Bankruptcy Basics: September Answers to Frequently Asked Questions

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress.

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Topics and types of FAQ covered in this 30 minute show:

  • What happens to a judgment from an uninsured car accident if I file for bankruptcy?
  • Can a 19 year old student loan for $12,000.00 be included in bankruptcy?
  • I am waiting for an insurance proceeds check, will  I be able to keep the money?
  • Can I include a judgment that garnishes my wages when I file for bankruptcy?

 

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973 he earned a JD from DePaul University Law School.

Visit our Chicago Bankruptcy Site online for more about the firm. You may also contact Joseph Wrobel for more information at (312) 781-0996 and by e-mail at JosephWrobel@ChicagoBankruptcy.com

 

How the FDCPA and the automatic stay help stop bill collectors from harassing you

Do you enjoy being harassed by bill collectors who ask excessive invasive questions and never seem to let up? Nobody enjoys harassment by creditors. There are several ways you can protect yourself from the harassment including making them stop calling you for good if you decide that the relief offered by the bankruptcy courts will put you in a better place. If you do not qualify or feel the need to discharge debts, but you still want the harassment to stop, you should get to know the Fair Debt Collection Practices Act (“FDCPA”).

The law in the FDCPA says debt collectors are not allowed to harass, oppress, or abuse you or anyone else they contact. The following are a few of examples of harassment[i]:

  • Repetitious phone calls that are intended to annoy, abuse, or harass you or any person answering the phone;
  • Obscene or profane language;
  • Threats of violence or harm;
  • Publishing lists of people who refuse to pay their debts;
  • Calling you without telling you who they are.

The FDCPA also says that debt collectors cannot use false, deceptive, or misleading practices. These are several examples of misrepresentations about the debt at issue[ii]:

  • The amount owed;
  • That the person is an attorney;
  • False threats to have you arrested;
  • Threats to do things that cannot legally be done;
  • Threats to do things that the debt collector has no intention of doing.

It might be a good idea to print a copy of this list of harassing conduct and otherwise inappropriate behavior and keep it near your phone. If a creditor seems to step out of line, ask them for their name and operator identification number and let them know you are concerned they are violating the FDCPA and you are warning them to stop the harassment. Many will apologize and take another approach to collect a debt. If they disagree and continue causing you problems you can submit a complaint with the U.S. Consumer Financial Protection Bureau (“CFPB”) by calling (855) 411-2372. The CFPB may also take an online complaint through their website. Additionally, you can file a report with the office of the Illinois Attorney General.

The automatic stay provision in the bankruptcy code can also stop bill collectors in their tracks.

When an individual files a petition for bankruptcy protection an automatic provision of the bankruptcy kicks in – the automatic stay. While a bankruptcy case is active, the that a Chapter 7 or 13, no creditors or collectors may contact or harass the individual in bankruptcy. To learn more, read Chicago bankruptcy attorney Joseph Wrobel’s article, “Examples of the automatic stay and how it operates in bankruptcy law.”

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

[i] U.S. Govt. Consumer Financial Protection Bureau, What is harassment by a debt collector? Updated 9/15/2014.

[ii] See HNi above

Discharging medical bills in a Chapter 7 bankruptcy: Don and Jessica’s story

Unpaid medical bills are the leading cause of bankruptcy. Nearly two million people a year people file for bankruptcy because there is no way they will ever be able to pay their large medical debts. Next to medical bills, credit card debt and unpaid mortgages are the other leading factors causing people to seek bankruptcy protection and often a discharge of those large and growing balances. Accidents and chronic illness can come from nowhere and wipe people out financially, despite years of savings and financial planning.

Jessica always did everything right and was blind sighted by a fall during a routine medical visit.

Two years ago, Jessica (she’s a hypothetical person) went to the doctor for a routine mammogram. She was 43 years old and in perfect health until the technician operating the medical equipment made a mistake and possibly causing Jessica to stumble and fall backward, hitting her head on a table as she fell.

A week before her routine visit to the doctor, Jessica was promoted at her marketing firm and was looking forward to going out to celebrate with some friends. She never left the hospital.

