Bankruptcy's breath of 'Fresh Start'

The Perfect Storm for skyrocketing numbers of Chapter 13 cases

2011-02-16T16:38:00.004-05:00

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

2011-02-16T10:05:00.004-05:00

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

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

2010-12-10T21:07:00.005-05:00

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

Black Friday November 26th 2010

2010-11-25T19:16:00.004-05:00

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.

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

2010-11-14T14:23:00.006-05:00

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

On being shot at while at work

2010-11-11T11:30:00.002-05:00

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.

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

2010-10-31T12:04:00.002-04:00

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

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

2010-10-20T22:43:00.007-04:00

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.

Yes, there will be challenges to foreclosures mounted by homeowners whose property in states with judicial foreclosures. (Want to read more about that: Here's an article published in the NYT on October 20, 2010-Big Legal Clash on Foreclosure Taking Shape.)
Yes, there will be many homeowners who are able to delay the foreclosure sale by challenging the lenders' standing and amount in default. No, Big Mortgage has not brought down the curtain on this issue. But no one thinks that the challenge will evolve into anyone in default being 'Home Free' forever (Want more on this: Here's an article published in the NYT on October 19, 2010--Intermission, At Best, In Battle Over Foreclosures.)
Yes, you may get solicitations from entities here in Georgia who say that they can offer you 'foreclosure defense' based on your lender's crappy record keeping. (Want to read more about that: Here's an article published in the WSJ on October 21, 2010 -Niche Lawyers Spawned Housing Fracas.)

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.

Is your Chapter 13 doomed to fail?

2010-10-18T17:03:00.002-04:00

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?

Maybe it's an unrealistic budget that proposes to put so much in the plan that there isn't enough money to eat.
On the flip side: Maybe the debtor's budget proposes expenses that will be deemed excessive in the eyes of the trustee.
Maybe it's the attorney who misunderstood, or miscalculated, the debts that would be paid on in the plan, or who didn't know that the client didn't qualify for discharge.
Maybe there is too much debt to qualify for Chapter 13 discharge.
Maybe it's the client who wasn't totally candid about the types of debts that would need to be paid.
Maybe it's the client who thinks that he or she can go it alone (Don't!)

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

2010-10-18T15:58:00.006-04:00

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.

New Means Test Numbers on November 1, 2010 (and they are not good news)

2010-10-17T10:30:00.002-04:00

The Department of Justice periodically updates the numbers that we use to determine median income and the means test when filing bankruptcy petitions. Median income draws a bright line in the bankruptcy court. Either your family is above median income or below median income.

Above median income means that you are presumed by the code to be a Chapter 13 debtor. Before you file, I'll be working hard to analyze your family's income and expenses to see if I can overcome the presumption that you belong in Chapter 13.

Below median income means that you are presumed by the code to be a Chapter 7 debtor. The problem is that the lower the median income, the harder it is to file Chapter 7.

Here's a comparison:

Household size	New Median income (Cases Filed After 11/1/2010)	Old Median income (Cases filed before 10/31/2010	Difference after 11/1/2010
1	$38,748	$40,546	($1,789)
2	$51,184	$55,061	($3,877)
3	$55,767	$60,887	($5,120)
4	$68,122	$68,258	($136)
5	$75,622	$75,158	$464

Add $7,500 for each increase in household size over 4. (That is actually the only good news here gang. The old increase for each additional member of the household was $6,900.)

Households of two and three saw the biggest drop to their median income between March and October.

The updates are generated by information collected by the Census department. These new numbers apply to cases filed after November 1, 2010. The numbers are not good news for Georgians ability to file Chapter 7 bankruptcy or Georgia's economy.

We're poorer, plan and simple.

Yes, that means you should call me today to see if the new numbers affect your ability to file Chapter 7 after November 1, 2010.

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

How to Pay for your Chapter 13 Bankruptcy Attorney

2010-10-16T10:27:00.005-04:00

I know from web analytics that one of the most commonly clicked parts of my website is:
How Much Does it Cost to File Bankruptcy. My clients aren't cheap--they're strapped.

