Don Harris' Law Blog

Dividing Property on Divorce

Reaching a property settlement in your divorce, whether through negotiations between your Albuquerque divorce lawyers or mediation, will require several steps. First, you and your spouse must disclose to each other all your assets and debts. To reach a successful settlement, each party must know about all property and debts. After disclosure has been accomplished, the next step is to determine which assets and debts are part of the community or marital estate (the items that need to be divided between you) and which are the separate property or debt of one of you.

For example, a couple may agree that a necklace given to the wife by her grandmother is her separate property or that gambling debts incurred by the husband are his separate responsibility.

Once you and your spouse agree on which assets and debts are part of the marital estate, each item in the estate must be assigned a value. If you and your spouse are unable to agree on whether a particular item should be included in the marital estate, it should be valued as well. Sometimes spouses argue over items of little value. Once they realize the item is not worth much in the total picture, they may decide quickly on how the item should be handled.

The valuation process depends on the complexity of the property and debt involved. For example, if your martial estate includes two cars, household furnishing, and credit card debt, you may only need to get the value of the cars from a car appraisal guide (generally using trade-in or private party sale), determine the amount of debt from the most recent credit card statements, and decide a fair value for your furnishings if they were to be sold.

However, if you and your spouse own a business, or rental properties, or have significant debt, the valuation process may take extensive work. You may each need to retain experts to perform appraisals.

After values are assigned, you and your spouse, with the help of your Albuquerque divorce lawyers and a mediator, are ready to decide on how the assets and debt are to be divided between you.

The Albuquerque divorce law firm of Don Harris Law, P.A. attempts to settle divorce case through mediation. When mediation is unsuccessful, Don has the trial skills to take the case to court. For assistance with your divorce, contact Albuquerque family lawyer Don Harris at 877-299-8777.

FAQ’s About the Discharge of Debts Through Bankruptcy

At the end of your bankruptcy case, you will obtain a bankruptcy discharge. A discharge means that the creditor can no longer enforce the debt. A discharge prevents the creditor from contacting you or initiating collection efforts on the discharged debt. Therefore, if a creditor contacts you regarding a discharged debt, contact your Albuquerque bankruptcy lawyer immediately.

When does a discharge occur?

Generally, if you file for Chapter 7 bankruptcy, the court will grant a bankruptcy discharge 3 to 4 months after you file the bankruptcy petition. In contrast, a discharge in a Chapter 13 bankruptcy does not occur until you complete your repayment plan. Depending on the length of your repayment plan, expect a discharge three to five years after you file for Chapter 13 bankruptcy.

How do my creditors know my debts have been discharged?

The bankruptcy court will send a notice in the mail to all the creditors listed in your bankruptcy petition notifying them of your bankruptcy discharge. In addition, your X bankruptcy lawyer may wish to send confirmation or contact your creditors.

What debts are discharged in a bankruptcy?

While each situation is different, generally credit card balances, medical bills, business debts, judgments against you, and personal loans are dischargeable in a bankruptcy proceeding. However, not all debts are dischargeable. For example, the court will not discharge family support obligations like child support or spousal support. In addition, student loans are not dischargeable in a bankruptcy proceeding unless you can show the loans create an undue hardship on your financial situation.

Can a creditor prevent a debt from being discharged?

Yes, a creditor can initiate an adversarial proceeding to prevent you from receiving a bankruptcy discharge. For example, if the debt was incurred because of fraud or dishonesty, the creditor in a Chapter 7 bankruptcy can file a non-dischargeability suit in bankruptcy court. However, the creditor must file this suit within 60 days of the 341 meeting.

Can a bankruptcy discharge be revoked?

Yes, the bankruptcy court has the authority to revoke a bankruptcy discharge. A court may revoke a discharge if the court discovers that you have hidden assets or if you made a false statement during your bankruptcy proceeding.

Skilled and experienced Albuquerque bankruptcy attorney Don Harris will guide you through the complex bankruptcy process. Don has more than 20 years of experience and considers it a privilege to help good people regain financial stability and peace of mind. If debt is overwhelming you, please contact bankruptcy attorney Don Harris for a free consultation.

