Wednesday, February 16, 2011

The Perfect Storm for skyrocketing numbers of Chapter 13 cases

Recent economic indicators suggest that after two years of economic calamity, thousands of laid-off Georgians are returning to work. This is great news if you're one of the newly re-employed. It ought to be reassuring news if you're one of those still searching.

One would think that returning to work means that there is now less reason to have to file bankruptcy. Sadly, that is not the case. We live in an economic climate that is the perfect storm to necessitate filing Chapter 13 bankruptcy. Why? Tax problems created by tapping retirement accounts, car notes that fell behind, looming threats of garnishment, and second mortgages on devalued property my friends. There is simply no way to solve all of these problems outside of the bankruptcy court.

The thought of filing bankruptcy--particularly Chapter 13--is an unpleasant prospect. But filing bankruptcy means that the United States Bankruptcy Court protects you from your creditors.

You will pay back a portion of your debts. You might pay back a big portion of your debt--maybe even all of your debt. I can't tell you for certain how much until I've evaluated your debt and income. But the amount you'll pay back will be one that is a function of all parts of your current income and expenses going forward over the next five years.

This calculation is the Chapter 13 means test, and my ability to get my clients through this test with their lives in tact is why my clients hire me.

There are allowances for continued reasonable contributions to your retirement account, your church, your kids educational expenses, your ongoing medical expenses, needed repairs to your home, the list goes on.

The fact that the bankruptcy court allows these expenses to factor into the determination into how much you pay back means the formula is fundamentally different (and most always less) than the amount you'll pay back through debt settlement companies.

And that reality means that it is always better to subject yourself to the court than is to subject yourself to the collectors.

If you're wondering where your relief is, perhaps it's time to set up your consultation with me Attorney Shannon McDuffie. (404) 418 8879.

Think twice before filing that tax return-5 common errors

Are you preparing to file your tax return yourself, or have you hired someone do to your return for you?

Well, think twice before you file that return my friends. Our friendly federal government is out there and thanks to powerful computers and algorithms, it's watching us and our tax returns.

I am not a CPA and I don't give tax advice. But I know common errors when I see them--and here are my top 5 tax return errors:

1. Claiming "head of household" when you are married. Big no no. If you're married, you are either filing your returns as "Married" or "Married Filing Separately." You may not file as head of household when you are married. When the IRS determines that you were married, it will come after you and force you to amend your returns for the years you were married--yes you'll likely have tax liability.

2. Claiming the home buying tax credit when you don't qualify. Another big no no that triggers huge liability--like $7,500 worth of tax liability. Read the fine print to make sure that your home purchase actually qualifies before you take this credit. Same goes for the energy efficiency credits and rebates. Yes, there are IRS auditors whose job it is to ferret out those who take these credits wrongfully. Don't be tempted.

3. Claiming kids that aren't yours to claim. Either you're divorced and your decree spells out who gets to claim the kids, you're married filing separately and you've agreed who claims which child, or you were never married and you've agreed who claims whom. Don't think for a second that the IRS doesn't cross check the social security number of the kids names provided on your return to see if more than one filer claims a child.

4. Leaving rental income off your return, but taking the repair and/or mortgage interest deduction. Ouch, this is not smart my friends. If you're claiming the mortgage interest deduction and/or taking repair deductions for your rental property, you had better be declaring the income you received.

5. Relying on the tax advice on a tax preparer who is not a CPA. I hate to denigrate other professionals but please use caution when selecting your tax preparer. I have seen many returns that were prepared by tax professionals who were not CPAs that contain the errors I listed above (and others more egregious). Remember, that you sign your name at the bottom of that return. The IRS doesn't care if you relied on a bookkeeper who gave you bad advice. If you are uncertain about the tax preparers qualification, ask the person who you are considering giving your business to if he or she is a CPA. A CPA (certified public accountant) is licensed by the state, has to complete annual continuing education each year, and can lose his or her ability to file returns if he or she screws up. Got complicated issues? It's worth the money to find someone who is liable for the advice he or she gives you.

Part of my job as a bankruptcy attorney is cleaning up tax problems from years past. Got questions--call me Attorney Shannon McDuffie for your consultation. (404) 418-8879

Friday, December 10, 2010

Car tricks in Chapter 13 cases (cram down and interet rate high jinx)

Did you know that the filing of a Chapter 13 bankruptcy case allows you to modify the terms of your loan with your car lender?

Well yes, it's true my friends. And it's magically delicious.

Welcome to your new and improved interest rate:
So long as the person on the note (or persons) files bankruptcy, your Chapter 13 plan will provide that your car lender gets what called the 'Till' interest rate. Till refers the Supreme Court case that sets the maximum allowed interest rate that car lenders can expect to get. The Till rate is currently around 4.5%. That means if your interest rate is anywhere north of 4.5%, then you're going to save money on the remaining balance of your loan. (Yes there is a potential wrinkle if your note is less than 4.5% interest; ask me to explain because the outcome depends on the lender.)
In most cases, it won't matter if you bought the car last year, or last week. I ring the Till bell for all Chapter 13 clients regularly for my clients.

