HOW EXACTLY DO WE DEDUCT ‘MARITAL ADJUSTMENTS’?
In re Dugan, Case No. 07-40899
August, 2008, Judge Karlin
Chapter 13 Trustee objections to debtor’s attempts to include a marital adjustment on Lines 13
and 19 for a non-filing spouse and a deduction for transportation expenses. Court
allowed, in theory, the marital deduction, but found it had not been supported with any
detail. Debtor was given time to provide documentation. Digest by Jan Hamilton Trustee.
How Do I Deduct My Non-Filing Spouse’s Expenses on the Bankruptcy Means Test?
Posted on January 6, 2010 Written by
Chapter 13 Bankruptcy Payments
Posted on January 5, 2010 Written by
Chapter 13 bankruptcy debtors are responsible for making their plan payments to the trustee.  No excuses.
This is true even if your payments are supposed to be deducted from your paycheck. If no deduction is taken out of your check or if your employer does not remit the money to the trustee, you are still responsible for the payment.
Watch your pay stubs to make sure the payments are being deducted. If not, make the payment yourself and call your attorney to troubleshoot. Your case will be dismissed if payments are not made and you will lose the benefits of chapter 13 bankruptcy.
You can check whether the trustee has received payments by setting up an account with the National Data Center.
Neither Topeka nor Kansas City, Kansas, chapter 13 bankruptcy trustees accept cash nor any kind of electronic bank transfer (ACH transactions). You can set up bill payer service at your bank and arrange for your bank to send the trustee a check if you don’t have employer pay. The Topeka trustee has an electronic payment service provided by a third party.
What Happens to Divorce Debts in Bankruptcy?
Posted on January 5, 2010 Written by
Debts in the nature of support of child or former spouse are not discharged in either chapter 7 or 13 bankruptcy.
What about property settlement debts? If the divorce decree contains a hold harmless obligation that makes one spouse indemnify the other spouse, then the hold harmess oglibation is a separate debt to the spouse and is not dischargeable in chapter 7 bankruptcy 523(a)(5) or 523(a)(15).
The hold harmless obligations can be discharged in chapter 13 bankruptcy as long as the debt to the former spouse not a Domestic Support Obligation (DSO). This is possible because property settlement debts under 523(a)(15) are not excepted from discharge in chapter 13 cases. See Schuett v. Finkey, 2008 Bankr. Lexis 1555 (Bankr. D. Neb. May 21, 2008).
Cram Down Value Used for Means Test in Wichita Bankruptcies
Posted on January 5, 2010 Written by
A DEBTOR MUST USE THE STRIPPED/CRAMMED DOWN AMOUNT FOR
PURPOSES OF CURRENT MONTHLY INCOME (CMI) ON LINE 47 OF B22C
In re Hoss, Case No. 08-10365
In re Arroyo, Case No. 07-12779
August 2008, Judge Nugent
In above median income (AMI) cases, debtors sought to deduct contract payments, rather than the stripped off/crammed down amounts. The Court sustained the Chapter 13 Trustee’s objection to confirmation. This is a good analysis of the status of the law, as of the date of the issuance of the opinion. Judge Nugent applied the reasoning of Lanning, but on the expense side, rather than the income side, of the equation. He also disagreed with Judge Karlin’s decision in Allen, which would have reached an opposite result.
Why Did They Stop Sending My Mortgage Statements After Bankruptcy?
Posted on January 4, 2010 Written by
Most home mortgage lenders who send monthly statements to their borrowers will stop sending statements once a bankruptcy is filed.  They will stop withdrawing automatic payments form your bank account. They claim sending the statements and withdrawing your funds might be seen as a violation of the bankruptcy automatic stay on collection and they don’t want to run afoul of the bankruptcy law.
Some Courts such as the Kansas bankruptcy courts have local rules allowing mortgage statements to be sent to debtors who want to retain their properties and continue paying the mortgage payments.