Pre-Filing and Pre-Discharge Bankruptcy Credit Management Course Requirements

My Albuquerque bankruptcy clients are sometimes surprised to learn that they have to complete two courses on credit management before receiving a bankruptcy discharge. The first course is a credit-counseling course that you must complete before you file for bankruptcy. The second course is a debtor education course that you must complete before the bankruptcy court will grant you a bankruptcy discharge. Both courses cannot be completed at the same time.

Pre-Filing Counseling Requirement

To fulfill your pre-filing credit counseling requirement, you must attend a counseling session with one of the U.S. Trustee Program’s approved organizations. Your Albuquerque bankruptcy lawyer can refer you to an approved provider. You must complete this course within 180 days before filing for bankruptcy. If you take it too long before filing, you will need to take it again.

The goal of the pre-filing counseling course is to explore all available solutions to your financial problems and to provide alternatives to filing for bankruptcy. During the counseling session, you and the credit counselor will examine your financial situation, and develop a budget that is personal to you. Even if the counselor suggests alternatives to bankruptcy, you do not need to follow the recommendations.

Most sessions last about an hour, and can occur over the phone, in person or online. Typically, the pre-filing counseling course will cost around $50 to complete. Upon the completion of the counseling course, you will receive a certificate of completion. Your Albuquerque bankruptcy lawyer will need to file this certificate along with your bankruptcy petition.

Pre-Discharge Education Course

Like the pre-filing counseling requirement, the pre-discharge education course must be taken with an approved organization. In contrast to the pre-filing counseling requirement, the pre-discharge education course is completed after you file for bankruptcy, but before you receive a bankruptcy discharge. The education course will address a variety of issues including how to use credit responsibly and developing a manageable budget. The course will last from one to two hours, and the fee for the course may be slightly higher than the fee for the pre-filing course. You will receive a certificate of completion after you finish the course that your Albuquerque bankruptcy lawyer will file with the bankruptcy court. It is a good idea to retain a copy of this certificate.

If you are having trouble paying your bills and are being harassed by your creditors, get help from an experienced bankruptcy lawyer. Albuquerque bankruptcy lawyer Don Harris can help make your life more manageable. Don’t wait for your situation to get worse. Call 877-299-8777 today.

The Chapter 13 Repayment Plan

Chapter 13 bankruptcy requires you to create a repayment plan that will last for 3 or 5 years. The bankruptcy court must approve your repayment plan, and you must make all monthly payments on time and in full each month to the Chapter 13 bankruptcy trustee. Your Albuquerque bankruptcy lawyer may warn you that failing to make a monthly payment may result in the court dismissing your bankruptcy case without granting you a discharge. Therefore, it is important to develop a repayment plan that you can afford.

Debts that must be repaid in Chapter 13 bankruptcy. Some of your creditors are entitled to be repaid in full, but others may receive less than 100 percent of what you owe them or even nothing at all. In general, your filing fees, the trustee’s commission, and your attorney’s fees must be paid in full. Priority debts must also be repaid in full over the course of the plan. The most common priority debts are alimony and child support arrearages owed to a former spouse or child, and back taxes incurred in the last three years. If you cannot pay these mandatory debts during your plan, you may have to sacrifice some secured property or reduce your living expenses.

If you want to keep your home, you will need to stay current on the mortgage and pay off any arrearages you owe during the life of the plan. The same is true for other debts secured by property if you want to keep the property.

Non-priority unsecured creditors, like credit card companies and health care providers, will be paid anything from 0 to 100 percent of what you owe depending on the amount of disposable income you have each month to put toward these debts, the total value of your non-exempt property (property that could be liquidated to pay creditors in a Chapter 7 bankruptcy), and the length of your plan.

Reasonable expenses during the repayment plan. During your repayment plan you are allowed only reasonable expenses. What expenses are considered reasonable varies from court to court and depends on your situation. As a general rule, luxuries are not reasonable. For example, loan payments for a luxury vehicle may not be allowed. Voluntary contributions to a retirement plan also may not be allowed unless you are approaching retirement age.

Common objections to a repayment plan. The bankruptcy trustee or a creditor may object to your repayment plan for several reasons. For example, your plan may not feasible if it calls for a monthly payment that you cannot afford. Your plan is also objectionable if it does not commit all your projected disposable income, you do not pay your creditors as much as they would receive if you went through a Chapter 7 bankruptcy, or your plan does not repay creditors according to their order of priority. For example, a tax obligation must be satisfied prior to a credit card debt.

