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How to obtain a Chapter 7 Discharge? Be Honest with the Trustee!

When clients hire the Law Office of Raymond A. Kenney, PLLC to assist them in the preparation of a Chapter 7 bankruptcy case their preeminent goal is to obtain a discharge of their debts as quickly as possible. This is an objective which can be achieved within 120 days of the filing of the bankruptcy Petition.

If your Maricopa County proceeding. is a no asset case (meaning that the assets you list are exempt) your case may well proceed in a fashion similar to this: A) 30- 35 days after filing will be the Meeting of the Creditors.  Approximately 60 days after the Meeting of the Creditors  will be the Deadline to File a Complaint Objecting to Discharge of the Debtor or to Determine Dischargeability of Certain Debts; C) Within this time frame you will complete your Debtor Education Course; D) Assuming the proper filing of the Certificate of Completion of the Debtor Education Course and no objections having been filed to your discharge, you should receive your discharge. See how easy that can be?!!!

Remember this is a no asset case, so the Trustee has little to no incentive to have this continue as a case for her/him to administer since there are no assets for the Trustee to sell for the benefit of your creditors.

So what can go wrong? You and your lack of full disclosure to the Chapter 7 trustee can go horribly wrong!

The first major mistake a debtor can make is to omit an asset from your bankruptcy schedules.  Our hypothetical debtor owns a boat that is temporarily not sea-worthy.    Since the boat is not used it is not even registered. The debtor figures that the Trustee will not find out about the boat and therefore says to himself, “I just won’t file bankruptcy on the boat  I don’t sail it so I don’t have to include the boat in my Bankruptcy.”  Sound reasonable?  NO. The trustee will find out. Maybe you owe money for past docking fees. You most likely registered it in the past and that will leave a paper trail. Most importantly you are breaking the law by failing to disclose the boat. You have a legal obligation to disclose all of your assets. You will be signing the Petition and Schedules swearing that you listed all of your assets. At the Meeting of the Creditors you will be sworn in under and under oath you will a\have to testify that you listed all of your assets. So what could possibly go wrong?

Well for starters the trustee will take the boat. Next the Trustee will object to the issuance of a discharge leaving the debtor liable for all of his/her debts. The Trustee may well report the concealment of the asset to the US Trustee and the US Attorney’s Office. If you are subsequently prosecuted pursuant to 18 U.S.C. §152 and convicted you may be fined, imprisoned for not more than 5 years, or both.

When it comes to a bankruptcy filing it is just like Momma told you – Honesty is the best policy!

If you are in need of immediate legal information, you may find the content located at http://www.rkenneylaw.com/bankruptcy.html helpful or you may contact me by email at ray@rkenneylaw.com or call the office at (623) 234-3536.

LEGAL DISCLAIMER:

This article is offered for informational purposes only. It is not offered as, and does not constitute, legal advice. You should rely only on the advice given to you during a personal consultation by a local attorney who is thoroughly familiar with state laws and the area of practice pertaining to your matter. The information herein is not legal advice and does not create an attorney client relationship.

Careful steps to take when establishing a Trust.

If after careful consideration you have determined that a Trust will help you properly effectuate your estate planning goals the following are some of the steps you will need to take in order to establish your Trust.

Consultation with our firm - In conjunction with any tax, insurance, and financial advisors that you may have, we will need to discuss your situation in order to help you determine what kind of trust meets your needs, and how it can best be structured.

Asset Management - We will need to determine how your assets will be managed during your lifetime. We will need to consider the current income needs and growth objectives for both you and your dependents.

Asset Identification - During the course of our consultation we will help you decide which assets to place in trust. In order to avoid probate, it is important that as many personal assets as possible be placed in trust.

Trust Distribution - You will identify the individuals to whom the trust is to make distributions after your death.