If you have filed bankruptcy and wish to keep your real estate that has been pledged as collateral for a loan, you must pay your mortgage payments. Not getting a statement does not get you off the hook – you don’t get a free house. YOU MUST PAY YOUR MORTGAGE PAYMENTS TO KEEP YOUR PROPERTY OUT OF FORECLOSURE. [Read more…]
Help for Student Borrowers When School Closes
Posted on January 4, 2010 Written by
Student loans are not generally discharged in bankruptcy, but what happens when the school closes and the student does not receive the education she borrowed the money for? As long as the school closed within 90 days of enrollment or the last day attended, there is a remedy for student loan borrowers (but it is not a bankruptcy remedy).
Check out this link to search for closed schools. The regulation is 34 C.F.R. § 682.402(d). More help for student borrowers is available at www.studentloanborrowerassistance.org.
Cold Weather Rule Applies in Bankruptcy
Posted on January 4, 2010 Written by
The Cold Weather Rule protects Kansas residential utility customers who cannot fully pay their winter electric or gas bill from shutoff. The Cold Weather Rule will be in effect from November 1 to March 31.
The Cold Weather Rule generally prohibits any disconnection of service when the local National Weather Service forecasts that the temperature will drop below 35 degrees or will be in the mid-30s or colder within the following 48 hours. The rule applies to utilities regulated by the Kansas Corporation Commission such as Westar Energy and Kansas Gas Service.
How do you sign up?
- If you can’t pay your entire bill, call your utility company to make pay arrangements:
- Agree to pay 1/12 of the overdue amount of your bill, plus 1/12 of your current bill, all disconnection and connection fees, and agree to pay the remainder in equal payments over the next 11 months; or
- Negotiate a payment plan to pay the overdue amount off quicker than 12 months.
- Remember, you must also pay your full bills for new service you use while paying off the overdue amount.
- Apply for federal, state, local or special funds for which you are eligible.
- If you are behind in a previous payment plan and cannot catch up, you need to make a new payment agreement with the utility.
- If you have illegally used service, you must pay for the value of the illegally used service.
What will the utility company do?
- Utilities must inform you of the Cold Weather Rule payment plan as well as other payment plans available to you. Remember, under the Cold Weather Rule payment plans, you always have the option of spreading your payment over a total of 12 months.
- Utilities must send written notice to customers 10 days before disconnection, plus make a phone call or personal contact the day before.
- Utilities must tell customers about agencies that have funds to help pay utility bills.
Questions? 1.800.662.0027
401(k) Withdrawal Is Income for Means Test
Posted on January 4, 2010 Written by
401(K) DISBURSEMENT PRE PETITION IS CURRENT MONTHLY INCOME BUT NOT PROJECTED DISPOSBLE INCOME
In re DeThample, Case No 07-11829
July 5, 2008, Judge Nugent
Under 1325(b)(1)(B), a singular, one time disbursement is “income†for purposes of
determining Current Monthly Income (CMI), but followed Judge Karlin’s Lanning decision in determining what constituted Projected Disposable Income (PDI). This is a good read of the status of the law in
this area of its date of issuance, according to a digest of the case by Jan Hamilton, Trustee.
U.S. Supreme Court Takes Topeka Bankruptcy Case
Posted on January 3, 2010 Written by
A Topeka, Kansas, consumer bankruptcy case is pending in the U.S. Supreme Court. It involves the Topeka chapter 13 trustee objecting to Stephanie Lanning’s bankruptcy plan.
Lanning had taken a buyout and left her job at Payless Shoesource. She was working at Joann’s Fabrics for less money when her bankruptcy was filed.
When Lanning took the bankruptcy means test, the Payless buyout caused her income average to be higher than her current income and higher than the median for a single person in Kansas. She would have been required to make a bankruptcy payment she could not afford to make with her lower income. [Read more…]
What Is Required to Confirm My Chapter 13 Bankruptcy Plan?
