How Do You Determine Household Size: Chapter 7 Means Test

By James Jennings

How do you determine your household size when calculating a Chapter 7 Means Test?

There seems to be a lot of confusion on this subject.  This is probably because there is a lot of deferring opinions on how this is determine and what  method your jurisdiction is using at the time you file.

Let’s look at some of these methods that have been used to determine household size.  There are three methods that are popular: Heads-On-Beds, Income Tax Dependent, and Economic Unit.

Heads-On-Beds Approach

The “heads-on-beds” approach follows the Census Bureau’s definition of a household which includes everyone who lives in your house. Because the heads-on-beds approach doesn’t take into account financial contributions or relationships between household members, most courts believe that it’s too broad and inaccurately inflates household size. As a result, only a minority of courts use this approach.

Income Tax Dependent Approach

When determining household size, some courts only allow debtors to count individuals they can claim as dependents on their tax return. In general, this is the most restrictive approach because it doesn’t allow debtors to claim a person who lives in their house unless they can include him or her on their tax return as a dependent.

Economic Unit Approach

Many courts use the economic unit approach when figuring out household size on the bankruptcy means test. This method essentially looks at how many people in your household act as a single economic unit. The economic unit approach generally allows debtors to count any individuals living in their home they financially support, depend on, or whose finances are closely intermingled with their own.

Also, it is important to note, the 4th Circuit Court of Appeals approved a fractional approach based on the amount of time children live with the debtor. In that case, the court divided the number of days each child lived in the debtor’s house during the year by 365 to come up with a fraction. The court then added the fractions for each of the children to calculate the debtor’s household size.

If you’re still confused don’t feel bad, there seems to be a lot of that going around. Ultimately if the Trustee objects to your household size then it will be up to the judge to determine if you qualify for a Chapter 7.  Only he or she can make the final determination.

As Dodge said in Frank Beddor’s Seeing Redd, “I think I speak for all of us when I say, ‘Huh?'”

If you have any questions regarding a specific legal matter or legal strategy you should contact an attorney for legal advice.  If you would like to get started on a family law or bankruptcy case call us today, 602-896-9020, email us at discountdivorce@msn.com, or visit our website at DiscountDivorcePro.com.

We invite you to subscribe to Discount Divorce & Bankruptcy Twitter account: @discountdivorce and Facebook page: facebook.com/discountdivorce Both of these social media sites have value information.

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Disclosing Financial Records to the Bankruptcy Court

By James Jennings,Legal Document Preparer.

When you file for bankruptcy, the court will take an active interest in your financial life. They look at your payment records and bills. Under a traditional bankruptcy proceeding, the trustee is going to want to review all of your bank account records, card accounts, credit loans, tax paperwork and various other financial components.

The Trustee is looking for any assets that can be sold to help pay down your debt in a Chapter 7 Bankruptcy. The Trustee is also looking for evidence of assets and income that are exempt under the conditions of the law. These are called exemptions.  A list of them can be found be found in a publication produced by the court.

Make sure to have your documentation organized and ready for the courts. It lets everyone involved know that you are willing to cooperate with them. Those who have a willingness to cooperate and work with the court will benefit in the long run. Being upfront and honest will get you a favorable result from the court officials most of the time.

When it comes to your tax returns, the courts normally like to see two years of returns. For everything else, you can expect to provide three months of documentation. As you file your documents with the court, it is imperative that you remember that you are under oath. If you hide information or lie to the court it maybe considered fraud which is a crime.

Most of the time, three months of records seems to be what the bankruptcy courts like to see.

The actress Angela Jolie once said in an interview back in 2003 “I’m just honest.  I like that I don’t have to worry about what I say.  I really don’t have the time or energy to pretend and I don’t want to have to live that way.”

Seems like good advice.  Being dishonesty is like swimming upstream in a storm.  It will eventually wear you out and you’ll end up drowning.