If you are facing financial problems, you need help from an experienced lawyer who knows the ins and outs of the complex Bankruptcy Code. Contact Albuquerque bankruptcy lawyer Don Harris. We can help make your life more manageable. Don’t wait for your situation to get worse. Call 877-299-8777 today.

Four Common Myths About Bankruptcy

As an experienced Albuquerque bankruptcy lawyer, I know that many myths exist regarding bankruptcy. Here I attempt to dispel a few of the more common ones. If you are considering filing for bankruptcy, make sure you raise any worries or concerns you have about the process with your Albuquerque bankruptcy lawyer. You may find you had less to worry about than you thought.

Myth #1: Most individuals can no longer file for bankruptcy since the Bankruptcy Code was changed in 2006.

In 2006, Congress made changes to the Bankruptcy Code, affecting some individuals’ Chapter 7 eligibility. This was done in response to what was viewed as widespread abuse of the bankruptcy process. Now, to file for Chapter 7 bankruptcy, you must earn less than the median income for individuals of your state, or you must satisfy the means test. The means test measures the amount of disposable income you have remaining each month after paying all necessary expenses. Therefore, some potential bankruptcy petitioners may not be eligible for Chapter 7 bankruptcy depending on their disposable income. However, the recent Bankruptcy Code changes have had little effect on Chapter 13 eligibility.

Myth #2: If I file for bankruptcy my case will drag on for years.

Most Chapter 7 bankruptcies are completed within 3 to 4 months. However, if you file for Chapter 13 bankruptcy, you must complete a repayment plan before you will receive a bankruptcy discharge. A repayment plan can last three or five years depending on the amount of debt and the number of assets you would like to keep following the bankruptcy.

Myth #3: I can only file for bankruptcy once in a lifetime.

There are no limits regarding how many times you may file for bankruptcy in your lifetime. The Bankruptcy Code allows you to file for Chapter 7 bankruptcy every 8 years. In addition, if you previously filed for Chapter 7 bankruptcy and 8 years have not elapsed since your last bankruptcy filing, you can file for Chapter 13 bankruptcy. However, to receive a discharge of your debt, you must wait 4 years after filing for Chapter 7 bankruptcy to file for Chapter 13 bankruptcy.

Myth #4: Everyone will know about my bankruptcy.

A bankruptcy filing is public information. For example, after you complete your bankruptcy case and you receive a bankruptcy discharge, creditors will have access to your bankruptcy filing. However, it is unlikely that the general public will search the online database to find your bankruptcy filing.

Filing for bankruptcy is a big decision. Get help in deciding whether it is right for you. Contact Albuquerque bankruptcy attorney Don Harris for a free initial consultation.

Five Common Mistakes Debtors Make Before Filing for Bankruptcy

As an experienced Albuquerque bankruptcy lawyer, I often see clients who have made these costly mistakes.

Paying credit cards, medical bills, and other unsecured debts instead of mortgages and car loans. Debtors sometimes pay credit card bills and other unsecured debt first because collection agencies are so persistent with their calls. Some people mistakenly believe that they can be sent to jail for failing to pay these debts. The truth is that unsecured creditors can do nothing more to collect the debt than file a lawsuit, which will be stayed (suspended) when you file for bankruptcy. Secured creditors can foreclose on your home or repossess your car, so it makes much more sense to keep these debts current.
Taking out a home equity loan to pay off credit cards. Debtors fall prey to this mistake because lenders advertise home equity loans as a way to consolidate debt and reduce monthly payments. Don’t fall for these ads. If you are unable to pay your home equity loan, the lender can foreclose. Your credit card debts, on the other hand, can be discharged in bankruptcy.
Withdrawing money from retirement accounts to pay debts. Don’t make early withdrawals, or borrow against your retirement plan to pay debt. Your retirement savings are fully protected from your creditors in bankruptcy.
Keeping accounts at the same bank from which you have an unpaid loan. Under a legal rule known as “setoff,” a bank may apply money in your bank account to any unpaid loan from that same bank. As soon as you decide to file for bankruptcy, open an account at a different bank from the one that holds your loans and transfer your balances to the new account.
Failing to pay income taxes. Keep up with your taxes by withholding the proper amount from your income. Recent tax bills cannot be discharged in bankruptcy. Interest and penalties will rapidly increase your tax bill, and the IRS has extraordinary collection powers.