Once they've accepted that filing bankruptcy is the only way out of their dire straights, many clients worry about how they are going to pay for their bankruptcy attorney. Sometimes that fear stops folks from calling. Sometimes it makes them defensive when they finally get the courage to call me.

Sometimes it takes getting down to a person's last $100 before they'll call me. If you're down to that last bit of money, then now is not the time to wrap your head around bankrolling thousands of dollars of attorneys fees.

Let me save you heartache and antacids.

Do you realize that filing Chapter 13 allows you to pay off your attorney through your plan? That means that you can pay very little to file Chapter 13.

Yes, you'll get breathing room because your first plan payment won't be due for a month.
Yes, you can time it such that your current month's mortgage payment and car note payments can be included in the plan (along with arrearages).
Yes, you can stop the wage garnishments that are taking food out of your kid's mouths.

Please don't think you can file Chapter 13 by yourself. File alone and you will be dealing with a somewhat cranky Chapter 13 trustee who will have many many objections that make no sense. Your plan will most likely fail. You will most likely have your case dismissed without discharge. That means that the bankruptcy will be on your credit report, and you will have not gotten any closer to the fresh start you deserve.

Please don't waste time with an attorney who either won't take the time to explain Chapter 13 to you, or who clearly has no experience filing Chapter 13 cases. You wouldn't hire a plumber to do heart surgery (but pipes are pipes, right??). You wouldn't hire the check-out clerk at the gas n go to do your taxes (but she handles money, right??).

Hire a bankruptcy attorney who gets you and who gets your case.

Call me and I will explain the clear advantage in hiring an attorney who
1. Cares about you
and
2. Gets affordable cases confirmed.

I'm not guaranteeing that I'll collect all of my fee via your plan. I set my up-front fee and in-plan fee after meeting with you. But I am guaranteeing that I'll work with you.

Attorney Shannon D. McDuffie (404) 418-8879

Can you file bankruptcy without filing a tax return?

2010-10-15T09:07:00.005-04:00

The short answer to this question is yes. You can file bankruptcy without having filed your tax return. But if you haven't filed your tax returns regularly, or if you have back taxes, you're going to have issues when you file bankruptcy. Sometimes the issue is easily resolved. And sometimes, unfortunately, failing to file tax returns can be fatal to your bankruptcy case.

Are your taxes Ripe for Discharge?
In a Chapter 7 or Chapter 13 bankruptcy case, failing to file returns affects whether I'll be able to discharge your back taxes. This is because the IRS has certain rules that determine the dischargeability of your income taxes.

The three rules are: more than three years must have elapsed since the tax return generating the liability was due, including extensions. The tax return must have been filed more than two years earlier than the bankruptcy petition (generally applicable to late-filed returns), and at least 240 days must have elapsed since the date of an IRS assessment(generally applicable to audit adjustments and amended returns). Also know that negotiations with the IRS can lengthen the time period and that if the IRS proves that you've done something fraudulent, these time frames are not applicable.

Reading those rules hopefully gives you insight on how failing to file a return can result in your taxes not being ripe for discharge. I don't expect it to be totally clear to you--don't worry. If you're head is spinning stop reading and call my office to set up your consultation. If you're a glutton for punishment read on:

Not ripe = Priority Unsecured Debt
Taxes that are not ripe for discharge are called Priority Unsecured debt, and they are treated specially by the bankruptcy code. Priority unsecured debt survives a Chapter 7 discharge--and this means that once your case is discharged the IRS will resume collecting the debt. In Chapter 13, priority unsecured debt must be paid off in the Chapter 13 plan. This is mostly why I wrote that tax issues can be fatal. In order to get your Chapter 13 case confirmed, you'll have to be able to fund a plan that pays off the back taxes. While it's true that tax debt helps you on the means test, it also increases the depth of your debt pool overall--and that fact can be fatal.

It's worth it to determine where your tax liability stands. Yes, you can still file bankruptcy, but you'll most likely find yourself coming clean with the IRS and filing your tax returns as part of your bankruptcy case.

I blogged earlier this year about what happens to your tax return in bankruptcy.

Call me, Attorney Shannon McDuffie to arrange your consultation. (404) 418-8879.