Draft Your Trust Agreement - After we have fully analyzed your estate-planning objectives and your personal intentions we will draft a Trust document that achieves those goals. Our typical revocable living trust agreement covers the following points:

  • Instructions for payment of income and principal during the grantor's lifetime and for distribution of assets thereafter.
  • A statement of the investment powers granted to the trustee (the person carrying out the terms of the Trust).
  • Specification of any additional responsibilities assigned to the trustee
  • A statement of the terms under which the trust agreement may be amended or revoked.

Fund Your Trust - In order to make your Trust operative you will need to change the legal title of your specified assets from your name to that of your Trust. Our firm will help ensure that all assets are properly re-registered. Some of the assets that will need to be renamed a placed in the Trust are:

  • Convey real estate to be held in trust.
  • List all unregistered (bearer) securities on a separate schedule, and assign them to the   trust.
  • Change the beneficiary of life insurance policies to the name of the trust.
  • Attach a schedule of assets to the trust agreement.

If you are in need of immediate legal information, you may find the content located at http://www.rkenneylaw.com/estateplanning.html helpful or you may contact me by email at ray@rkenneylaw.com or call the office at (623) 234-3536.

LEGAL DISCLAIMER:

This article is offered for informational purposes only. It is not offered as, and does not constitute, legal advice. You should rely only on the advice given to you during a personal consultation by a local attorney who is thoroughly familiar with state laws and the area of practice pertaining to your matter. The information  herein is not legal advice and does not create an attorney client relationship.

IS A TRUST RIGHT FOR ME?

As an Estate Planning Attorney one of the questions that I am most frequently asked is:  Is a trust right for me? My answer invariably is: That depends on your personal situation. After our initial consultation you may decide that you have no need for a trust. Or, you may find that a revocable living trust would meet your needs and those of your family.

Depending upon your situation some of the following advantages that a Trust offers may be available to you:

  • Providing for the management of your assets if you become incapacitated
  • Holding assets for the benefit of minor children
  • Providing for ongoing management of assets for loved ones.
  • Asset protection for you or for your loved ones (protection from creditors)
  • Providing incentives for children to further their education
  • Business succession planning and retirement planning
  • Providing for special needs of handicapped loved ones
  • Providing for children of your marriage in the event that your spouse remarries after your      death
  • Preserving your family's property for future generations
  • Estate and gift tax planning
  • Privacy -unlike a Will there is no probating of a Trust.
  • Avoidance of probate in Arizona  and in other states where you own real property

In a future article I will discuss some of the steps in the Trust drafting process.

If you are in need of immediate legal information, you may find the content located at http://www.rkenneylaw.com/estateplanning.html helpful or you may contact me by email at ray@rkenneylaw.com or call the office at (623) 234-3536.

LEGAL DISCLAIMER:

This article is offered for informational purposes only. It is not offered as, and does not constitute, legal advice. You should rely only on the advice given to you during a personal consultation by a local attorney who is thoroughly familiar with state laws and the area of practice pertaining to your matter. The information herein is not legal advice and does not create an attorney client relationship.

Should a debtor be concerned that he/she will be committing bankruptcy fraud if they file?

Bankruptcy fraud is the last thing any bankruptcy petitioner wants to engage in when filing for relief under the bankruptcy laws.  A petitioner convicted of bankruptcy fraud could find their discharge denied, face a large fine and potential jail time. So given that a debtor wants to avoid a bankruptcy fraud allegation at all costs the question becomes what could constitute fraud?

The bankruptcy laws are designed to give honest debtors a fresh start but the bankruptcy trustee will carefully scrutinize the filing and the following categories of issues are just some examples of items that will be red flags:

1) Incurring debt for the purchase of luxury items when the debtor was insolvent (lacked the ability to repay loan).

2) Taking cash advances shortly before the filing of the bankruptcy.

3) The transfer of assets to family members/relatives or friends prior to the bankruptcy.

4) Failure to list all of the debtor's assets.

5)  Concealing any property from a spouse during a divorce proceeding;

6) Filing under a different name/social security number so that a filer's previous bankruptcy filing will not be discovered.

