Bankruptcy trustees are “clawing back” tuition paid for debtors’ kids

According to an article in the Wall Street Journal, Bankruptcy Trustees are using a legal argument called “fraudulent transfer” to take back tuition payments clients have made 7027599019_ffc018d450_mto their children’s colleges. This can be a shock to people, but trustees do things like this all the time.

Here’s how it works:

Under bankruptcy law, all the property you have at the time of your bankruptcy filing is part of the bankruptcy estate. If you have property above certain exemption amounts, the trustee can demand turnover of that property. This would seem to incentivize people to get rid of assets before filing bankruptcy. You can understand the temptation for someone to sell their boat to their brother for $1.00. (more…)

5 Tips for Streamlining Your Bankruptcy

Go Fast!

Photo by Eric Ward aka a4gpa

The number one thing that slows down a bankruptcy case is the speed with which clients can assemble the necessary documents. By following these five tips, you can ensure that your bankruptcy moves quickly, and that you’re prepared for any issues that could arise during the process.

Go Paperless.

It’s time to get rid of that mountain of paperwork and bills. Sign up to receive digital statements from your bank and financial accounts, and request to receive your pays stubs digitally. It also pays to switch your utilities, mortgage, car payments and regular payments to e-bills. This allows you to stay up to date on your assets and liabilities, and makes submitting your documents to your attorney as easy as sending an email. (more…)

Divorce debts in Chapter 13 bankruptcy

I wrote last week about how to deal with divorce debts in Chapter 7 Bankruptcy. Chapter 13 has different rules and different ways to deal with family court debts.

Photo by Chris Potter

Photo by Chris Potter

1. Chapter 13 can’t discharge domestic support obligations. Domestic support obligations (child support/maintenance) can’t be wiped out in any form of bankruptcy, Chapter 7 or 13. In Chapter 13, to get a discharge the debtor must pay all child support/maintenance arrears, as well as all payments due during the three to five years of the Chapter 13 plan. (more…)

Divorce debts in Chapter 7 bankruptcy

 

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Photo by Magdalena Beckah

Divorce is one of the leading causes of bankruptcy. People often have questions about how to deal with debts from their divorce. Depending on how a debt is categorized in the divorce decree, you might be able to wipe it out in bankruptcy, or it might stick around.

1. Child support and maintenance cannot be discharged in Chapter 7 bankruptcy. Certain debts in bankruptcy are called “domestic support obligations,” including child support and spousal maintenance/alimony. These debts can never be discharged in bankruptcy, and are also “priority” debts, meaning that if the trustee gets any money from you, those debts are paid off first. (more…)

Chapter 7 lien stripping a new possibility

We know that you can strip a completely unsecured second mortgage lien in Chapter 13 bankruptcy. However, at least one court (the 11th Circuit Court of Appeals) has ruled that you can strip a second mortgage after filing Chapter 7 bankruptcy, and it looks like the U.S. Supreme Court will decide whether that applies to the whole country.

In Bank of America v. Caulkett, the creditor is appealing the 11th Circuit’s decision that second mortgages can be stripped when they’re completely unsecured, meaning that the balance of the first mortgage is above and beyond the value of the house, such that if the house were to be sold or foreclosed, the second mortgage lender would get nothing.

A 1992 case called Dewsnup v. Timm  has been the law of the land, and Dewsnup held that a partially unsecured second mortgage could not be wiped out in either Chapter 7 or Chapter 13 bankruptcy. In oral argument, the Supreme Court justices seemed to be considering overruling Dewsnup, which would be even a step beyond the 11th Circuit’s decision.

The Supreme Court’s decision is expected to be released later this Spring. If the justices uphold the 11th Circuit, expect more bankruptcy cases to be filed for borrowers who are underwater on second mortgages.

“As is” isn’t a license to rip you off on a used car

Dealers can't hide behind an as-is disclaimer when they knew the car was bad

Photo by Jennifer – flickr.com

We get a lot of calls from people who have unknowingly bought cars from dealers with serious defects. Generally, when a car is sold it comes with an “implied warranty” that the car will be fit to drive.

But when a consumer lets the dealer know that the car is no good and they want their money back, the dealer will often insist that the car was sold “as is,” and so it’s “not my problem.” But the dealers don’t understand the law–there are many reasons a buyer will have remedies even when the car is sold as is. I’ll break down a few of them here. (more…)

What to do if your car has missing airbags

Minneapolis auto fraud lawyers

Pamela Carls – flickr.com

As we discussed in an earlier post, car dealers sometimes sell a formerly wrecked car without disclosing to the buyer that it’s been in a serious accident. Maybe the most shocking is where the dealer repairs the car, but doesn’t replace the airbags (and of course, doesn’t tell the unsuspecting buyer.) In some cases, the airbag compartment has been found filled with packing peanuts or paper towels. Airbags cost $1,000 to $3,000 to replace, and so if the dealer buys the car at auction, fails to make the repair, and doesn’t tell anyone, that’s $1,000 to $3,000 of pure, dirty profit to them. Here are a few steps you can take to detect whether your airbags are missing:

1. Check the airbag compartment. Is there physical damage to any of the airbag compartments? Tears or scratches in the dashboard could be indicators that the airbags have previously been deployed. (more…)

How to know your car is a rebuilt wreck

Minneapolis auto fraud

Photo by Bradley Olin – flickr.com

Shady car dealers like to find ways to sell bad cars for as much money as possible. A really opportunistic dealer may sell a frame-damaged car with shoddy repairs, not disclosing that the car has serious structural issues. Once a car has sustained serious frame damage, it will often never again be safe to drive, unless very careful and expensive repairs are completed. The safety issues involved in rebuilt wrecks can be severe and possibly life-threatening.

Search the history. One of the ways to find out whether a car is a rebuilt wreck is to search its history. Summary history reports like Carfax and AutoCheck may tell part of the story, so they can be a good first place to look. You might also pull a title history on the car, to see if an insurance company ever owned it, or if it ever had a salvage title. You can pull a title history by contacting the state motor vehicles department in every state the car has been titled. (more…)

Lemon law: What to do if your car is defective

We discussed Minnesota’s lemon law in a previous post. If you think you might have a lemon, we have a few tips that might make it easier to win your case, if you’re not able to resolve your issue out of court.

1. Read your owner’s manual. You want to make sure you’re maintaining your car properly. When you bring your lemon law case, the manufacturer might accuse you of failing to maintain your vehicle properly, and argue that the problem is your fault. If you’ve kept up with the scheduled maintenance (and you can prove it) and you haven’t abused the car, you shouldn’t have any problems. If you can’t find your owner’s manual, you might be able to get an online copy. (more…)

What is the Minnesota Lemon Law?

Friedman Iverson - Minnesota lemon law

Photo by Rob Bertholf – flickr.com

Minnesota’s lemon law protects you against a new car (sold with a written warranty) that has a problem that affects the use or value of the vehicle. Under the lemon law, for any problem that arises within two years of purchase,  the manufacturer must replace or a refund a vehicle if a serious problem can’t be fixed within a “reasonable” number of attempts.

Minnesota lemon law presumption

In order to use the lemon law, the manufacturer must have made a reasonable number of attempts to repair the vehicle. You don’t have to meet the lemon law presumption to have a case, but it sure helps. The presumption means that a particular number of attempts will be assumed to be reasonable. (more…)