5 year anniversary of bankruptcy 'reform'

2010-10-14T10:26:00.002-04:00

October 17, 2010 marks 5 years since changes to the bankruptcy code were enacted that are commonly referred to by bankruptcy attorneys as BAPCPA.

The "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" was designed to make it harder for consumers to qualify for Chapter 7 bankruptcy.

What a difference 5 years makes! That was before we bailed out Wall Street and found out about crooks like Bernie Madoff. In 2005, we were more concerned and outraged about consumers gaming the system than we were about big banks gaming us.

In 2005, getting credit was easy. We had no idea that the lending industry would implode and that we would be faced with the Great Recession.

Here we are my friends. If you're struggling now, you're not struggling alone.

In 2005, I was in my third year of law school taking my first bankruptcy law class. We studied BAPCPA--I was eager, even then, to get out and fight for my clients. I never practiced under the 'old law' so I never reminisce about the way the code use to be. I just sharpen my tools on the options the code currently contains.

Call me, Attorney Shannon McDuffie to arrange your consulation. (404) 421 3706.

Exciting times for your bankruptcy attorney

2010-10-04T20:01:00.004-04:00

The Supreme Court began its annual session today. Newly appointed Justice Elena Kagan took the bench for the first time after having been sworn in to replace retired Justice John Paul Stevens.

Yes, feminists--there are now three women on the bench. But that is not what gets me so excited.

Last year's term brought bankruptcy attorneys like me three cases that change the way we practice law and assist clients navigate the Code. This year's term will result in more of the same.

Today kicked off with a case that will determine a key deduction on the means test. The case is Ransom v. FIA Card Services N.A., fka MBNA America Bank, N.A.

Here's a summary of the case from USA Today published October 4, 2010.

This case is exciting to me because the outcome could open up another deduction on the means test that could reduce the amount of "disposal monthly income" available to payback creditors in Chapter 13. If the Supreme Court rules in favor of the debtor, it could also open up another deduction that might allow more Georgians to qualify for a Chapter 7 discharge.

I have a hard time imagining that the court will ultimately rule in favor of the debtor. The Bankruptcy Court, the Bankruptcy Appellate Panel, and the Ninth Circuit Court of Appeals all agreed with the creditors. Ransom went to the Supreme Court because there was a different interpretation of the Code in another circuit.

And, on the other hand, the court LOVES to rely on the so-called 'plain language of the statute.' There is at least some hope that the plain language will be interpreted to allow the deduction. We won't know the court's decision until late next spring.

Also bolstering the idea that the Supreme Court will side with the debtor is last year's decision in Hamilton v. Lanning, which stated that the means test must contemplate 'known or virtually certain' expenses when determining the debtor's disposable monthly income--the core of the Chapter 13 plan payment. You better believe I've been using Lanning as a sword and a shield since it was decided.

Who do you want handling your Chapter 13 my friends?

Call me, Attorney Shannon McDuffie to arrange your consultation. (404) 418-8879

Considering filing Chapter 13 on your own?

2010-09-24T13:06:00.006-04:00

I occasionally get calls from debtors who have already filed a Chapter 13 petition, been to court, and decided that they want help from an attorney. (I also get calls from potential clients who ask me if they really need to hire an attorney to file their Chapter 13 case).

If you file a case without an attorney you are called a "Pro se" debtor which loosely translates from Latin as "for himself."

Pro se sometimes works out alright. Here's an article from the AJC describing how couples are able to divorce without attorneys using resources such the Family Law Information Center in DeKalb County or Fulton County.

But in the bankruptcy court, going it alone is never wise. I write this because the Bankruptcy Code is treacherous, and there is no Bankruptcy Information Center to save you.

What is at stake if you risk going it alone in Chapter 13? Your property, your income, and your discharge. Will your property be exempt or are you at risk of having to liquidate it? Will you be able to afford your plan payment? How will you deal with creditors objections? Who will protect your disposable income from your creditors? Do you have a debt that will sink your plan before it's left the shore? Are you over the Chapter 13 debt limit? How do you get your Chapter 13 plan confirmed? What happens after confirmation?

The answers to these questions are not found on the Internet. Each case is unique, each debtor gets a custom fitted plan that is designed to fit around his or her debts.

I want you to succeed in getting your fresh start. You want to succeed too, I know!

