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Supreme Court Hearing Case on Underwater Mortgages

Just this week, the Supreme Court heard oral arguments for a case regarding underwater mortgages and bankruptcy. In 2013, the Caulketts filed a Chapter 7 bankruptcy. During the bankruptcy proceedings they asked the court to discharge their second mortgage and the court agreed. Typically, individuals are only able to discharge underwater mortgage debt for Chapter 13 filings, so Bank of America is now bringing this case to the Supreme Court.

The decision in this case will have very big ramifications for bankruptcy law across the country. If the court decides in favor of the plaintiff, many people who are filing bankruptcy and feeling crushed under mortgage debt will have a new option. If the court decides for Bank of America, individuals filing for Chapter 7 bankruptcy will still have mortgage debt in most situations.

What is an Underwater Mortgage?

An underwater mortgage is a mortgage in which the debt far exceeds the value of the property. This can happen when individuals agree to predatory lending agreements or if the value of their home declines dramatically. Once someone has an underwater mortgage, he will have an incredibly hard time paying off the debt, because even the property itself is of lower value.

In the case of the Caulketts, they took out two mortgages to purchase a home in 2006. The first was for $183,000, and the second was for $47,855. After the real estate market collapsed, the Caulketts found themselves in serious financial trouble and had to file for bankruptcy. Unfortunately, the value of their home had declined precipitously, and now it was only worth $98,000—much lower than the amount of debt still owed on the mortgages.

Because they had an underwater mortgage, they asked the court to wipe out the second mortgage, and the court agreed. In bankruptcy law, those who file for Chapter 13 bankruptcy may ask for second mortgages to be wiped out if the first mortgage is worth more than the value of the property. This rule has not been used for Chapter 7 bankruptcies. Now it is being brought in front of the highest court in the land to decide.

What This Means for You

If you are filing Chapter 7 bankruptcy, this Supreme Court case might be extremely important. Other courts around the country are still reluctant to discharge underwater mortgages during a Chapter 7 filing. If the Supreme Court decides in favor of Bank of America, you will not be able to discharge these debts, and they will follow you even after bankruptcy. If the court decides in favor of the Caulketts, Chapter 7 bankruptcy may be able to give you the fresh financial start that you need.

If you are currently thinking about filing for bankruptcy, our attorneys can help you decide what type of filing you need and can help you through the filings and proceedings. Bankruptcy law is an incredibly complex area of law, but our practice has years of experience and expertise. Call us today, and we can schedule an appointment to meet with you soon.

Bankruptcy - 04/24/2015

What is a Quiet Trust, and How Will It Help Your Estate Plan?

A lot of parents with substantial assets worry about how those assets will be distributed and used by their children. That is one of the reasons why many choose to establish trusts. Another large concern is how the assets or the existence of a trust may affect the way a child acts or behaves financially.

For this reason, more and more people are establishing a quiet trust. Though some states require that you inform beneficiaries about their trusts, there are also many states where parents can establish quiet trusts that do not have to be reported to the beneficiaries.

A quiet trust functions the same way a normal trust does. The only difference is that the language in the trust document specifically states that the beneficiary will not be notified about the trust or its assets.

Like other trusts, the trustee will be responsible for managing and administering the trust.

It is also possible to create a trust wherein some beneficiaries are notified of the trust’s existence and others are not. By including quiet trust provisions into a discretionary trust, you will have total control over which beneficiaries are notified about the trust and when they will be notified.

Why Create a Quiet Trust?

There is actually a number of reasons to keep trust information away from the beneficiaries.

One of the main reasons is that many people do not believe their children are financially responsible and are worried that knowing they have a trust will actually make them even less responsible.

In fact, only one-third of wealthy parents have fully disclosed their wealth to their children.

That is because they want to make sure their children learn financial responsibility. If a child or teenager knows that there is a large trust in his name, it may cause him to develop the wrong types of character traits.

Safety is an Important Consideration

Another reason is concern for privacy and safety. If a beneficiary has a large trust in his name and others find out about it, he may become a target for financial exploitation and fraud.

By keeping the trust quiet, you will reduce the risk that others will try to take advantage of your child beneficiary.

This can also reduce the risk of your beneficiary becoming involved in frivolous lawsuits or identity theft. You can structure the trust so that your children are notified once they have reached an age where they can better protect the assets from others.

Some people also choose to create quiet trusts if they are giving non-voting interests in the family business to the beneficiary. If the trust wasn’t quiet, the beneficiary may start requesting input and information regarding the business.