If you have any questions regarding a specific legal matter or legal strategy you should contact an attorney for legal advice.  If you would like to get started on a family law or bankruptcy case call us today, 602-896-9020, email us at discountdivorce@msn.com, or visit our website at DiscountDivorcePro.com.

We invite you to subscribe to Discount Divorce & Bankruptcy Twitter account: @discountdivorce and Facebook page: facebook.com/discountdivorce Both of these social media sites have value information.

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Let’s Talk about Wage Garnishment

By James Jennings

Creditors

Federal law places limits on how much judgment creditors can take from your paycheck. The amount that can be garnished is limited to 25% of your disposable earnings (what’s left after mandatory deductions) or the amount by which your weekly wages exceed 30 times the minimum wage, whichever is lower.

At the US Department of Labor’s website you can find some examples of how much money can be taken from your check. This is a great informational resource provided by the US government.

Child Support

More of your paycheck can be taken to pay child support. Up to 50% of your disposable earnings may be garnished to pay child support if you are currently supporting a spouse or a child who isn’t the subject of the order. If you aren’t supporting a spouse or child, up to 60% of your earnings may be taken. An additional 5% may be taken if you are more than 12 weeks in arrears.

It is important to note that child support in Arizona can be modified at anytime that amount of support would change by 15% or more.  It may be worth it to contact Discount Divorce & Bankruptcy and speak with someone about modifying your child support if you feel you are over or under paying child support.

Student Loan

The U.S. Department of Education (or any agency trying to collect a student loan on its behalf) can garnish up to 15% of your pay if you are in default on a student loan. No lawsuit or court order is required for this type of garnishment; if you are in default, your wages can be garnished.

Student loans are typically not forgiven in the bankruptcy process.  These loans will follow you to the grave in many cases.

Back Taxes

If you owe money to the IRS, watch out: The agency can take a big chunk of your wages, and it doesn’t have to get a court order first. The amount you get to keep depends on how many dependents you have and your standard deduction amount. Your employer will pay you a fairly low minimum amount each week and give the rest to the IRS.

The IRS must send a wage levy notice to your employer, who is required to give you a copy. The notice includes an exemption claim form, which you should complete and return.

State and local tax agencies also have the right to take some of your wages. In many states, however, the law limits how much the taxing authority can take.

How can Discount Divorce & Bankruptcy  help?

If you find yourself in a situation where you were served with a lawsuit by one of your creditors, Discount Divorce & Bankruptcy maybe able to help you.  We have successful helped more than 5,000 people file for Chapter 7 Bankruptcy here in Arizona since 1998.

If you have any questions regarding a specific legal matter or legal strategy you should contact an attorney for legal advice.  If you would like to get started on a family law or bankruptcy case call us today, 602-896-9020, email us at discountdivorce@msn.com, or visit our website at DiscountDivorcePro.com.

We invite you to subscribe to Discount Divorce & Bankruptcy Twitter account: @discountdivorce and Facebook page: facebook.com/discountdivorce Both of these social media sites have value information.

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So You Goofed and Filed Your Bankrupcy Too Soon. Now What?

By James Jennings

It happens.  No matter how careful you are.  No matter how much you planned and researched you made a mistake or you omitted something when preparing your bankruptcy documents.  So now what?

The most common mistake I see is my clients don’t include all of their creditors.  I must Head in Handsask what seems like a hundred times when I meet with a client, “Is this everyone?  Is there anyone else you owe?  Do you want to go home and think about it some more?  Do you need more time to go through your records?”

The answer more times than not is, “No, James there are no more.  That’s everyone.”

No matter how much prodding and goading I do to get people to double check or even triple check, there are those few souls that come back after the documents have been prepared, reviewed, signed, and filed say to me, “Oh shoot, I found another creditor.  Now what do I do?”

Since you can only file a Chapter 7 Bankruptcy every eight years you really only have two options in most cases; 1) you can live with your mistake.  Meaning you are still responsible for that debt and will have to pay that creditor, or 2) You can amend your documents and add that creditor to the bankruptcy.