In order to do so, you'll need an attorney who's taken clients through the process to their fresh starts.

Call me Attorney Shannon McDuffie at (404) 421 3706 to set up your consultation.

Unemployment income and the means test--a lesson

2010-09-20T11:10:00.005-04:00

I've written about the means test what types of income 'count' for the purposes of determining your household income.

I recently got a call from a prospective client who told me that an associate who works for the law firm who files the most number of bankruptcies in Georgia** told him in his consultation that unemployment income counts on the means test.

Did I agree?

Nope.

Here's why: Yes, an unpublished decision on this point came out of the Northern District of Georgia's bankruptcy court May 12, 2010. The case was a Chapter 13 were the issue to be decided was whether all of the debtors income had been allocated to the Chapter 13 plan. The means test excluded the debtor's unemployment income on the grounds that it was income derived under the Social Security Act and therefore excluded from the 'current monthly income' calculation. The judge ruled in a footnote on the unpublished opinion that he believed that Congress meant to say 'retirement' when it wrote that SSA income was excluded from the means test not 'unemployment.' (!)

The fact is that whether the means test includes or excludes unemployment compensation is not settled law across the country. Attorneys like me are fighting this battle case by case (until it's decided by the Supreme Court).

Up till now, we've proceeded in Georgia excluding unemployment income from the means test. This decision doesn't mean that the law is settled, it's an unpublished opinion that signals to me that at least one judge (a very fair and good judge) believes that it counts.

It also means that if qualifying for Chapter 7 turns on whether your unemployment income is 'counted' you had better hire an attorney who will fight for you. Who will take to the mat for you? Who will explain this to you so you know what you're doing before you do it?

As our unemployment rate doesn't' appear to be improving anytime soon, this issue will become important for more and more clients.

You need an advocate who will advocate for you.

Call me, Attorney Shannon McDuffie to arrange your consultation with me in my office.
(404) 418 8879

** See this brief before you sign your name with that firm my friends.

Free pre-filing counseling

2010-09-19T12:31:00.002-04:00

If you're planning to file either Chapter 7 or Chapter 13 bankruptcy, and you're not filing as a corporation, you're going to need to complete pre-filing counseling.

Here's one provider that will do it for you FOR FREE.

Enjoy.

Attorney Shannon McDuffie (404) 418-8879

Business Bankruptcy--When does a business file bankruptcy?

2010-09-14T11:30:00.004-04:00

What happens when a business needs to file bankruptcy?

Contemplating filing a "Business bankruptcy" should strike fear in your heart if you've been running your own show, and are now wondering if the show might be over.

Why? Because you need to extra careful who you hire to help you decide how to treat the business in bankruptcy. You need to be advised by an attorney who will explain how your business will be treated by creditors and the court. Choose your attorney unwisely and you may still be liable for the debt post-discharge, you may lose your business to liquidation, you may be accused of intending to defraud creditors based on what you did with the business prior to filing.

What chapter do you file? Do you file personally? Does the business file alone? What happens to the assets of the corporation?

I've worked through this analysis with many clients' businesses, and reached different conclusions and solutions depending on the facts of their situations. Business bankruptcies are often my favorite cases because I am able to shepherd my clients to freedom from their business debt (albatrosses around their necks).

Here are some of the questions that you and I will discuss: (these really are the tip of the iceberg--we'll have much more to discuss)

Is your business solvent? Will it ever be solvent?
How was the business entity constructed?
Do you intend to keep operating the business?
Are you the personal guarantor for the business' debt?
Where are the assets of the business physically kept? Are they leveraged?
Has the business paid off creditors recently?
Has the business kept on the good side of the IRS and GDOR?
What other assets have been pledged for the business debt?
Are any of the business creditors 'insiders'?
How much is the business worth? How much accounts receivable are outstanding?

Have I piqued your concern? Are you looking at negative numbers on your balance sheet and worried about your personal finances sinking under the weight of your own albatross?

Call me, Attorney Shannon D. McDuffie to set up your consultation. (404) 418-8879.

Who will know that you've filed bankruptcy?

2010-09-08T15:18:00.003-04:00

Who will know that you've filed bankruptcy?