Keeping the trust quiet will keep your beneficiary’s involvement limited until you pass away.

If you are interested in arranging a trust, our firm can help. Give us a call today and we can schedule an appointment. Our attorneys love helping individuals safeguard their assets and arrange how their assets will be distributed to their loved ones.

Estate Planning / Trusts - 04/22/2015

Myths You Need to Know About Bankruptcy

There are, unfortunately, many different myths about bankruptcy that could end up causing you problems if they lead you down the wrong path. Of course, if you plan on filing for bankruptcy, then it is vital that you hire an experienced attorney, but it also helps if you know what you are getting into beforehand. Below, we will discuss the top four myths that people mistakenly believe about bankruptcy along with an explanation of the actual truth.

1. Bankruptcy Is the End of Your Credit

Yes, your credit will take a blow when you file. And, depending on the situation, it can take a while to build your credit score back up. Bankruptcies can stay on your credit for seven to 10 years, but that doesn’t mean you have to wait the whole time to start working on your credit scores. Instead, about a year after you file, try getting a low limit secure card. Then, make sure you make all of your payments on time. This can start making a difference in your credit score fairly quickly.

2. If You File for Bankruptcy, then You Are Financially Irresponsible

There is a stigma about bankruptcy and it’s that anyone who files is irresponsible or they wouldn’t have gotten in the situation. However, there are quite a few different reasons why you could be a completely responsible person and still have to deal with the effects of bankruptcy. For example, if you have been unemployed for a long time, are facing massive medical bills, or are dealing with a life event like divorce, then you may be in severe financial trouble.

3. When You File for Bankruptcy, You Get Out of All Your Debts

That’s a big myth and it is not true. There are types of debts that will not be discharged and you will have to continue paying, such as child support or alimony. More than that, some types of bankruptcy actually require that you continue paying on a plan set up by the courts. If your assets are sold off and there is still money owed, then you may be responsible for part of that debt too.

4. You Can Spend with Abandon Right Before You File

Some people, when they know they will be filing for bankruptcy, will spend with abandon, thinking they can do what they want and not have to deal with the debt. It doesn’t work that way. In fact, if you do this, then you could be charged with fraud. Any debt that you have incurred as a result of this fraud will still be yours to pay. It will not be discharged, and you could face serious trouble with the courts.

As long as you understand that these things are myths, you will better be prepared for the actual process of bankruptcy. However, before you go through this, make sure you hire an attorney with extensive experience in the area. That way, you will have legal representation to look after all of your rights throughout the whole process.

Bankruptcy - 04/15/2015

Understanding the Fair Debt Collection Act

Filing for bankruptcy usually means you already have debt collectors knocking on your door. If you better understand the Fair Debt Collection Act, you can ensure you know whether those debt collectors are acting properly or breaking the law.

What Is the Fair Debt Collection Act?

The Fair Debt Collection Act was first put into place in 1977 and the whole purpose of it is to ensure consumers cannot be harassed by debt collectors. There are parts of the act that cover various things such as how the collectors can contact consumers, how they handle telephone calls, and how they can disseminate information about your credit. There are also parts of the Fair Debt Collection Act that cover what you can do if your rights have been violated.

Who Is Covered by the Act?

The Fair Debt Collection Act only comes into play with third party debt collectors. In other words, collection agencies that have purchased your debt and are now trying to collect on it. These third party collectors have to follow the law of the act and that means they cannot harass you in an attempt to get the money. This act doesn’t cover banks, retailers, and issuers of credit who may be trying to collect debt from you.

What Does the Act Do?

There are several things that the Fair Debt Collections Act does in order to ensure you are treated properly, even when you owe money to collectors. These things include:

• The debt collector must make first contact with the consumer and inform them that they have the right to dispute that debt. The consumer also has the right to ask for detailed information about the debt and that information has to be mailed within five days of the first telephone contact.

• If the consumer feels that the debt is incorrect, then they have the right to put together a dispute letter, which needs to be sent within one month of initial contact with the debtor. During this time, the collection agency must stop all collection contact until the debt has been confirmed.

•Debt collectors may only contact consumers between the hours of eight in the morning and nine in the evening. If the debt collector has been informed that they cannot call you at work, then they must stop this as well.

• Contact with others in your life about the debt must be limited to asking for your current contact information.