If you are considering filing for bankruptcy, contact experienced Albuquerque bankruptcy lawyer Don Harris today. To schedule your free initial consultation, call 877-299-8777.

Advantages and Disadvantages of a Chapter 13 Bankruptcy

Individuals will need to decide which type of bankruptcy to file, Chapter 7 or Chapter 13. Each has different eligibility criteria and different advantages and disadvantages. An Albuquerque bankruptcy lawyer can review these with you and advise you about your options.

A Chapter 13 bankruptcy is a good option for debtors who would like to reorganize and repay at least some of their debts. During a Chapter 13 bankruptcy, you and your Albuquerque bankruptcy lawyer will create a three or five year repayment plan.

To be eligible for Chapter 13 bankruptcy, you must have regular income for at least six months before filing for bankruptcy. The income can come from any source including a pension or Social Security benefits.

A Chapter 13 bankruptcy will allow you to keep your assets, even if they would not be exempt from seizure in a Chapter 7 bankruptcy. A Chapter 13 bankruptcy may allow you to catch up with arrearages on secured debts, like your home mortgage or car loan, over the life of the repayment plan. In addition, a Chapter 13 bankruptcy may allow you to favorably modify some secured claims. For example, if you purchased a car at least two and a half years before filing for bankruptcy, you may be able to reduce the amount owed on the car loan to the car’s current value. You may also be able to convert a second or third mortgage on your home to an unsecured debt that you will not need to repay in full if your home is worth less than the amount remaining on your first mortgage.

Chapter 13 bankruptcy does have several disadvantages. A Chapter 13 bankruptcy trustee receives a commission on each monthly payment for managing your repayment plan. In addition, if you miss a monthly payment, the bankruptcy court can dismiss your case, no matter how close you are to completing the plan. Attorney’s fees for a Chapter 13 bankruptcy will also be higher than for Chapter 7 bankruptcy.

If you are considering filing for bankruptcy, contact experienced Albuquerque chapter 13 bankruptcy lawyer Don Harris today. Don will evaluate your financial situation and help you decide whether filing for Chapter 13 bankruptcy is right for you. For a free initial consultation, call 877-299-8777.

Chapter 7 or Chapter 13?

Filing for Bankruptcy: Should you choose Chapter 7 or Chapter 13?

In my role as an Albuquerque bankruptcy lawyer, I assist individuals in choosing whether to file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, the bankruptcy trustee liquidates the debtor’s non-exempt assets to repay the debtor’s creditors. In contrast, Chapter 13 bankruptcy allows a debtor to reorganize her debts through the creation of a repayment plan. As your Albuquerque bankruptcy lawyer, I will assess your situation and recommend which Chapter you should file under.

Chapter 7 Bankruptcy
Changes to the Bankruptcy Code in 2005 have made it more difficult for debtors to qualify for Chapter 7 bankruptcy. Now a debtor must satisfy the means test. The means test evaluates the debtor’s income and allowable expenses to determine the debtor’s monthly disposable income. If the debtor has significant disposable income each month, a presumption arises that the debtor is able to repay at least a portion of her debts, and therefore should not be permitted to file a Chapter 7 bankruptcy. Chapter 7 is a good option for an eligible debtor who has dischargeable unsecured debt, like credit card debt or medical bills, and few or no non-exempt assets that can be seized by the bankruptcy trustee.

Chapter 13 Bankruptcy
To be eligible to file for Chapter 13 bankruptcy, a debtor must have regular and reliable income for at least six months prior to filing for bankruptcy. Income can come from any source including child support or a pension. In a Chapter 13 bankruptcy, the debtor creates a plan to repay all or a portion of her debts over three or five years. The debtor must make all payments in full and on time each month to the Chapter 13 bankruptcy trustee, or the debtor will not receive a bankruptcy discharge. Chapter 13 may be a good option for a debtor who has non-exempt assets that she would like to keep or non-dischargeable debts like student loans and family support obligations. A Chapter 13 bankruptcy may enable a debtor who is behind on a mortgage or car loan to pay the arrearage and prevent foreclosure or repossession.