Jessica’s husband Don arrived to find his wife of 18 years in the ICU, unconscious. Fearing the worst, Don was thrilled to see Jessica wake up and say his name. Confused, she asked him why she was in the hospital. He explained that she had fallen during the mammogram. She did not remember. He thought nothing of it assumed trauma blocked the memory.

Jessica suffered short term memory loss and was unable to do her job. She tried going to work but kept making mistakes and her firm had to let her go due to her injuries. Unable to earn an income, Jessica’s ongoing therapy for her head injury sent her in and out of doctors offices and hospitals because things started getting worse and other symptoms suggested there was more going on than the doctors thought.

Don and Jessica saved for retirement and her accident wiped them out.

When Jessica’s insurance was maxed out and she had trouble getting new insurance at the time, and Don didn’t have any insurance through his carpet installation job. She and Don turned to their savings. It went quickly. Don picked up extra labor work and barely had time to see his sick wife. Needing to pay up front for certain procedures and medications, other bills were not getting paid. Don’s phone was constantly ringing with collectors on the other end, or the hospital, every 10th phone call. Don no longer recognized his life.

Jessica started getting better and although she couldn’t go back to work due to permanent memory loss problems, her other motor skill and respiratory symptoms were improved. Trying to move forward with their new life together was difficult, especially when Don could barely afford to take them out for dinner.

Chapter 7 Bankruptcy is Don and Jessica’s best option.

Jessica learned that she qualified for a Chapter 7 bankruptcy. She also learned that even though she would not be liable for the medical bills after discharge, the collectors would go after Don for those payments. Jessica and Don are going to file a joint husband and wife bankruptcy petition so the massive medical bills go away for good, for both of them. Worried about the incredible payments, Don didn’t even realize that filing for bankruptcy will also stop the phone from ringing off the hook. The automatic stay provision will prevent anyone from contacting him or taking action to collect certain debts, such as the medical bills for anything incurred prior to the filing date of the bankruptcy.

Jessica also worked it out with the hospital so that she could continue treating with her regular physician and found a private program to help with her medication. Don and Jessica are hopeful that they will have many good years together and they are adjusting well to their new life after the accident. A lawsuit has been pending for over a year and they are hopeful a settlement will help them pay for future expenses if and when Don can retire. A situation that seemed hopeless is starting to look up.

Even tragedy can be overcome with a sense of purpose, some planning and the right professional help.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

 

Ask an anonymous bankruptcy question for our radio show!

Do you have questions about bankruptcy and have a specific situation that causes you to believe bankruptcy protection might save the day? Once a month, Joseph Wrobel appears on the Chicago Bankruptcy Update, an Internet radio show/podcast as he teaches basic bankruptcy concepts while answering real questions about bankruptcy from real people.

If you have a bankruptcy law question for attorney Joseph Wrobel, you can send him an e-mail at josephwrobel@chicagobankruptcy.com and he will read it on an upcoming episode of the Chicago Bankruptcy Update. Please write “radio show question” in the subject line so your question can be included.

Important Disclaimer:

Please understand a few disclaimers: (1) answers to questions read on the show do not constitute legal advice; (2) asking a question to be answered does not create an attorney/client relationships; (3) the radio show is for education and entertainment purposes only.

Joseph Wrobel takes his time to appear on the Chicago Bankruptcy Update for many reasons, mostly to help you, the person who may need bankruptcy information, gets the real information you need without a “sales pitch.” Joseph Wrobel has been an active bankruptcy attorney for more than 40 years and has seen just about everything. As a result, he quickly thinks of the types of situations that are challenging in bankruptcy law.

Joseph Wrobel is changing how people look at bankruptcy. Do not be afraid of taking control.

Attorney Wrobel also knows that too many people are afraid to admit financial defeat, afraid to talk to a lawyer, and afraid of losing their home, car and possessions. There are many instances in which people will not lose everything, will not have to worry, and will be able to start over fresh, without all the debt and harassment from creditors.