7) If in response to the Trustee's documentation requests the debtor a) fails to provide the documents, b) omits material information, or c) provides false documentation in response to the Trustee's request any of these actions will be problematic.

A bankruptcy fraud charge can have severe consequences. The best method to prevent this from occurring is to be open, honest, complete and accurate in all of the filings and testimony during the bankruptcy process.

If you are in need of immediate legal information, you may find the content located at http://www.rkenneylaw.com/bankruptcy.html helpful or you may contact me by email at ray@rkenneylaw.com or call the office at (623) 234-3536.

 

Chapter 13 Bankruptcy Process

What Is the Chapter 13 Bankruptcy Process in Arizona?

The Chapter 13 process is different than the Chapter 7 procedures. Prior to the filing of either a Chapter 7 or a Chapter 13 you will provide a large number of documents to this law office and complete a credit counseling course. In either a Chapter 7 or a Chapter 13 this law office will prepare your bankruptcy petition and schedules and in the Chapter 13 bankruptcy case a Chapter 13 plan will be crafted.

The Chapter 13 plan will be either a 36-month plan or a 60-month plan. The length of the Chapter 13 plan will be determined by the application of the Means Test to your financial situation. If you pass the Means Test (have income below the Arizona median income for your household size) you will be able to propose a 36-month plan. If you fail the Means Test (have income in excess of the Arizona median income for your household size) we will have to propose a 60-month plan.

As in a Chapter 7, a Chapter 13 341 Meeting of Creditors usually occurs 30-40 days after the filing of the petition. The Chapter 13 341 hearing can be slightly longer than a Chapter 7 341 meeting, and it generally involves answering a series of questions posed by the Trustee that will roughly outline the Objections to Confirmation that can be expected to be filed.

The reason many clients file for Chapter 13 bankruptcy protection is to stop foreclosure proceedings in order to save their home. The mortgage arrears may be included as part of the Chapter 13 plan and the debtor will be able to retain the home and pay the arrears over the course of the Chapter 13 plan as long as the debtor makes the regular mortgage payments that come due after the chapter 13 filing

Within 30 days of the filing of the Chapter 13 petition the petitioner must begin making the plan payments to the Trustee. If any secured loan payments (typically home and automobile payments) are due prior to plan is confirmation, you must make adequate protection payments directly to the secured lender.

The bankruptcy judge must hold a confirmation hearing no later than 45 days after the meeting of creditors and the judge will determine if the Chapter 13 plan is feasible and meets the standards for confirmation. Creditors will receive 25 days' notice of the hearing and may object to confirmation.

If the court confirms the plan, the chapter 13 trustee will begin to distribute funds received under the plan.

If you are in need of immediate legal information, you may find the content, located at Arizona bankruptcy attorney  helpful or you may contact me by email at ray@rkenneylaw.com or call the office at (623) 234-3536.

What you should know before signing a Reaffirmation Agreements

I have a loan on my automobile and no equity in the vehicle will I lose it in a Chapter 7 Bankruptcy filing?

If your goal is to keep your vehicle when you file a Chapter 7 bankruptcy case it is an attainable goal. You need to keep in mind that the lender on your automobile will receive notice of your bankruptcy filing and will closely monitor your bankruptcy case as it proceeds through the process. Either because you were behind on payments or because the vehicle is uninsured your lender may well have wanted to repossess your automobile. If you file a Chapter 7 bankruptcy case and want to keep your car, you will have to reaffirm the debt which means that in spite of the fact that this debt could have been discharged in the bankruptcy you will agree to pay the debt in full after the bankruptcy process has completed.

Tell the Court what you wish to do with the vehicle

As part of your Petition filing you will be asked to state your intention as to whether you want to surrender your car, reaffirm the debt or redeem the vehicle. If you fail to state your intention you may well expect that the lender will promptly file a Motion to Lift the Automatic Stay which once granted will mean that despite the protection initially afforded by the Automatic Stay the lender may move to repossess your car. You have to act on your statement of intention promptly – within 45 days.