Albuquerque bankruptcy attorney Don Harris will assist you with the complex calculations of the means test and help you decide which type of bankruptcy is right for you. For assistance with your bankruptcy case, please contact Albuquerque bankruptcy attorney Don Harris for a free initial consultation.

Which chapter are you eligible to file under: the means test

Most individuals will file for bankruptcy under either Chapter 7 or Chapter 13. Chapter 7 wipes out all your dischargeable debts and liquidates your non-exempt assets, while Chapter 13 is a reorganization of your debts. In a Chapter 13 bankruptcy, you will repay a percentage of your debt over 3 or 5 years.

Most people file under Chapter 7, if they are eligible, because it gives them a fresh start and is a shorter and simpler process. However, for some people with sufficient income, Chapter 13 is a better option because it allows the debtor to keep some assets that the debtor would lose in a Chapter 7 bankruptcy.

Before 2005, debtors were generally free to choose whether to file under Chapter 7 or Chapter 13. Congress was concerned that Chapter 7 was being abused by debtors who actually had the ability to repay some of their debts. To eliminate this perceived abuse, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). BAPCPA established a new “needs-based” bankruptcy process, which forces higher income debtors to file a Chapter 13 bankruptcy.

BAPCPA provides a detailed “means test” for determining when an individual debtor qualifies to file a Chapter 7 case and is not thereby abusing the process. The means test applies to debtors with primarily consumer debt. If a debtor’s estate does not consist mostly of consumer debt, the debtor is not subject to the means test.

The means test is a complex calculation that takes the debtor’s average monthly income over the previous six months and deducts certain allowable expenses set by the IRS, as well as some of the debtor’s actual expenses and actual payments for certain debts.

The means test creates a presumption that filing a Chapter 7 proceeding would be an “abuse” if, over five years, the means test shows that the debtor has the ability to repay the lesser of:

(i) $11,725, or
(ii) 25% of the debtor’s total non-priority, unsecured claims (but these must be at least $7,025).

Completing the calculations required for the means test is tricky for most debtors. A knowledgeable bankruptcy attorney can provide invaluable assistance with the calculations and can help you decide which type of bankruptcy is right for you. For assistance with your bankruptcy case, please contact Albuquerque bankruptcy attorney Don Harris for a free initial consultation.

Automatic Stay Upon Bankruptcy Filing

Automatic Stay Upon Bankruptcy Filing

Generally, when a debtor files a petition for bankruptcy, the filing automatically “stays” all pending civil actions against the debtor. This means that all proceedings in the civil actions are halted until the bankruptcy is resolved. Furthermore, creditors are not permitted to take certain actions during a stay. For instance, a utility company may not discontinue service during the stay or immediately after the stay is lifted. Before discontinuing service, the utility company must allow the debtor 20 days from receipt of the Order of Relief to provide a deposit securing payment for future services.

Furthermore, creditors are not allowed to contact the debtor during bankruptcy; rather, they must communicate through the debtor’sAlbuquerquebankruptcy attorney. If a debtor is harmed by a creditor’s violation of the stay, he or she may be able to recover actual damages, including costs and attorneys’ fees, from the creditor. An automatic stay during pendency of bankruptcy proceedings affords a debtor opportunity to create a bankruptcy plan without the pressure of addressing pending civil actions with creditors.

Automatic Stay After Previous Bankruptcy Filing

When an individual debtor files for bankruptcy within one year after having a previous filing dismissed, the debtor must show that the refiling was in good faith, or the automatic stay will be lifted after 30 days. The debtor’s bad faith is presumed if: (1) the debtor’s previous bankruptcy case was dismissed because either the debtor failed to amend his or her petition or schedule when ordered by the court, or the debtor failed to provide adequate protection when ordered by the court; and (2) there has been no substantial change to the debtor’s affairs indicating that the current case will not be concluded with either a discharge or a confirmed plan.

If the debtor had more than one bankruptcy case dismissed within one year prior to the current filing, no stay goes into effect unless the debtor’s good faith is established upon motion before the court. To obtain the stay, the debtor’s Albuquerque bankruptcy attorney must file the motion for it must within 30 days of the petition. The motion must establish the debtor’s good faith in filing the bankruptcy petition. If the court grants the motion, the stay becomes effective when the order is entered by the judge.

For assistance with your bankruptcy case, please contact experienced Albuquerque bankruptcy attorney Don Harris for a free initial consultation.

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