So let’s talk about number 2; amending your documents.  How exactly do you go about doing that?

rockstone-search-bannerThe first thing you have to do is find the necessary forms to amend your documents.  The US Bankruptcy Court for the Arizona District has a great website that has all the forms you would ever need on it.

Next you need to follow the correct procedure.  Amending bankruptcy documents in Arizona is governed by Local Rule 1009-1.

This means that after you prepare the necessary forms to reflect either updated information, or additional creditors, you will have to file them with the Court and pay the filing fee.

At the time of the this post, the filing fee in Arizona to file amended documents is $30.  A current and up to date filing fee schedule can be found on the Court’s website.

The next step according to Local Rule 1009-1(a) is you have to notify everyone this change would effect.  For example you would notify the Trustee, the United States Trustee and any new creditors you add to the case.  You also have to provide them with a copy of any amendment to the petition, schedules, or statements you modified.  This is typically done through the Court’s internal system and through the mail.

865349331-547x300This is an important step because you do not want to circumvent your creditors rights.  Also, by not notifying the creditors you harm yourself as well.

So this plays into Local Rule 1009-1(b).  Which states in part:

If an amendment to the schedules adds one or more creditors, the debtor shall file with the amendment a supplemental master mailing list that lists the names and addresses of those creditors added by the amendment.  …”

This means you have to file a Supplemental Master Mailing List that has the additional creditors added to it.  (The Master Mailing List is used by the Court to make labels for envelops containing a notice from the Court informing your creditors that you filed for bankruptcy.)

The requirements for the Master Mailing List for Arizona can be found on the Court’s website.

The notification to your creditors does two things:

  1. The notice of the bankruptcy sent by the court clerk tells your creditor where to file a proof of claim and the deadline for doing so; and
  2. That the creditor must cease any collection action, including telephone calls, billing or law suits that might be pending against the debtor.  The  automatic stay protects the debtor and his property from all forms of collection during the bankruptcy.

We are all guilty of errors or omissions in life.  After all, we are human.  Follow the court’s rules and procedures when making your modifications and everything will work out.

In most cases if you have any questions about the process the clerk of the court will be happy to assist you in finding the answers.

If you have any questions regarding a specific legal matter or legal strategy you should contact an attorney for legal advice.  If you would like to get started on a family law or bankruptcy case call us today, 602-896-9020, email us at discountdivorce@msn.com, or visit our website at DiscountDivorcePro.com.

We invite you to subscribe to Discount Divorce & Bankruptcy Twitter account: @discountdivorce and Facebook page: facebook.com/discountdivorce Both of these social media sites have value information.

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Traffic Tickets and Chapter 7Bankruptcy

By James Jennings

speeding-ticket1Some of my bankruptcy clients have a lead foot when it comes to driving.  I get.  Sometimes you have to get somewhere in a hurry and sometimes when you roll the dice you come up short and you blow by a cop doing 100 MPH.  This leads to a really expensive fine and a hefty insurance premium hike.  Now some people have the notion that they can just blow off paying their fines and go and file bankruptcy.  So will this tactic work?  Can I get out of paying my fines by filing for bankruptcy?

Although a Chapter 7 discharge has the power to eliminate most debts, traffic fines are not included. The U.S. Bankruptcy Code classifies traffic fines in Chapter 7 bankruptcy as non-dischargeable in Section 523(a)(7). Typically, any fine or penalty you owe to a governmental unit is non-dischargeable under this section. Even if the rest of your debts are discharged in Chapter 7, you will have to find a way to pay your traffic tickets.

WeWorkHardMoreover, regardless of the type of bankruptcy you file, if your traffic fine is the result of a criminal violation, you can never discharge it in bankruptcy. Criminal traffic offenses include hit-and-run, driving while under the influence, reckless driving or eluding the police. In a broader sense, a criminal traffic offense is one that could result in jail time.

