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Thursday, June 18, 2009

Question: What other factors should I consider when deciding when I should file for Bankruptcy?

Question: What other factors should I consider when deciding when I should file for Bankruptcy?

Factors regarding the need to obtain an automatic stay will likely be dictated by your creditors, not you. The automatic stay is a useful tool in temporarily stopping foreclosure proceedings brought by your mortgage holder(s), as well as collection efforts, collection calls and lawsuits filed by your creditors, if any. This foreclosure and debt collection process generally takes a few months, not a few days, and the benefit of the automatic stay can create some additional time for the debtor to deal with logistical issues associated with preparing the bankruptcy petition, appraising assets, selling real property or finding new housing, if necessary.

In order to file for bankruptcy under any section of the Bankruptcy code (Chapter 7, 11, or 13), your federal income taxes must be filed up to the current year (2008). Other documents are necessary for preparing the bankruptcy petition and schedules, such as a credit report, current credit card statements, bank statements, and income information. If this information is not immediately available, it will take some time to collect and review. If you believe a bankruptcy filing is on the horizon, your best bet is to contact an attorney for a bankruptcy planning consultation, then begin preparing the information needed to file.

Equally important in deciding when to file is a debtor’s own ability to handle the current situation, balanced against their need to make immediate changes. Some debtors will need time to prepare for relocation to an apartment or smaller home, whereas others will be anxious to take action to save their house or get a fresh start. These factors are unique to each case, and should be discussed with an attorney before filing your bankruptcy petition.

Question of the Week: Will my new job affect my Bankruptcy filing?

I have been out of work for some time, my bills have gotten out of hand, and I need to file for Bankruptcy. I may be getting a new job soon. Will my new job affect my Bankruptcy filing?

If a would-be Chapter 7 debtor were to see a significant change in their income before filing a Chapter 7 bankruptcy, there is a risk that the debtor would no longer qualify under the Chapter 7 Means Test, and must file under Chapter 13. While Chapter 13 Bankruptcies are often effective in allowing a debtor to cure mortgage arrearages and keep their house, if the debtor’s intention is to pursue liquidation of all assets (including the house) or does not have real property to protect, your increased income would be required by the U.S. Trustee to fund the Chapter 13 plan, and not be used for other costs/expenses. In this case, a Chapter 7 Petition should be filed before any increase in income.

Friday, June 5, 2009

What do I do if my ex threatens to take our child out of the country?

If a parent wants to move a child's residence out of the country, then the same laws apply as when the parent wants to move to another state, though the evaluation by the Court may be slightly different. The removal statute is discussed at length in our previous blog: What do I do if my ex wants to move out of state with our child?.

If you are afraid that the other parent may remove the child illegally and once the child is out of the country it may be difficult to get them back, then there is still something you can do. The U.S. Department of State has a website entitled Child Abduction Prevention with many useful tips including:

1. Be aware of your state's laws relating to removing the child from your state against the other parent's wishes. This is a crime in most states and may also be a federal crime.

2. Obtain a custody order that clearly defines both your and the other parent's rights relating to the child and any limitations on those rights.

3. Be aware of U.S. Passport law, which requires the signature of both parents to obtain a passport for a child. If you are concerned that your ex might try to obtain a passport without your signature or with a forged signature, then you should apply to The Children's Passport Issuance Alert Program. You can obtain the entry form by clicking here.

4. If your child already has a passport you can ask the Court to require its surrender.


Thank you to Robert P. Schneiders, Esq. of Canton, MA for forwarding us this information on The Children's Passport Issuance Alert Program.

What do I do if my ex wants to move out of state with our child?

In Massachusetts, M.G.L. c. 208 Section 30: Minor Children; Removal from Commonwealth; Prohibition states that a child who the Massachusetts' probate courts have jurisdiction over shall not be removed from the Commonwealth without consent of both parents or Order of the Court. This statute does not apply to vacations; generally the term "removal" refers to a change of residence.

If one parent unilaterally moves out of state with the child without the permission of the other parent and without an Order of the Court, then you must act immediately to force the return of the child. If the child resides out of state for more than six (6) months then under the laws of most states (most states having enacted the Uniform Child Custody Jurisdiction and Enforcement Act, or some variation of it), that other state will now be the "home state" and have jurisdiction over the child. You should consult with an attorney about the appropriate action to bring before a Court in order to obtain an order requiring the child to be returned (which will then have to be brought to the other state and enforced, through the use of law enforcement if necessary).

If both parents do not agree to allowing one parent to move with the child to a different state, then the parent that wants to move is required to file a Petition for Removal. If the Court has already ruled on the custody of the minor child, in a Paternity or Divorce judgment, then this it typically done with the filing of a Complaint for Modification.

The standard for approval of a request for Removal is actually a two-part test as defined in the landmark case Yannas v. Fronditsou-Yannas, 395 Mass. 704 (1985). The Court in Yannas created a two-part test:

First, the parent requesting removal must first show the court that there is a "good, sincere reason" for the move. This is often described as the "real advantage test." Examples of acceptable "good, sincere reasons" are a lucrative job opportunity, significantly greater family support, or a new spouse who resides in another state. In Pizzino v. Miller, 67 Mass. App. Ct. 865 (2006) the Court found that "a sincere desire to be with a spouse is, per se, a good and sufficient reason".

The second part of the test requires the Court to evaluate whether the move is in the best interest of the minor children. Typically if the first part of the test is meant, the "real advantage" likely carries over and demonstrates that the move is also in the best interest of the minor child. Meeting the second part of the test may be more difficult, however, in the case where both parents are significantly involved in the minor child's life, such as when there is a joint physical custody arrangement.

Tuesday, June 2, 2009

What happens to payments owed to an ex-spouse in Bankruptcy?

Obligations that are considered by the Bankruptcy Court to be “domestic relations orders” are non-dischargeable and priority debts. They are defined in U.S. Bankruptcy Code Title 11 Section 101 14(A).

In summary, the term 'domestic support obligation' includes child support, alimony, or other support payment, and can include payments for housing, health insurance or other costs paid on behalf of a spouse or ex-spouse. If payments are owed and in arrears then the 'domestic support obligation may also include interest and the interest is non-dischargeable as well.

It is very important when preparing a Chapter 7 Bankruptcy to be aware that these debts will not be discharged, i.e. will still be owed after the bankruptcy.

It is likewise very important when preparing a Chapter 13 Bankruptcy to be include the 'domestic support obligation' in the Chapter 13 plan as a priority debt and to be clear about how arrears will be paid versus how the ongoing payment reduces the filer's available income. If these issues are not addressed specifically, the Bankruptcy Court may find that the Plan is not binding against your ex-spouse as was the case in In re Owen, 2009 WL 693161 (Bky.E.D.Tenn. March 13, 2009). For an excellent explanation of what happened in that case check out the following article on the Bankrutpcy Law Network: "Stealth" Plan Provisions: Confirmation of Chapter 13 Plan Did not Alter Domestic Support Obligation".

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