Prerequisites to signing a reaffirmation agreement

In a Chapter 7 bankruptcy in order to be eligible to enter into a reaffirmation agreement you must be current on your car loan payments. You also must be able to prove to the Court that you can afford to make the loan payments on the vehicle after you emerge from bankruptcy. You will need to do this by calculating for the Court that your post-bankruptcy income exceeds your post-bankruptcy expenses to the extent that you now can afford to make the reaffirmed loan payments.

Consequences of signing the reaffirmation agreement

If you sign a reaffirmation agreement you are entering into a new contract with the lender to pay the remaining balance of the car loan in full after bankruptcy even though you would have received a discharge from this debt if you had not signed the reaffirmation agreement. If you fail to pay the debt in the future, you will be personally liable for the debt and the lender may repossess the vehicle.

The decision to sign a reaffirmation agreement should not be taken lightly

As demonstrated above there are major ramifications to signing a reaffirmation agreement. You will be liable for the repayment of the full amount of the reaffirmed debt and if you default on the loan you will not be able to have the debt discharged in bankruptcy since you have already filed bankruptcy and will not be able to file again for many years. You should fully discuss with your attorney the consequences of the reaffirmation agreement before you sign.

 

If you are in need of immediate legal information, you may find the content, located at Arizona Bankruptcy Lawyer helpful or you may contact me by email at ray@rkenneylaw.com or call the office at (623) 234-3536.

 

Desperate Arizona home owners susceptible to mortgage scams.

With many sub-prime mortgages with adjustable rates resetting at significantly higher interest rates many hard working Arizonians are finding it increasingly difficult to make their monthly mortgage payment.  As the mortgage payment due date grows closer many Arizona home owners become desperate to save their homes and in their panic they reach out to any source that seems to offer a way out.

Homeowners listen to news reports which state that there are government programs designed to help people like them but when they contact their lender they get the run around. When it appears that the government isn't helping and the lender doesn't care there is despair and into that void arrives an advertisement for the “loan modification specialist.” These advertisers piggy back off of the very really potential that lenders might be willing to modify their loan by lowering their interest rates, place missed payments onto the back end of the loan, or even lower the principle balance due.

Arizona homeowners must be aware that even though legitimate programs exist which help lenders modify their loans, the unscrupulous loan modification specialist usually ask for money upfront then do little or no work on the case. Many loan modification specialists tell the homeowner to stop making their mortgage payments and then homeowner usually falls further behind because the money that should have been going towards mortgage payments was instead paid to the specialist. It is only when it is too late that the homeowner finds out that a foreclosure was started instead of a loan modification.

Arizona homeowners must be aware that just because a bankruptcy attorney's name is used in the loan modification advertising this does not insure that the loan modification will be properly handled. Unfortunately, bankruptcy lawyers have been lured into "partnerships" with loan modification scammers in return for what appears to be an easy pay day. Under this scenario the bankruptcy attorney places his/her name on the advertisement or even onto the loan modification contract. The problem arises when the loan specialist does all of the work and the bankruptcy lawyer does nothing. It is probable that the type of actions described above would constitute a violation of the Arizona Ethic Rules which bar fee sharing with non-attorneys, and/or allowing the unauthorized practice of law.

Arizona homeowners who are considering hiring an attorney to assist them during these trying economic times should inquire into the bankruptcy attorney to make sure he/she is actually doing the work. If you are like many Arizona homeowners and you are upside down on your home loan you would be wise to consult with a bankruptcy attorney to understand your options before paying over thousands of dollars to a loan specialist.

