following a car wreck or work injury, and suddenly find that they are unable to work and don’t have enough socked away for a rainy day. And our disability clients face a year-long wait for a hearing with an Administrative Law Judge, during which they typically have no income and cannot work. Any way you cut it, if you need the services of a lawyer you are probably facing some hard times.

If you have more bills than money, you need to know how to prioritize the money you do have to maximize your chances of returning things to normal in as soon as possible.

Pay Secured Debts First – the House and the Car

Lawrence & Associates tells clients to make sure their car payment is taken care of first (assuming they want to keep the car). Missing even one car payment can cause the repo man to start cruising down your street. A repossession is one of the few ways a creditor can take your money or assets without getting a judge’s approval first, and that means it can happen fast. Clients filing bankruptcy can be forced into a Chapter 13 if they are behind on a car payment, and cars that have been repossessed by surprise are difficult (but not impossible) to get back. While repossession applies to other types of assets as well – for example, if you take out a loan on an engagement ring and fall behind on payments, the ring can be repossessed – but nothing else you own is as exposed as a car sitting on the curb overnight. Keep car payments up to date if at all possible!

The next most common secured debt is a mortgage on a house. While houses cannot be repossessed, a judicial foreclosure is a relatively uncomplicated court battle (for the mortgage company) where many homeowners have little chance for relief. A bankruptcy will stop a foreclosure in its tracks, but Northern Kentucky courts allow the mortgage company to include its legal fees in the money that has to be repaid, further increasing your burden. And like car loans, even one month arrearage on a mortgage payment can force bankruptcy filers into a Chapter 13.

Similar to the mortgage payment, it is important to keep rent payments up to date. Although a rental agreement is not a secured debt, it’s important to protect your home. Also, once an eviction is filed it cannot be stopped, even if the renter files for bankruptcy protection.

Next Pay Back Due Taxes, Student Loans, and Utilities

Taxes and student loans have one thing in common: they are non-dischargeable, which means you only get rid of them if you pay them off or die trying. Therefore, it’s a good idea to continue paying on taxes and student loans even if you are falling behind on credit cards and lines of credit. If you eventually fall into bankruptcy despite your best efforts, unsecured debts such as credit cards, lines of credit, and medical bills will get wiped out. Taxes and student loans won’t.

Utilities are important for an obvious reason: you don’t want your lights shut off. However, be sure to prioritize utilities. Electricity is more important than a cell phone, for example. Pay the utilities you can afford first. While a bankruptcy will discharge an unpaid utility bill (and the utility company cannot cut your power for filing bankruptcy), it won’t help you any if your lights are cut off while you prepare your bankruptcy paperwork.

Finally, Pay General Unsecured Debts – But Do It Right!

Unsecured debts are the lowest of the low under the law. This category includes credit cards, medical bills, lines of credit and personal loans, debts related to old repossessions, and pay day loans. If you have the money to pay them, you should. But there are some limits on this line of thinking. First, it is a bad idea to cash in a retirement fund, or to stop saving for a child’s college education via a 529 fund, in order to catch up payments on a debt. This is not just opinion: the law makes these types of funds completely exempt from seizure even when filing a bankruptcy. Uncle Sam wants you saving for your retirement to ease the pressure on the overburdened social security system, not sacrificing your retirement to add a few bucks to a billion dollar company’s bottom line.

Before you take big risks to pay back creditors, talk to an attorney. Lawrence & Associates has represented thousands of Northern Kentucky and Greater Cincinnati residents just like you. We are Working Hard for the Working Class, and we can help. Call today!