If you want to stop the phone calls, wage garnishments and get a better financial attitude, take Attorney Wrobel’s advice and ask the real questions so you can get the real answers. The only bad questions are the questions never asked.

We hope you join us and share your hypothetical question for an upcoming radio show episode.

At Joseph Wrobel, Ltd., we all hope you enjoy our monthly radio show and share it with other people you know might be too shy or ashamed to ask for help. Together we can make a difference.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’sFacebook page and Follow Joseph Wrobel. Ltd. onTwitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

The dangers of do-it-yourself bankruptcy: There is no substitute for professional experience

It seems to be human nature for people to ask questions of their friends and neighbors first, before seeking the advice of professionals. Nowadays, people also read news articles, blogs and materials on websites to do their research before making a decision on a significant life event. This is particularly true in legal matters affecting the public. This is particularly evident in bankruptcy law.

Do you or someone you know have experience with a bankruptcy case? How long ago was it? What were the facts and circumstances? The responses to the last two questions could lead into an exhausting set of examples where what was true for one person at one time, may be quite different from the next. Take into consideration that your friend or neighbor, telling you about their success in bankruptcy, might leave out some significant details.

A “routine” new client meeting comes with a bit of a surprise to the “well researched” new client.

Consider the following scenario: A man makes an appointment with the bankruptcy attorney because he is out of work, has injuries, and is temporarily unable to work. The man reports that he lives in the city, he rents an apartment and does not own a car or any significant assets other than personal items and a small amount in a bank account. He reports he was injured and lost his job, received workers compensation benefits that ran out and he is receiving harassing calls from credit card companies and collection agents, generally. The man suggests his is a simple bankruptcy that should be open and closed so he can move forward and get a fresh start. Sometimes, however, it is not that easy.

As the attorney asks the man to list all the creditors calling him to collect, things seem pretty normal until he mentions that the local State’s Attorney is after him for child support arrears and he may be facing jail time for failure to comply with the court’s orders to seek employment, keep a job diary, etc. Unfortunately, the attorney reports, you cannot get a bankruptcy discharge of child support payments, maintenance, and support orders entered by a family court.

It is easy to make wrong assumptions in good faith if you do not know the law.

In this case, the man seeking to avoid child support payments might have legitimately assumed that child support debts are like any other debts and he would be able to discharged. He may have honestly believed they would be included in the bankruptcy and he could start out with a clean slate, no longer being in hot water with the State’s Attorney seeking to collect for monies already paid by the State Disbursement Unit to the child support recipient parent. This could have turned out poorly for this man had he attempted to navigate the bankruptcy courts on his own without an attorney.

Ignorance of the law is not justification for breaking the law. If the individual in our hypothetical had filed a petition for bankruptcy on his own and withheld information about his child support obligation, he could have been in trouble for committing a fraud on the bankruptcy court. Otherwise, if he had included the child support amounts in his petition, he would have likely been promptly notified by the bankruptcy court that this was not an option.

Don’t get caught in a surprise moment. Take the time to get proper legal advice.

In over 40 years of bankruptcy practice, Joseph Wrobel has heard it all, or close to it. If you do not qualify for bankruptcy, or the only reason you want to file bankruptcy is to accomplish something you cannot, like discharging child support, Joseph Wrobel will tell you in a free initial consultation to help you determine if Chapter 7 or 13 bankruptcy options are available and likely to solve your financial troubles.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’sFacebook page and Follow Joseph Wrobel. Ltd. onTwitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

Bankruptcy Basics: August Answers to Frequently Asked Questions

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress.

CLICK/TAP HERE TO LISTEN NOW

Topics and types of FAQ covered in this 30 minute show:

  • How are lawsuits already scheduled for mediation affected by a bankruptcy filing?
  • Can I easily find information on the web regarding my bankruptcy case and dispositions?
  • After I receive my bankruptcy discharge letter, how do the reporting agencies know?
  • Can you file bankruptcy if you have been out of work with no income for two years?

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973 he earned a JD from DePaul University Law School.