Welcome to your new and improved loan balance:
So long as the person on the note (or persons) files bankruptcy, and so long as the vehicle was purchased more than 910 days before your Chapter 13 case is filed, then I will cram down the value of your car to the replacement value / fair market value. Your plan will pay out the secured balance of the note. The remaining balance will go to your unsecured total.
Yes, it's true. I can take that upside down loan and 'right' it.
The 910 day rule is fixed--the value of your car may not be.

Call me Attorney Shannon D. McDuffie for more information. (404) 418-8879

Thursday, November 25, 2010

Black Friday November 26th 2010

If you're Thanksgiving was anything like mine, you are sitting in front of your TV set right now watching the Who Dat Nation try to hang onto their slimming lead over the Cowboys.

You're stuffed and a little bit sick from too much food (and maybe too much wine).

You've seen the commercials, your email account has been assaulted with it, your newspaper was besotted with ads. Unless you live in a Yurt, you know the deal.

Tomorrow is Black Friday.

Are you ready? Is your wallet ready? Where will you start? How much will you spend?

Each year, I devote a special blog post to you dear reader to remind you that Black Friday is called Black Friday because it's traditionally the day when retailers' balance sheets go from red to black.

It's not the day when consumers balance sheets realize any benefit.

It is the day when Americans go completely crazy spending money on gifts for their loved ones, themselves, anyone and everyone.

We are a nation of consumers. That is part of what makes us uniquely American. We sometimes believe the fallacy that it's possible to 'save more when we spend more.'

You can't. You won't. The fact is that you won't miss anything if you opt out of Black Friday. You'll skip the after-guilt from buying things that you wouldn't buy if they weren't on sale. You'll minimize the January hang-over when you open your credit card statements.

Tomorrow, I'll celebrate my 12th 'Buy Nothing' day. Yes, some years I've caved and bought something(s). Yes, I maintain a short list of things I'd buy tomorrow if I weren't celebrating Buy Nothing day. No, I don't expect you to think Buy Nothing day is anything worth adopting.

But, I do give you permission to stay out of the shopping center and offline.

Buy nothing.

Kiss your children and your squeeze. Be glad you're not in Haiti. Be glad you're not making a living as a debt collector. Balance your check book. Throw some of that money you were going to blow into your retirement account.

If you're struggling under the weight of your debt, it's time to call me to discuss your options.

Attorney Shannon D. McDuffie (404) 418-8879.

Sunday, November 14, 2010

Think of your chapter 13 attorney as your own personal shoe cobbler

When you meet with me, I will analyze your income and your debt and tell you if you qualify for filing either Chapter 7 or Chapter 13 bankruptcy. I will also advise you whether you should elect to file Chapter 13 even though you qualify for filing Chapter 7 based on the means test.

When we discuss the process of filing Chapter 13 and writing a Chapter 13 plan, I suggest that you think about your Chapter 13 plan the way you think about having a pair of shoes custom made for your feet.

The 'shoes' that I make for you are designed to be worn every day for five years. They can't wear out--they can't give you blisters--and they need to be versatile enough to go with all aspects of your wardrobe.

If the shoes don't fit then you're likely to stop wearing them.

Following that analogy: your proposed plan payment can't be so expensive that you can't buy food for your family. The plan can't leave debt out, or treat creditors in a way that will cause them to object to your plan. If I don't size the plan correctly, then you're likely to see your case dismissed without discharge.

Yes, you can buy shoes at Wal-Mart or Target--and yes they are easy to find and priced to move. But I doubt that a pair of mass produced shoes will meet your needs for the duration. Similarly, yes you can find high volume attorneys who will write Chapter 13 plans that are essentially mass produced and destined to fail.

When you're about to enter into the world of Chapter 13, it's worth the time it find an attorney who will take the time to build a plan custom made for your debt and income.

Call me, Attorney Shannon D. McDuffie for your shoe consultation. (404) 418 8879

Thursday, November 11, 2010

On being shot at while at work

November 11th--11 AM

It is now another 11th Hour of another 11th Day, of another year. Nations once honored this day as Armistice Day. Our long dead relatives once gathered together to give thanks that our soldiers weren't dying violent bloody deaths in wars brought on by sociopaths. We thank God for that fact on Memorial Day now.

Armistice day we now save for our veterans. We thank God that they are here and that we can see them and cherish them. Our soldiers get paid to get shot at while at work.

What an amazing and terrifying proposition.

We are here working in our safe environment assuming that the details of our regular lives will unfold uneventfully. Some of us are bored. Some of us are not.