The answer is: it depends.

Your Creditors, your bank--Yes.
Certainly all of your creditors will know because they will recieve a 'Notice of the Filing' when your petition is filed. The Notice tells creditors that you've filed bankrutpcy and tells them that they might have a claim. The Notice also tells creditors deadlines that apply to your case (such as the deadline for creditors to object to discharge).

Can you leave a creditor off your petition?
Not unless you want to risk not getting discharged of the debt you left off, and possibly having your entire case hit the skids. Even if you leave a creditor off, it is highly likely that they will get notice as a result of the databases that report bankruptcy filings to credit issuers.

Your family and friends--Maybe.
Yes, your family and friends will get notice if they are a creditor. They will also get notice if you've given them something of value in the year or two prior to filing, and if that thing is not exempt.

Your neighbors, your casual acquaintances--Probably not.
It is very uncommon for casual acquaintances to know that you've filed bankruptcy. Newspapers don't generally publish a list of names of people who've filed bankruptcy. The local news doesn't cover it unless there is something scandalous about the case.

Your boss--Maybe.
Your employer will know you've filed Chapter 13 if your Chapter 13 plan payment is paid by your employer (this is usually how it's paid, but there are other options). Your boss will find out if he or she runs your credit report after you file bankruptcy. This can be very bad if you work for a company that discriminates against bankruptcy filers.

Who discriminates?
Banks, law firms, other employers who have a fiduciary duty with other people's money. Though the bankruptcy code protects you from discrimination for filing bankruptcy, it is hard to prevent 'pretextual' firing.

When we meet, I'll explain this to you and talk about how your emploment might be threatened by filing.

Look for Congress to pass laws protecting us from 'pretexual' firing. Until then, Call me Attorney Shannon McDuffie to find about about bankruptcy's breath of fresh start.

Shannon McDuffie (404) 418-8879

How do you fix your credit after filing bankruptcy?

2010-08-26T11:04:00.003-04:00

Clients often ask me how they can fix their credit after filing bankruptcy.

Some clients had great credit scores before life-events triggered filing bankruptcy. Other clients' scores were never great, and life after bankruptcy is the time to make the change.

We know that virtually all lenders use your FICO score to determine whether you're credit-worthy. There are three major credit bureaus: TransUnion, Experian, and Equifax. Each bureau calculates it's own FICO score (though the bureaus use various acronyms for their version of FICO).

Though you can obtain your credit report for free once per year from each bureau by visiting http://AnnualCreditReport.com, it's up to you to buy your FICO score from the bureaus directly or from FICO. Credit reports are different than your credit score. I worry a lot about your credit reports because I want them to be accurate (because they will be used against you!). I personally worry less about your credit score, because it is a reflection of what's in your credit report. The number improves when you're in a better place debt-wise.

Eight Credit Repair Tips After Bankruptcy
Here's a link to an August 2010 MarketWatch Article you'll like: Eight Credit-Repair Tips After Bankruptcy. This article provides a general overview of how to improve your FICO score after filing bankruptcy.

Here's what it doesn't say: You'll be rebuilding your score from a 300 point hit that you'll take when you file. But, you'll be rebuilding without the repeat assaults your credit score takes each month you're late on a payment, miss a payment, or otherwise default. That means you get to be 18 years old again credit-wise, and you get to rebuild your credit history the way you want to with the knowledge of what not to do.

Your post bankruptcy Future--The Quest for the Perfect Credit Score
Here's a link to an article in the September 2010 issue Money magazine about some Americans who've made it their goal to have stratospheric credit scores--The Quest for the Perfect Score. Don't hate these folks because their credit scores are in the top percentile! These Americans are not Bill Gates or Warren Buffet money-wise. They are just exceedingly careful with credit.

This is a great article that overviews the components of the score, how to address short term strategies for improving your score, and some long-range tricks for ratcheting a good score even higher.

Though I ordinarily view credit scores with the same disdain I view getting on the bathroom scale, I was inspired by this article to check my own FICO score. Guess what? I found a an error on my credit report that was adversely affecting my number. Some creditor I've never heard of was reporting a $78 collection account to the bureau. As a result the bureau was dinging my FICO score. I disputed the error, and the bureau fixed it. Yes, even a bankruptcy attorney can find errors.