Visit our Chicago Bankruptcy Site online for more about the firm. You may also contact Joseph Wrobel for more information at (312) 781-0996 and by e-mail at JosephWrobel@ChicagoBankruptcy.com

Five common reasons people in Chicagoland might file a bankruptcy petition

The United States Bankruptcy Court for the Northern District of Illinois has an interactive website listing near-live information about current filings with the bankruptcy court. For example, today, the 19th of August, there were 61 Chapter 7 and 40 Chapter 13 bankruptcy petitions filed as of 1:50 p.m. The total amount of filings for the current year to date are 33,009 (compared to 2013 at this time and date when there were 35, 927 filings). The website also allows you to search by the top city accounting for the largest number of bankruptcy filings. If you guessed Chicago was number one, you are correct. Chicago residents have filed 12,698 bankruptcy petitions this year. Following with much smaller numbers are Rockford, Aurora, Joliet, Plainfield, Calumet City, Elgin, Bolingbrook, Waukegan and Naperville.

Why are so many people filing for bankruptcy protection?

Of course, every individual and family who files for bankruptcy has a unique reason and need for relief from bill collectors and legal actions by creditors. Some people even spend more money they cannot afford in debt relief programs that do not pull their participants out from behind all the bills they cannot pay. At any given point, your life and financial circumstances can change drastically. If you are not wealthy and do not have a safety net, you might take advantage of bankruptcy protection. Below are a few of the circumstances in which people decide to file for bankruptcy.

  1. A medical emergency can cause an individual to file for bankruptcy.

Imagine you are driving to work and are hit by a big truck. Many people only carry the state minimum required insurance coverage and some people have no insurance. If the insurance policies do not pay or the amount of your medical bills exceeds the policy limits, you might have a big financial problem on your hands. Yes, a personal injury suit might make you whole, but that could take years and the bills still come due while you wait, and you might not be working.

  1. The loss of a job can devastate a family’s budget, sending them into bankruptcy.

Many Americans filed for bankruptcy when our country plunged into recession in 2008 and beyond. Economic recovery can be slow and when jobs are lost, people can sink deeply into debt, sometimes beyond recovery. Unless that new job pays a sports hero salary, you may consider eliminating debt you will never likely be able to repay after being out of work for a sometimes extended period of time.

  1. Wage garnishment can trigger an interest in bankruptcy relief.

When a creditor obtains a money judgment against you, they can file a wage garnishment and send that to your employer who is ordered to withhold money from your paycheck and pay it to the creditor. While many Chicagoland families live on a tight budget, the reduction in a paycheck can mean the difference in keeping the lights on. A bankruptcy filing can stop a wage garnishment and you may be able to eliminate the underlying debt.

  1. Banks foreclosing on your home can lead to a bankruptcy filing.

Sometimes life’s hassles and expenses cause us to fall behind on the mortgage. A sick child or a surprise transmission repair can cause a family to slip one month, then maybe two. By that point, it can be nearly impossible to bring the mortgage current. A Chapter 13 bankruptcy may help you keep your home and put other creditors on hold while you get caught up.

  1. Relentless creditors and stress from debt can drive a person to seek bankruptcy help.

When creditors know they can call and bug you until you pay, they can and will. The stress of not being able to pay bills is awful. Too many people turn to the bottle or worse when facing debilitating stress. When they file for bankruptcy, the automatic stay provision kicks in and those creditors can no longer ruin your day, or they will be violating federal law.

If one of the above scenarios is all too familiar, we can help you make the determination if bankruptcy protection is right for you. Joseph Wrobel, Ltd. has convenient offices located all over the Chicagoland area for your convenience. Our new contact us page has address and map directions to our offices in: Chicago; Deerfield; Gurnee; Naperville; Orland Park; Schaumburg; Skokie; St. Charles and Westchester.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’sFacebook page and Follow Joseph Wrobel. Ltd. onTwitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

We updated our website: A guide to our collection of bankruptcy information

Many people face both expected and surprise financial conditions that cause them to consider bankruptcy protection. A car accident, injury or job loss of even one spouse can cripple a family’s ability to keep up with the bills while depleting savings; worse yet, a 401(k) or IRA (retirement accounts are protected in bankruptcy). Our approach to bankruptcy at Joseph Wrobel, Ltd. is focused on educating you, so you can make the decision if bankruptcy relief will solve your problems and get you out from behind the eight ball. To help you find answers to your bankruptcy questions, we recently launched our updated website.