Posted on January 3, 2010 Written by
11 U.S.C. § 1325. Confirmation of plan
(a) Except as provided in subsection (b), the court shall confirm a plan if—
(1) The plan complies with the provisions of this chapter and with the other applicable provisions of this title;
(2) any fee, charge, or amount required under chapter 123 of title 28, or by the plan, to be paid before confirmation, has been paid;
(3) the plan has been proposed in good faith and not by any means forbidden by law;
(4) the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 of this title on such date;
(5) with respect to each allowed secured claim provided for by the plan— [Read more…]
What Documents Do I Need for a Bankruptcy Audit?
Posted on January 3, 2010 Written by
One in 1000 bankruptcy cases are randomly selected by the U.S. Trustee for audit. When that happens, the debtor is sent a letter requesting copies of the following documents:
- Payment advices [paystubs] from an employer covering the six calendar months preceding the date of filing for the debtor and the debtor’s spouse.
- Federal income tax returns, with all attachments, for the two tax years prior to the date of filing.
- Financial account statements for the six calendar months preceding the date of filing and for the month of filing for every financial account in which debtor had an interest; and documentation explaining the source of every deposit or credit, and the purpose of every check, withdrawal or debit.
- A divorce decree, property settlement orders going back three years and pending child support orders, if such documents exist.
The audits are supposed to find material misstatements in the bankruptcy paperwork. [Read more…]
Pay Child Support or Lose Your Professional License in Kansas
Posted on January 1, 2010 Written by
PAY CHILD SUPPORT OR LOSE YOUR PROFESSIONAL LICENSE, INCLUDING YOUR LAW LICENSE
When a person who holds any kind of professional license or certification in Kansas owes past due child support equal to or greater than three months of child support and has failed, after reasonable opportunity, to comply with any payment plan, 2009 HB 2201 mandates that the court order noticesent to the support debtor’s licensing body. In the case of an attorney, the court is required to file a complaint with the disciplinary administrator in this state and/or any other state in which the attorney is licensed.
Once the licensing body gets notice, it must notify the support debtor within 30 days that it will suspend or withhold issuance or renewal of debtor’s license. It can then issue a temporary license that is good for up to 6 months to give the debtor a chance to comply. The sixth months can be extended an additional 30 days upon a showing of extreme hardship. The licensing body has no jurisdiction over anything related to the debt. Upon compliance, the license would be reinstated or renewed.
Means Test Allowances
Posted on January 1, 2010 Written by
Out of Date Means Test Guidelines
Posted on December 31, 2009 Written by
Out of Date Means Test Income Guidelines
New Income Guidelines After Halloween
Here are the new Kansas means test income figures for cases filed on or after November 1, 2009:
- one earner household $41,357 (up $353)
- two person household $57,767 (up $1621)
- three person household $63,438 (up $193)
- four person household $72,610 (down $2016)
- add $6900 for each individual in the household in excess of four.
Income Guidelines for Cases Filed on or after March 15, 2009, through October 31, 2009
The Kansas median income has increased giving debtors a raise on the bankruptcy means test for cases filed on or after March 15, 2009. The new figures by family size are:
- one earner   $41,004
- two people   $56,146
- three people $63,245
- four people  $74,626
* Add $6,900 for each individual in excess of 4.
Guidelines for Cases File on or after October 1, 2008, but before March 15, 2009, see below
Here are the bankruptcy income guidelines that went into effect October 1, 2008:
- 1 earner             $39,488
- 2-person families   $54,070
- 3-person families   $60,906
- 4-person families   $71,867
- 5-person families   $68,548
- 6-person families   $63,075
Who Are Creditors in Bankruptcy?
Posted on December 30, 2009 Written by
Creditor: The person or organization to whom the debtor owes money or has some other form of legal obligation.
What is Bankruptcy Conversion?
Posted on December 29, 2009 Written by
Conversion: Cases under the Code may be converted from one chapter to another chapter; for example, a Chapter 7 case may be converted to a case under Chapter 13 if the debtor is eligible for Chapter 13. Even though the chapter of the Code which governs it changes, it remains the same case as originally filed.