This act is designed to protect you so that you will not be harassed by debt collectors. If you are dealing with severe debt and the collectors are harassing you, then it is vital that you find out whether or not those collectors are breaking the rules of the Fair Debt Collection Act. If they are, then you may have a case against them. No matter what, you will need to contact an attorney who specializes in debt issues as well as bankruptcy law. You may need to file bankruptcy at some point, but in the meantime, you do need to take action if you are harassed by debt collectors.

Bankruptcy - 04/13/2015

What Does an Executor Do?

One of the things that you will need to learn about when it comes to estate planning would be the role of the executor. When you write out a will, you will need to appoint someone to this position, so it is something you will need to consider very carefully. You will want to name the right person for the duty, and that means understanding what that job is in the first place.

The basic definition of an executor is someone who is responsible for probating the estate should something happen to you. There are essentially three duties that the executor you choose will be responsible for.

Identifying Assets

When the executor has taken the oath to be responsible for your estate, they will have access to your property and assets as well as any records covering these things. The executor will need to sort out this information and identify all assets, providing an inventory to the courts. Additionally, the executor will need to move all accounts out of your name and into the name of the estate.

Pay Expenses

In addition to identifying those assets, the executor will need to take over paying debts as well as taxes. If there was anything owed when something happened to you, then the executor will be responsible for ensuring that your estate pays these things. The debts will not become the personal responsibility of the executor, but will be a part of the estate instead.

Distribution of Assets

Finally, whatever assets are left after debts have been paid will need to be distributed according to your will. The executor has the responsibility of ensuring all the parameters of your will have been met and that assets go where they should based on what you wanted.

Choosing an Executor

Keep in mind that you want to choose someone you feel you could trust to work as an executor. The person you choose will have to devote some time and work to doing the job properly. Some of the other things you will want to consider when choosing an executor will include:

Picking someone you can trust, first and foremost
Considering someone good with finances
Thinking of someone who will be fair

You want someone you can depend on to handle things the way you would have wanted.

When you write your will, it would be a good idea to ensure the executor is compensated for their time as well. You could choose to write them out of the will, but since you are putting your whole estate in their hands, it wouldn’t make a lot of sense to do that.

It’s important that you understand the role of an executor. That way, you will find it much easier to make the right decisions for your own estate. So, when you speak with an attorney about your own estate planning, make sure you have taken the time to consider what an executor does and then, you will be able to choose the right person for the job.

Estate Planning / Probate - 04/10/2015

What Is Power of Attorney?

When you make the decision to start planning your estate, there is much more that will go into this process than just creating a will. People don’t realize all of the many different layers of estate planning. By hiring a quality attorney to handle the process, that lawyer will be able to walk you through the details. However, it certainly helps if you already have an idea of what to expect and what the different aspects will entail.

For example, one thing that you will need to do is assign a power of attorney. However, that will be very hard to do if you don’t know what this person is or what they do. There are actually two different types of power of attorney: financial and healthcare.

• Financial power of attorney puts decision making power in someone else’s hands when it comes to your finances.
• Healthcare power of attorney or healthcare proxy will allow someone else to make your healthcare decisions for you if you are incapacitated.

In either case, what this person is able to do depends solely on you. You have the right to go through all of the different types of decisions they may need to make and determine if you want to give that power to someone else.

When It Works

For the most part, the power of attorney will start the moment you sign the documents with a lawyer. Usually, they are set up to stop working if you are incapacitated, however. This may defeat the purpose, though, so you will need to discuss this with your attorney and find out how to name someone responsible if you are no longer able to make decisions for yourself.

Choosing Power of Attorney

In most cases, you will want to name someone you know and trust to have power of attorney for you. That often means a loved one. However, that doesn’t have to be the case depending on your own situation. You have the right to choose anyone you like. No matter what, you need to make sure that you trust them. Whether you are naming a financial or healthcare power of attorney, this person will have a great deal of power in your life and you will want to make the right choices.

Once you have decided who you would like to have power of attorney, you will need to talk with them first. This is a big responsibility and you certainly don’t want to just spring it on them. So, discuss this with them and ensure they are open to working in this capacity for you. If they are, then you can have the documents drawn up.

There are many parts to estate planning that you may not fully understand. However, knowing more about them will certainly help before you meet with an attorney. It will ensure you aren’t surprised by anything that comes up. You will need to appoint power of attorney, so this is definitely something you should take the time and better understand before you see your attorney for estate planning.