Our soldiers are hoping for a slow day--zero casualties.

I encourage you think about the difference between your job and those soldiers' jobs. And I encourage you to think about what motivates you in life and what you really seek to protect.

It's only money my friends. Protect what you need to protect. Take the action that you need to take in order to protect. Get real about this life and the things in it.

Is it time to take stock of your financial situation and take action? I don't know. Need help deciding? Call me.

Sunday, October 31, 2010

Yes, I do want to make a federal case of it.

In general, I am debtor's counsel in the bankruptcy court. That means I most often represent debtors who seek to have their debts discharged either via Chapter 7 or Chapter 13 bankruptcy.

As defense counsel, I am akin to a defense attorney. I will be preparing you for an inquiry into your personal finances that you cannot possibly anticipate or navigate without my help. I will be defending your actions and getting you to the other side of the shore.

There are occasions however, when I act on behalf of creditors who need an attorney to act on their behalf. My favorite type of creditor is one who has been duped or screwed by an Ex spouse, Ex business partner, or Ex friend in the bankruptcy court.

Yes, I do want to make a federal case for creditors like these.

I do this because the individual who is attempting to screw my creditor-client doesn't deserve the protection of the Bankruptcy Code. He or she (or 'it', if it's a corporation) has done something bad, and is trying to hide the bad action in the discharge.

Yes, I very much want to make a federal case of it.

I routinely file what we call either 'Adversary Proceedings' or 'Dischargeability Motions' to get the mess straightened out. There is nothing sweeter than recovering money or property for my clients.

Do you think that you're about to be screwed or duped by someone who filed bankruptcy?

Call me Attorney Shannon D. McDuffie to find out how I can help you. (404) 418-8879

Wednesday, October 20, 2010

Will the foreclosure mess mean you're 'home free?' What's a Foreclosure Moratorium?

If you've turned on your television news, or picked up your newspaper you've likely read coverage of the moratorium on foreclosures that a few big banks instituted two weeks ago.

Most notably, Bank of America and Ally Bank (formerly GMAC) stopped foreclosures briefly via self-imposed moratoriums on foreclosures. Bank of America has since restarted foreclosures in states where a judge rules on their right to foreclose. B of A anticipates restarting foreclosures everywhere else once it 'straightens out' their evidence.

What does the moratorium on foreclosures mean to you if you own property that is at risk of foreclosure in Georgia?

First you must understand that Georgia is a non-judicial foreclosure state. Non-judicial means that there is no court review of your lender's right to sue you to foreclose.

The foreclosure process in Georgia goes like this:
1. You default.
2. Your lender sends you a letter demanding you come current in 30 days, by accelerating your loan.
3. Your lender advertises your property for foreclosure for 4 weeks leading up to the sale date in the legal organ (newspaper) for your county.
4. Your property is foreclosed in a public auction on the court house steps of the county where the property is.
5. The sheriff executes a writ to evict you (if you're still there).
6. Your lender files a motion to validate the foreclosure sale.
7. Your lender has six years to sue you on the deficiency.

John Adams (and AJC columnist and real estate guru) columned about this in his column "Georgia Foreclosures Swift and Sure."

In Georgia foreclosures, there is no hearing and no judge reviews the lender's right to foreclose (standing) or the amount in default. Your lender does not have to prove that you were served with notice of the foreclosure.

But, I wouldn't get too excited about any of these eventualities if I were you.

When the gears start grinding again, unless our state law changes, it will be business as usual on the First Tuesday of the Month. You may not want to rely on the possibility that Big Mortgage's botched paperwork will save your house.

You can't live in your house for free. I'm sorry.

Want advice about your options managing your debt and taking control of your finances through?

Call me Attorney Shannon D. McDuffie for advice about your mortgage, foreclosure, and bankruptcy. (404) 418 8879.

Monday, October 18, 2010

Is your Chapter 13 doomed to fail?

Over 15,000 Chapter 13 cases have been filed in the Northern District of Georgia Bankruptcy Court so far this year. Most of these cases were filed in the Atlanta division bankruptcy court.

Did you know that approximately 50% of these chapter 13 cases will fail?

By failing, I mean that the cases end before the debts are discharged. Yes, sometimes the cases convert to Chapter 7 and the debts are ultimately discharged in Chapter 7.

But the truth is that most of the Chapter 13s that fail do so because the debtors who file Chapter 13 are not well-prepared to take on the challenges of Chapter 13.

This is bad because the bankruptcy filing goes on the debtor's credit report--does about 350 points damage to the credit score--and doesn't result in relief from debt.

Who's at Fault?