[You may ask why I disdain FICO scores when I preach the importance of vigilantly monitoring your credit report. I'll elaborate on my philosophy of FICO scores when we meet.]

Should you file bankruptcy? Does it make sense for your family? Will filing bankruptcy solve your financial problems?

Call me, Attorney Shannon McDuffie, at (404) 418-8879 to set up your consultation and we'll find out.

Been told "No" by your home lender? You're not the only one not getting helped by HAMP!

2010-08-18T10:24:00.005-04:00

I can't tell you how many clients I've met with who have applied for HAMP modification from their lenders, and been denied help.

Even after lenders reported that the numbers of homeowners who've been granted HAMP modifications increased because of better pre-screening--I still meet clients every day who report that they've been denied. In fact, I can count on one hand the number of clients I've met since the beginning of the year who have obtained a HAMP modified loan.

The US Treasury reports that over 1.2 million borrowers have been given 'trial' HAMP mods. But only around 400,000 have been granted permanent loan modification. You're not the only one not getting helped by HAMP!

Here are two articles that I've passed along to my clients:

More Homeowners Get Help of Federal Loan Program published in USA Today on July 23, 2010.

and

'Vultures' Save Troubled Homeowners published in the Wall Street Journal on August 18, 2010.

What does this mean to you if you've been struggling on the phone with your lender to get help?

1. Make sure that your lender is considering you for non-HAMP help. It's out there! It's possible that even when the pre-screening done for HAMP screens you out, that you might qualify for your lender's 'in-house' modification program.

2. If your lender says no, and HAMP goes nowhere, then it's time to DYI legwork finding a 'vulture' as discussed in the WSJ article.

BIG WARNING MY FRIENDS:
Any company that contacts you and says they can modify your loan, buy your loan, buy your house, or makes any such offer to save your home, and wants to deal directly with your is a scam. The vultures deal with your lender, not you. Your lender sells your mortgage to the vulture--not you.

In general, reputable entities don't send out mail solicitations to struggling homeowners.

SECOND BIG WARNING:
No matter what you do, no matter what your lender tells you, your lender has the right to proceed to foreclosure on your property even while you try to obtain modification. Don't think for a second that the bank will suspend, stop, or delay foreclosure while it 'works' with you.

You need help figuring out your options. You need help understanding what will happen if your house is foreclosed and you don't file bankruptcy. Banks are rolling out new strategies to recover the debt you owe them, and you should not go it alone.

Call me, Attorney Shannon McDuffie to arrange your consultation. (404) 418-8879.

Does filing bankruptcy mean that you're a deadbeat?

2010-06-29T20:57:00.003-04:00

Before clients call my office, they've usually spent time on my website educating themselves about what would happen if they decided to file bankruptcy. I use the my website and blog to provide as much information as I can because I believe that an educated client is the best client.

I wish there was also a way for me to reach out to people who haven't yet found my website, or other sources online, because they believe that seeking out my advice would be a form of admitting that they have problems that they cannot solve alone, and that if they filed bankruptcy then they would be viewed as a deadbeat.

A shrink would say that this is denial coupled with fear. I say, whatever it is, an unwillingness to get advice about bankruptcy is extremely dangerous in light of the fact that creditors and debts are not going anywhere--especially in Georgia.

I almost fell off my chair when USAToday published this June 9, 2010 article documenting what I know to be true: Yes, the number of people who are filing bankruptcy these days is stratospheric, but Only a fraction of those in need file for bankruptcy.

This article describes a reality that you might be faced with right now. That is, many Americans can't afford to file, or would not get relief from filing. But how do you know if this is you? How do you know if the debt burden you're carrying is one that could be discharged in bankruptcy?

Are you relying on what someone said at church? Are you relying on a sign you saw by the side of the road? Are you resisting getting advice because your sleazy neighbors down the street filed for bankruptcy and appear to have not learned a thing from filing? Did you hear something stomach-turning about deadbeats from your boss?

Are you not calling to get advice out of denial and fear?