For more information contact the Law Office of Raymond A. Kenney at 623-234-3536 or visit the website  http://www.rkenneylaw.com

Welcome to R. Kenney on Real Property

This blog is intended to educate and inform the reader about real property topics. The goal of the blog will be to provide basic real property  information to the reader/subscriber on a monthly basis. The contents of this real property blog are expected to be updated the last week of every month. During the course of the blog's initial roll out I intend to provide real property basics in an easy to comprehend format. As the blog entries progress, readership builds and the  real property basics have been covered I expect the blog will evolve into what I intend for it to be - a question and answer format blog driven by the needs of you the readers. It is hoped  that the blog's readership will have commented on the blog posts and/or emailed sufficient questions to ray@rkenneylaw.com that the following month's blog may consist of material that is of the greatest importance to you, the loyal reader, which would be answers to your specific issues, questions and concerns. You should bear in mind, that although the information contained in this blog is intended to provide general information to all readers throughout the web, that the author is an Arizona licensed attorney so the information contained in this blog may not have application to readers outside of the State of Arizona. In addition, the information and/or opinions presented in this blog are those of the author and are not intended to be specific legal advice for any specific factual situation and/or any specific individual. Individualized, specific legal advice will be provided to an individual only after an attorney/client relationship has been established between the attorney and you the client. The use of the comment section of this blog or the sending of an e-mail for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted on this blog. If you are in need of immediate legal information, you may find the content located at http://www.rkenneylaw.com/realproperty.html  helpful or you may contact me by email at ray@rkenneylaw.com or call the office at (623) 234-3536.

The following question was submitted on a popular legal website with my answer below.

 

Question: My mom quit claimed the deed to my primary residence over 4 yrs ago to me for repayment on some work I performed for her. Now apparently she never paid off the mortgage and my home is in foreclosure. Although the quit claim is recorded, I have never received notice of the foreclosure. I've never been part of the mortgage. She was just supposed to finish paying it off with the additional funds I had given her. She didn't. Can the bank foreclose on my home since my mom released her interest in the home to me. Doesn't the quit claim deed just make her loan an unsecured loan?

 

 

Answer: No, the quit claim deed does not make her loan an unsecured loan. The quit claim deed transferred to you whatever interest, if any, your mom had in the property. Under the scenario you laid out, your mother's interest in the property was subject to a mortgage. Mom cannot pass on to you more than she owned. Although you cannot be held personally liable for the repayment of the mortgage note, if you were never on the note, the mere act of Mom quit claiming the property to you does not mean the bank has lost its security interest in the property. You might want to look further into the lack of notice issue you raised regarding the foreclosure, but keep in mind that based on what you have written here, the property is still subject to a mortgage which will need to be paid even if the foreclosure has not been properly noticed.

Welcome to R. Kenney on Bankruptcy

This blog is intended to educate and inform the reader about bankruptcy topics. The goal of the blog will be to provide basic bankruptcy information to the reader/subscriber on a monthly basis. The contents of this bankruptcy blog are expected to be updated the first week of every month. During the course of the blog's initial roll out I intend to provide bankruptcy basics in an easy to comprehend format. As the blog entries progress, readership builds and the bankruptcy basics have been covered I expect the blog will evolve into what I intend for it to be - a question and answer format blog driven by the needs of you the readers. It is hoped  that the blog's readership will have commented on the blog posts and/or emailed sufficient questions to ray@rkenneylaw.com that the following month's blog may consist of material that is of the greatest importance to you, the loyal reader, which would be answers to your specific issues, questions and concerns. You should bear in mind, that although the information contained in this blog is intended to provide general information to all readers throughout the web, that the author is an Arizona licensed attorney so the information contained in this blog may not have application to readers outside of the State of Arizona. In addition, the information and/or opinions presented in this blog are those of the author and are not intended to be specific legal advice for any specific factual situation and/or any specific individual. Individualized, specific legal advice will be provided to an individual only after an attorney/client relationship has been established between the attorney and you the client. The use of the comment section of this blog or the sending of an e-mail for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted on this blog. If you are in need of immediate legal information, you may find the content located at http://www.rkenneylaw.com/bankruptcy.html helpful or you may contact me by email at ray@rkenneylaw.com 
or call the office at (623) 234-3536

 

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