It's your Chapter 13 bankruptcy attorney's job to take the time to work through these kinks with you before you file your case. Don't waste time and money on an attorney who won't be bothered to do these calculations for you. If you're interviewing attorneys, get up and leave if you feel like you're not being treated well by your attorney. If you've already filed and want a new attorney, it's not too late to switch so long as you are pre-confirmation.

You need an advocate who understands the code, and the Chapter 13 trustees in our district.

Call me, Attorney Shannon D. McDuffie for my advice about your Chapter 13 plan. (404) 418-8879.

How to pay for bankruptcy when you're broke in Georgia

If you're struggling under the weight of your debts and wondering if it's time to consider filing bankruptcy, you'll probably also wondering how you're going to pay for it.

"Going broke" (e.g. filing bankruptcy) costs money, and somehow you've got to pay the court filing fees, pre-filing counseling fees, and most importantly your attorney fees.

How much will it cost to file bankruptcy in Atlanta, Georgia?
Both the court filing fee and pre-filing counseling fee are non-negotiable, but fortunately affordable. The court charges $299 to file Chapter 7 bankruptcy and $274 to file Chapter 13 bankruptcy. The court allows you to pay these off in installments of around $100/month. Pre-filing counseling is also affordable--it costs $30.

How much your attorney fee will be is a function of the complexity of your case and your attorney's experience.

If you are my client, then my fee depends on a number of factors including but not limited to: the nature and complexity of your case, the risk I see in representing you, the number of creditors you have, whether you have existing and/or pending judgments, garnishments, repossessions and foreclosures, and what we plan to do with your property.

You and I will talk a lot about your case and its complexity. You will understand why the fee is what I set it at when we are done talking. You will leave my office with a clear fee agreement that spells what services are included and excluded. You will sleep better with this information.

The Bad News--In Chapter 7, the attorney's fee is paid before the case is filed
Attorney fees in Chapter 7 are paid up-front before your case is filed. This is not my doing. This is the rule of the court and the code. Yes, there are attorneys who advertise that they can get your Chapter 7 started with a down payment. I say that they are violating the law and risking their bar license. The law firm that advertises biggest filer of bankruptcy in Georgia is currently under investigation for this practice in Tennessee. The Department of Justice is seeking to disgorge over $1 million in fees from this firm because it filed chapter 7 cases with attorney fees paid post-filing.

The Good News--In Chapter 7, the attorney fee is affordable.
A Chapter 7 case is significantly less expensive than Chapter 13. Most clients discover that the total of their attorney fees in Chapter 7 is less than what they were shelling out in one month of minimum payments to Big Credit. This is especially true for clients who have credit card balances that carry 30% interest rates. Believe me.

The Great News--In Chapter 13, the attorney fee is paid is mostly through the plan.
Chapter 13 costs more because it involves a Chapter 13 plan and plan confirmation. But because the court views the plan confirmation as being an administrative cost of the case, paying your attorney 'in plan' is okay and is the way the court wants your attorney paid. That way there is an incentive for your attorney to get the case confirmed, and a disincentive for your attorney to file Chapter 13 cases that are doomed to fail.

Now, how to Get the money to pay me.
You and I will discuss a few strategies:
  • Are you keeping your house? Your car? If not, then not having to make the monthly note payment will provide money to file.
  • Are you 'in the chute' to file bankruptcy and is there good reason to not make the monthly minimums on your credit cards (DON'T do this without being my client--There are risks you must know about!)
  • Is there a friend or family member who will give you the cash you need to file? You'd be surprised how many clients have their fees paid for by a loved one. (this can't be a loan).
  • Are you about to get your tax refund? During refund season, most people who file bankruptcy did so with their refund. It's money well spent.
  • Do you have an asset that you can sell at fair market value to an outsider to get your filing fee? This is very very tricky. (Please don't sell your '75 Cadillac, or your baseball card collection without me explaining to you how this transaction must be set up to avoid problems in court).
  • Is there a retirement accounts that you can tap? Please don't plan to use your retirement accounts to bankroll bankruptcy. But on the other hand, if you've already liquidated the account you and I will consider this as a strategy. This is often the last resort.
  • Can you incur new credit card debt to pay your attorney? No. No you may not use credit cards to pay your attorney. Ask me about another Atlanta and Chicago based law firm who is currently being investigated and who will likely disgorge ALL attorney fees collected from credit cards since 2005.
Where there is a will there is a way. Where there is a calculator and a calendar, you'll find me.

I've 'shined the light' for hundreds of Georgians who needed to figure out how to pay to go broke. Let me help you too.

Call me Attorney Shannon D. McDuffie for more information about getting (and paying for) your fresh start. (404) 418-8879.

Are you ready to get started on the road to your Fresh Start?

Please call my office at (404) 418-8879 to set up your consultation with me. I will personally evaluate your situation with you and help you decide whether filing bankruptcy is the best option for you and your family.

My office is located in downtown Decatur.

For information about my practice visit