If you have any questions regarding a specific legal matter or legal strategy you should contact an attorney for legal advice.  If you would like to get started on a family law or bankruptcy case call us today, 602-896-9020, email us at discountdivorce@msn.com, or visit our website at DiscountDivorcePro.com.

We invite you to subscribe to Discount Divorce & Bankruptcy Twitter account: @discountdivorce and Facebook page: facebook.com/discountdivorce Both of these social media sites have value information.

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How Do I Value My Property for Bankruptcy?

By James Jennings

865349331-547x300It seems like with almost every client when I ask them how much something is worth they just stare at me and shrug their shoulders.  It is important for you to determine an accurate value for your property.  Why? Because when preparing a Chapter 7 Bankruptcy the Court wants you to disclose all of your assets and their value.  This in turn helps the Trustee that is appointed by the Court (who more or less represents the interests of the creditors in your case) determine if you have anything of value so that they can liquidate it and pay the people you owe – well at least in part anyway.

It is important to note that most if not all your personal property may be exempt from being taken away by the Court.  This all depends on the value of the property, the laws in your state.  Arizona statues concerning exemptions can be found in a publication provided by the US Bankruptcy Court for the District of Arizona.

So how does a person figure out the value of their personal property?  Well I guess that would depend in part on what type of personal property we a talking about.

The bankruptcy laws require that you value your personal property at retail replacement value. This is the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time the value is determined. It is not the cost of replacing your items with new items. The value should represent the amount you would have to pay, on the date you file for bankruptcy, to replace each item with a used item of similar age and in similar condition.

large_carsssIn regards to motor vehicles, like cars, trucks, SUVs and the like, most people I know go to Kelly Blue Book’s website.  There are also other trade publications or you can have your vehicle appraised by a professional.

If you want to figure out what your furniture, household goods, clothing or other similar items you could try to visit various thrift stores, such as Goodwill, or local flea markets, or garage sales to see what comparable goods are selling for. Keep a record of the dates and locations you visit to support your valuation. You can also check online sales or auction sites. Wherever you find your values, make sure to list the age and condition of the property to give the trustee a better idea of what you are valuing.

For jewelry, furs, and collectibles will almost always need an appraisal. Make clear to the appraiser that you are looking for a current sale value appraisal and not an appraisal for insurance. The valuations may be different. Pawn shops may give you the lowest appraisal value but they have a general reputation for undervaluing property and may not be the best source. A reputable dealer in estate property may be the best source for appraisals on these items.

If you have any questions regarding a specific legal matter or legal strategy you should contact an attorney for legal advice.  If you would like to get started on a family law or bankruptcy case call us today, 602-896-9020, email us at discountdivorce@msn.com, or visit our website at DiscountDivorcePro.com.

We invite you to subscribe to Discount Divorce & Bankruptcy Twitter account: @discountdivorce and Facebook page: facebook.com/discountdivorce Both of these social media sites have value information.

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How Can Discount Divorce & Bankruptcy Help Me?

ne_courtHow can Discount Divorce & Bankruptcy help me?  Great question.

Discount Divorce & Bankruptcy is much more than just a legal document mill.  We actually care about every single client that walks through our doors.

Discount Divorce & Bankruptcy was established in 1998 by James Jennings, a native born Arizonian and Military Veteran who served in the Gulf War.

Mr. Jennings, a family law paralegal while working for a Phoenix Metro Area firm saw that many people could not afford the cost of a high priced attorney.  Mr. Jennings saw that family law attorneys were charging huge, almost unattainable retainers (most nonrefundable) and then billing their clients at a rate of $250 to $400 per hour.  He also saw that people who hired an attorney spent out of pocket somewhere in the neighborhood of $10,000 when it was all said and done.  He also saw that if they couldn’t pay or ran out of money their cases went nowhere.  Often times their attorney’s left them high and dry.

On the other hand there were a lot paralegals out there that were disbarred attorneys or unsavory characters that promised people the moon but couldn’t deliver.  These people would open up divorce mills and have little to no experience in family law. Many of these individuals would take peoples’ money and then prepare spotty documents with little to no support.  So when clients had questions or things went awry they were left hanging.  So, again, if they couldn’t then hire an attorney to fix their case or push it through, then the case went nowhere or was dismissed and they had to start over again.

The third thing that was happening was people that prepared their own documents without any aid from an attorney or legal document preparer  would run a fowl with the court system somehow.  This is a very common problem.  Family law and family court procedure is very complex and has a lot of quirks and nuances and if you have little to no training in it, you can easily crash and burn your own case.  It was Mr. Jennings’ experience too, that many people that had prepared their own documents got them thrown out by judges because of some legal, procedural, or clerical mistake. They either didn’t establish jurisdiction correctly, provide proper legal notification to the other party, or did not calculate deadlines correctly when they managed their own cases.  The court has no mercy on people that don’t follow procedure correctly.  They hold everyone to the same standards as attorneys and have little to no patience for do-it-yourself folk.

So because these three things, attorney’s fees being out of reach for many people; an unregulated paralegal industry that took advantage of people or were just down right incompetent; and people choosing to handle their own cases and failing miserably, Mr. Jennings quit his successful career as a paralegal and opened Discount Divorce & Bankruptcy in 1998.  In his mind, enough was enough.  People were not getting quality access to the court and he was going to do something about that.

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James Jennings, Managing Partner for Discount Divorce & Bankruptcy, LLC

Mr. Jennings’s vision was three fold; 1) to open a full-service legal document preparation company that would not only prepared legal documents for a fair fee but 2) also filed the documents with the courthouse and 3) managed the case from beginning to end.  Thus solving all the major problems with the legal industry as a whole.

Because of Discount Divorce & Bankruptcy’s high success rate in helping people handle their own legal matters, Discount Divorce & Bankruptcy has a stellar track record for service.

Thousands of people have referred their friends to Discount Divorce & Bankruptcy.  This is because of their standards of excellence and high quality service.

Discount Divorce & Bankruptcy has become paragon in the industry in Arizona.   Discount Divorce & Bankruptcy was also certified by the Arizona Supreme Court (the highest court in Arizona) to prepare legal documents in 2003 and has outpaced everyone ever since.

In fact, Discount Divorce & Bankruptcy maintains its high level of legal knowledge and ethical values by requiring all document prepares in their employ to participate in at least ten hours of continuing education each year.  Ensuring top scores in legal document preparation.

bbb-accreditedMoreover, Discount Divorce & Bankruptcy has an A+ rating with the Better Business Bureau.  The top score of any business rating.  Also, Discount Divorce & Bankruptcy scores high with Yelp, Facebook, Google, Angie’s List, and many, many other business rating systems.  Bottom line, people love us.

Discount Divorce & Bankruptcy’s mission:

  1. To prepare high quality documents that will surpass all other documents in the industry for accuracy and clarity.
  2. Documents that will pass the demanding scrutiny of family court and bankruptcy court judges and commissioners.
  3. Discount Divorce & Bankruptcy will not only prepare the documents for you, but in family law matters will also file them and all other subsequent documents required by the court for no additional charge.  That’s right, no additional fees to make trips to the court and file your documents.
  4. Unlike most attorney’s you can contact Discount Divorce & Bankruptcy and ask as many questions as you like about your case for no additional cost.
  5. Discount Divorce & Bankruptcy does not charge you by the hour.
  6. Discount Divorce & Bankruptcy charges one flat rate for documents, case management, and filing.
  7. Your information and case status is always confidential. Something they take very serious.
  8. You will always have Discount Divorce & Bankruptcy on your side.

We understand that the only case that matters to you is yours.  If you’d like to give Discount Divorce & Bankruptcy a try, like so many others have, call them at (602-896-9020) or email us at DiscountDivorce@msn.com to get started.

We invite you to subscribe to Discount Divorce & Bankruptcy Twitter account: @discountdivorce and Facebook page: facebook.com/discountdivorce Both of these social media sites have value information.

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