Estate Planning / Trusts - 04/08/2015

Why You Need a Will

There are actually numerous different parts of estate planning, but arguably, the one basic thing you absolutely should do if you do nothing else would be putting together a last will and testament. This is considered very basic, and it is vitally important no matter your age. If you are unsure of why it is so important, here are a few reasons why everyone needs a will.

You Decide on Things

If you don’t have a will, then you will have absolutely no control over things that happen involving your estate and your belongings. Someone else will make the decisions, and things may not go the way that you would have wanted. By writing out your will, you are in control and you can be as specific as possible. That means you can decide on every little thing and ensure that all of your belongings in the estate go where you want them to.

Your Minor Children Will Be Cared For

If you have children, it becomes even more important that you have a will because this document will discuss what happens with those children. Without a will, the court will determine what happens with your children and that could include a family member or even foster care. Your will should include very specific details on where your children should go and who should take care of them if something happens to you.

This Will Avoid Lengthy Probate for Your Family

When there is no will present, your estate will go through the probate process and that can take a very long time. In fact, it could take years, and that could put a serious financial burden on your family. When you have a will that has been properly drawn up, you can avoid this very long process. Everything will be expedited and this will ensure your whole estate gets completed much quicker, which will save your surviving family members a big headache.

You Can Choose to Disinherit People

Finally, there may be cases when you wish to disinherit people. There could be different reasons for this, but what you must remember is that you won’t be able to do this if you don’t have a will. Without the document, you will have no control over who gets a part of your estate, and that could include people you didn’t want receiving anything. By choosing to put together a will, you will be able to pick and choose specifically who will receive part of your estate and who will not.

Having a will is the most basic element of estate planning. You should consider it vital even if you don’t do anything else. So, even if you don’t necessarily want to deal with the idea that something could happen to you, it is something that you must face. Ensure that you have the proper estate planning attorney to help you draw up this document as well. That way, you will know that everything is properly in place. Then, even if something bad were to happen, you will know that your family and estate is properly looked after.

Estate Planning / Probate - 04/03/2015

How to Know If You Should File for Bankruptcy

Dealing with debt can be extremely stressful and emotionally draining. However, it is something that thousands of Americans face on a daily basis. In some cases, the debt becomes so difficult that people have to start considering the option of bankruptcy. However, this is a drastic step. How do you know when it is time to take it and when you shouldn’t? It’s a difficult decision, but to help you make that choice, let’s look at some signs that it may be time to look into bankruptcy.

You Have Been Out of Work

If, for some reason, you have been out of work for a very long period of time and you have not been receiving unemployment income, then it may be time to file for bankruptcy. That’s because you will not have the financial recourse needed to pay debts that are building up over that time.

You Owe a Lot of Back Taxes

If your taxes have been building up to the point that you are delinquent, then it may also be time to file for bankruptcy. Remember that the IRS has the right to garnish your wages and this can put a financial burden on you when you don’t have the ability to pay your other bills.

Your Home Is Close to Foreclosure

This is an obvious sign that you are in severe financial trouble. When you cannot make your home payments, you have to start thinking about bankruptcy as a way to get relief from your numerous expenses.

Your Bills Are Delinquent

When you have numerous different bills that have continued to build up and you are not able to pay them, then this could be a sign of impending bankruptcy. You may have collectors and creditors calling you regularly trying to get money from you, but you may have no money whatsoever to give them. If this is the case, then bankruptcy may be the only way to get relief in the first place.

Your Wages Are Being Garnished

As mentioned, this could happen if you owe back taxes to the IRS, but that isn’t the only reason for wage garnishment. No matter why someone is taking money from your paycheck, it can put a serious financial burden on you. You may not have the money needed in order to cover your own bills simply because so much money is being taken out of your paycheck in the first place.

If you are seeing any of these signs or a combination of them in your own finances, then it may be time to start considering bankruptcy. While that isn’t something anyone wants to face, it could be the best reality for you. Should you feel that you may need to file bankruptcy, it is very important that you get an attorney who has experience with bankruptcies in particular. This type of law can be difficult to navigate and you will want to make sure everything is handled properly. That way, you will get the best possible outcome.

Bankruptcy - 04/02/2015

Evaluating Personal Injury Damages

Those who suffer personal injury as a result of a slip and fall accident, a car accident, medical malpractice, etc., may consider filing a personal injury lawsuit against the offender, and might also be wondering whether the case is even worth pursuing. Putting a monetary value on the physical, psychological, and emotional damages the injury caused can be a daunting task. The first step when looking to file a personal injury lawsuit, due to the complex nature of the process, is to seek legal advice from a qualified lawyer.