Helping you find the information you need saves time and stress.

Our new website is similar to our previous site, full of information, but the new site is easier to navigate and works well with all your mobile devices. Mobile site viewers can easily find and listen to our Internet radio podcasts, read our blogs and watch our short videos answering the most frequently asked questions about bankruptcy protection. Since all bankruptcies are different, what happened to someone you know may not be what you could expect, or it could; doing some initial research on our website will better help you see where you may stand.

If you split your screen by two browsing windows, you can open our new website ChicagoBankruptcy.com and click the links in this article to the sections of the website that have useful information and learning tools.

  • Main page: If you click on the images with frequently asked bankruptcy questions you will arrive at our FAQ page to take care of some of those basic initial questions.
  • Scroll down the any of the pages to find several information videos in the footer section of our site, such as Why You Need a Lawyer.
  • Listen and learn from our collection Internet radio podcasts on the Chicago Bankruptcy Update channel on Blog Talk Radio.
  • Right above the videos, to the left, notice the link to the Bankruptcy Blogger, where we publish articles with bankruptcy information and news about financial success.
  • Back the main navigation tab section on the top left of the site, hover over the FAQ tab to access Wrobel Q&A, a collection of real questions (and our answers) for bankruptcy lawyers on the Avvo attorney rating site.
  • After studying up and reviewing some client testimonials, you can take the next step and read our How Do I Start page and find the forms you will need when starting the bankruptcy process.

We hope you enjoy our updated website and hope you can find answers to some of your initial questions about stopping the bill collectors and getting out of debt and off to a fresh financial start.

Joseph Wrobel, Ltd. has convenient offices located all over the Chicagoland area for your convenience. Our new contact us page has address and map directions to our offices in: Chicago; Deerfield; Gurnee; Naperville; Orland Park; Schaumburg; Skokie; St. Charles and Westchester.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’sFacebook page and Follow Joseph Wrobel. Ltd. onTwitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

U.S. Supreme Court: Inherited IRAs are not “retirement funds” protected in bankruptcy

Protecting a qualified Individual Retirement Account (“IRA”) is important to the people who rely on their IRA accounts when they retire and from time to time, when they borrow from them in certain situations. Creditors often try to persuade debtors to cash in or borrow from their IRA to pay debts, and some people succumb to pressure when they fear losing their house, car and personal property in a lawsuit if a creditor makes good on their threats.

What many people do not know is that their IRA is protected from bankruptcy proceedings. The trustee will not make you empty your qualified IRA when collecting assets to pay off creditors. Some people call IRA assets “bulletproof” money because of its nature in being beyond the reach of creditors.

What happens, however, when you inherit an IRA account? The U.S. Supreme Court recently decided that the funds in an inherited IRA are not protected in bankruptcy.

The case of Clark v. Rameker, involves a bankruptcy petitioner, Ms. Heidi Heffron-Clark, who inherited her mother’s IRA in 2001. Nine years later when she filed her petition for bankruptcy, Clark sought to exclude approximately $300,000 held in the inherited IRA, from the bankruptcy estate, using the “retirement funds” exemption. “The Bankruptcy Court concluded that an inherited IRA does not share the same characteristics as a traditional IRA and disallowed the exemption. The District Court reversed, explaining that the exemption covers any account in which the funds were originally accumulated for retirement purposes. The Seventh Circuit disagreed and reversed the District Court.” The Supreme Court, on review, held that, “Funds held in inherited IRAs are not “retirement funds…[i]”

The Court’s analysis over whether inherited funds were meant to be treated like originally accumulated funds, by the individual owner, were the same under the legal meaning of “retirement funds” in the bankruptcy code of laws. IRAs are certainly unique and some of these features were noted in a recent Forbes article about this case, “Unlike IRA owners, inheritors can’t put additional funds into the account, and they can take money out at any time without penalty. In fact, generally, non-spousal IRA heirs must either withdraw the entire amount each year, starting by Dec. 31 of the year after the IRA owner died.[ii]”

An IRA rollover, to a spouse, is one additional notable impact of this case.