If so, I hope you'll think seriously about your family and your future and take the time to be advised by a reputable bankruptcy attorney like me. My advice is free--and my knowledge is hard won. I can't help everyone and if I can't help you using the bankruptcy code, I'll tell you.

Call (404) 418-8879 for your consultation with me Attorney Shannon McDuffie.

Got tax issues with Uncle Sam? I've got good news!

2010-06-03T00:35:00.005-04:00

The IRS has extended an invitation to tax payers who have tax issues and who are looking for a way to settle up with Uncle Sam. Come on down to the IRS open house this weekend and see if you can resolve your issues:

Below is their announcement:

The IRS is hosting an open house Saturday, June 5, at 200 Taxpayer Assistance Centers nationwide from 9 a.m. until 2 p.m. local time. The open house will offer assistance to taxpayers who may have recently received an IRS notice or have other tax problems.

This open house is one of several Saturday events the IRS is offering to help taxpayers who may need federal tax assistance, but who are unable to come in during normal business hours.

IRS locations will be equipped to handle a number of tax-related issues including notices and payments, return preparation, audits and a variety of other issues. At the May 15 open house, 97 percent of the taxpayers who came in for help had their issues resolved the same day.

Several recent tax law changes, coupled with applicable tax credits, may provide additional help to many taxpayers.

If you live in an area participating in the open house, please share the information about this special event. Encourage people you know — family, friends and neighbors — to visit a TAC if they need help with their federal tax issues.

Locations in Georgia include:

Albany: 235 Roosevelt Ave.
Albany, GA 31701

Atlanta: (Koger) 2888 Woodcock Blvd.
Atlanta, GA 30341

Atlanta: (Summit) 401 W. Peachtree St. NW
Atlanta, GA 30308

Augusta: 2743 Perimeter Pkwy.
Augusta, GA 30909

Columbus: 3604 Macon Rd.
Columbus, GA 31907

Macon: 640 North Ave.
Macon, GA 31211

Savannah: 120 Barnard St.
Savannah, GA 31401

Smyrna: 1899 Powers Ferry Rd.
Atlanta, GA 30339

If you have questions about the dischargeability of your federal income taxes in bankruptcy, call Attorney McDuffie at (404) 421 3706 to get your questions answered. Here's a link to a blog post I wrote last year that summarizes the rules--Taxes and Bankruptcy.

Opting Out of Credit Card Solicitations

2010-05-27T11:32:00.005-04:00

Here's a post for readers who may or may not be in dire straits.

Last November, I wrote about how you can enjoy year-round credit monitoring FOR FREE. Here's the link to that blog entry: DIY Free Year-Round Credit Monitoring--here's what I do.

After several months of not getting any credit card solicitations in your mail box, you may have noticed an uptick in the number you see now.

Supposedly Big Credit is only sending out offers to consumers who they'll actually give credit to, so if you're not seeing the uptick, it could be because your credit score isn't high enough to warrant their attention. (This change occurred as a result of the credit card reforms that took hold this Spring.)

If you have noticed the uptick, I hope that you'll take my advice and elect to OPT OUT of these credit card offers.

Why?
Because you don't need more credit cards.
Because you don't want to do business with Big Credit
Because the 'offers' you get in the mail are not worth your time.
Because you've learned something about yourself and the temptation that comes from having numerous credit cards, and you want to take temptation out of your life.

How?
Visit the Federal Trade Commission's (FTC) website and follow the link that enables you to either opt out online for 5 years, or permanently via the US Mail.

What happens next?
You'll be taken off the lists that the bureaus use to sell your data to Big Credit. You won't see offers for credit cards, but you can still obtain a credit card if you find that you need one. I suggest visiting Card Ratings to compare card offers. Please heed my advice about not incurring debt where you bank. Don't even consider getting a Wachovia credit card if you also have a checking or savings account with Wachovia. Why? Here's my blog entry on banking where you owe money: What you need to know about your bank account before you file

Know that if you are in financial straights, now is not the time to get new cards with the hope that they'll save you from needing to file bankruptcy. Please, please, please call me before you head down that road. There are potentially serious consequences waiting for those who transfer balances between cards, or who max out newly obtained cards on the eve of filing bankruptcy.

Call me, Attorney McDuffie at (404) 418 8879 to arrange your consultation.