In cases of personal injury, the injured person receives monetary compensation for the damages the injury caused if the offender is found to be guilty for the accident, whether due to negligence or any other valid reason. The negotiation of the settlement among the insurance companies, parties, and attorneys involved may be modified by the court system based on what the judge believes is a fair arrangement.

Types of Damages in Personal Injury

The first type of damages in cases of personal injury is compensatory damages. This means that the victim is to be restored financially from the damages the accident caused; in other words, he is rewarded with a set monetary amount that should, as much as possible, make up for the consequences of the accident.

There are some compensatory damages that are easier to put a dollar amount on. For example, damages to property and healthcare bills acquired as a result of the personal injury. Pain and suffering damages, for example, are more subjective and are harder to quantify.

Some of the most common personal injury damages are:

• Medical treatment and rehabilitation: This is a very common form of compensation in these cases, and includes repayment of previous and payment of future medical expenses and rehab caused by the personal injury.

• Lost wages: This is also a very common compensation in personal injury cases, and it entails the repayment of lost income and income the victim would have made in the future but now can’t make due to the accident.

• Loss of property: This is the repayment of damages to personal property, such as clothing, vehicles, etc., that became damaged due to the accident. Fair market value is used to determine the monetary reward for lost property.

• Pain and suffering: This is an intangible situation that is also rewarded with monetary compensation. Pain and suffering can include emotional distress, loss of enjoyment, loss of consortium, anxiety, and such.

Another form of personal injury damages is punitive damages. Punitive damages are a form of punishment to the defendant, if found guilty, to discourage the offensive action in the future. Punitive damages are given on top of compensatory damages in some cases. Most states do have a cap on how much money a plaintiff can get for punitive damages.

Since personal injury cases can be so complex, it’s always advisable to hire an experienced attorney to handle your case. If you were hurt due to the negligence of another individual or entity, you deserve to get compensation. A personal injury lawsuit might help you get the compensation you deserve.

Personal Injury - 04/01/2015

FTCA (Tort Claims) and Administrative Filing

The Federal Tort Claims Act (FTCA) allows the government to be sued in cases of negligence that involve a federal employee. While you are still essentially filing a personal injury claim, when you are suing the government, the process must be handled differently. If you think you have been injured due to carelessness on the part of a government employee, your first step is to determine whether you can make a claim under FTCA.

Permitted Claims

The FTCA provides numerous exceptions, limitations, and regulations, but there are a few specific guidelines that will help you determine whether your tort claim might be permitted:

The person that caused the injury has to be directly employed by the federal government.
The employee in question must have been displaying wrongful or negligent conduct within the capacity of his or her position.
The laws in the state in which the wrongful conduct took place must permit the claim.
The injury had to occur due to negligence of the employee.

While there are many other limitations that may apply, if your situation fits within these guidelines, you may be able to file a claim. However, your first step in the process is to file an administrative claim.

Administrative Claim Filing

Under FTCA, you are required to file an administrative claim, known as the Standard Form 95, with the agency at which the employee worked. For example, if an FBI agent was responsible for your injuries, you would file with the FBI. The claims process is somewhat lengthy, but the following is an overview of what you need to do, and what you can expect:

Statute of Limitations – Your claim must be submitted within two years of the date of your injury.
Facts and Damages – You must detail the facts of your injury, and include the total amount of the damages that you are trying to recover.
Agency Response – The agency with which you filed has up to six months to provide you with a ruling. If the ruling given is “admit,” this means your claim was accepted as valid and court hearings may not be required.
Filing a Lawsuit – If your claim is rejected, or you disagree with the amount the agency agrees to pay, you must file your lawsuit within six months of the decision.
Delays – If the agency takes longer than six months to make a ruling, you can either choose to move forward with your lawsuit, or continue waiting for a ruling on your administrative claim.

If you decide to file a lawsuit, it will have to be filed in the United States District Court. The rest of the process will follow the normal steps involved with any other personal injury lawsuit, just at a higher court. Keep in mind that you will not be able to add damages to your claim in the lawsuit.

If you believe you are eligible to file a claim under FTCA, you should contact an attorney as soon as possible to help you with the process, especially if you file a lawsuit.

Personal Injury - 03/31/2015

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