Reports on this case also note the Court’s decision does affect an individual who inherits an IRA from their spouse. They are allowed to receive their spouse’s IRA funds and have the option of rolling those monies into their own IRA – this option is only available for spouses. As mentioned in Forbes, “She can roll the assets into her own IRA and postpone distributions from a traditional IRA until she turns 70 ½. The catch is, like other IRA owners she may have to pay a 10% early-withdrawal penalty if she takes money before age 59 ½ from her own IRA.[iii]”

Here is a link to another relevant article: Five Rules For Inherited IRAs.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’sFacebook page and Follow Joseph Wrobel. Ltd. onTwitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney.

[i] U.S. Supreme Court Opinion: CLARK et ux. v. RAMEKER, TRUSTEE, et al., No. 13-299, Decided Jun. 12, 2014.

[ii] Forbes: Supreme Court Finds Inherited IRAs Not Protected in Bankruptcy. By Deborah L. Jacobs, Jun. 12, 2014.

[iii] See Forbes article (FNii).

Bankruptcy Basics: Your current and ex-spouse and why they must be disclosed

Many of us make decisions regarding our finances with someone else. Often a spouse or a former spouse is involved in major financial decisions, in a variety of situations. Your current spouse, with whom you may own property, can certainly affect your decision to file a petition for bankruptcy protection. Likewise, an ex-spouse, to whom you may owe financial support, also is likely to chime in on legal activity involving bankruptcy. You may have heard people say, “I’m not going to tell so and so, and it is none of their business,” but the truth is it will become their business soon enough.

Yes, you must disclose your current and/or ex-spouse to your bankruptcy attorney.

We hire bankruptcy attorneys who are experienced in the law and practice of debt relief because we rely on their advice and counsel as to what works best for us in our current financial state. While it is possible that a current or ex-spouse will have no bearing on your bankruptcy case, that is a decision your attorney should make by using their knowledge and experience with the law.

Your bankruptcy lawyer needs to know about current and/or ex-spouses to the extent their income is included or somehow affects your income, for purposes of the means test necessary to determine whether you qualify for bankruptcy relief, and which chapter may be available. For example, if you pay or receive financial support as required by a divorce judgment or separation agreement, you may qualify for a Chapter 13 bankruptcy instead of Chapter 7. In the event of divorce, you might also be obligated to maintain life and/or health insurance policies, another factor in calculating potential bankruptcy outcomes.

Bankruptcy attorneys cannot help you unless you give them accurate and complete information.

If your bankruptcy attorney determines your current or former spouse is relevant to the bankruptcy, and is entitled to notice pursuant to the law, they might have to disclose the individual as a creditor to whom you owe money, or as a co-debtor also responsible for joint debts. Responsibility for debts might also be stated in the divorce judgment, and your attorney will likely need a copy of the final divorce decree.

Giving your attorney a full and complete financial picture at the first meeting at the attorney’s office is important. Based on the information you provide, your attorney can generally tell you what bankruptcy relief may be available, but only when you give them a complete and accurate financial history. This is not a time to feel shame and hide information, because if you do, things may only be more difficult moving forward.

Full disclosure of financial facts and circumstances is necessary to avoid committing a fraud on the court.

If you fail to disclose a current or former spouse to the bankruptcy court, you may have bigger problems. Of course, in reviewing and preparing your bankruptcy petition, your lawyer is likely to discover a current or former spouse the court and trustee needs to know of, however if you work to hide their existence it is possible for your petition to be filed with incomplete information, and may be considered a fraud on the court. For more information about the penalties for defrauding the bankruptcy court, please read our article, Bankruptcy Court: Go ahead and make their day.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’sFacebook page and Follow Joseph Wrobel. Ltd. onTwitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney.