How Does Bankruptcy Impact My Credit?

When you’re in debt and trying to decide what action to take, you may be concerned about how to protect your credit score. That’s often one of the last barriers to deciding to file for bankruptcy – so how much does bankruptcy affect your score? The answer may surprise you. Bankruptcy certainly does have an effect on your credit score, but it’s not nearly as bad as you might expect.

How Does Bankruptcy Impact My Credit

Credit Score and Bankruptcy

Each of the three major credit reporting agencies maintains a credit score for every person who uses credit. These scores run from 300 up to 850. All three scores are based on the FICO score system. “FICO” is an abbreviation of “Fair, Isaac and Co.,” the California company that invented the system. That is why you will sometimes see the credit score referred to as a FICO score.

This post will consider three possible actions and their effect on your credit score: filing bankruptcy under Chapter 7 or Chapter 13 of the Bankruptcy Code, debt consolidation, and debt settlement.

Chapter 7 and Chapter 13 Bankruptcy

Both Chapter 7 and Chapter 13 are common forms of consumer bankruptcy. Under Chapter 7, the debtor generally does not pay anything bank to his or her creditors. Under Chapter 13 the debtor pays some or all of the debts back; Chapter 13 filers can pay anywhere from 1 percent up to and including 100 percent of the debts. The amount being paid back depends of the debtor’s income and other factors. Because most Chapter 7 filers pay nothing to creditors, most people prefer to file under Chapter 7. However, not everyone qualifies for Chapter 7 protection. If your income is above a certain level, you may be required to file under Chapter 13 and pay something back.

Both Chapter 7 and Chapter 13 are going to affect your credit score in similar ways. Most filers end up with a score in the mid-500s. Higher starting scores take a bigger hit than lower ones. For example, a high credit score of 780 will probably go down to around 540, a drop of 240 points. A lower score, such as 680, will go down to around 530, a drop of only 150 points. In any case, most people land in that mid-500 range. Before you write off bankruptcy as an option because of the effect on your credit, consider that your score already takes a hit whenever you miss a payment. Most people considering bankruptcy already have lower scores.

After bankruptcy, you can immediately start to rebuild your credit. You may want to take out a secured credit card or a store credit card (these are easier to get than standard credit cards) and use them regularly to make small purchases. Pay off your account in full, on time, every month. Your credit will build up quickly. However, keep in mind that a bankruptcy will remain on your credit report for 7-10 years, so lenders and other financial institutions will take it into account when extending you credit.

Debt Consolidation or Bankruptcy

When you consolidate your debts, you lump them all together so that you only have to make one manageable payment every month. Unlike in bankruptcy, you’re going to pay all your debts back. In typical debt consolidation arrangements, a debt consolidation company will intercede for you with your creditors and arrange for a manageable payment for you to make each month on your debt. You’ll make your payment to the debt consolidation company and they’ll send the appropriate portions along to your creditors. Debt consolidation plans may be useful when you fell behind because of a crisis and can’t get back on track because the creditors demand that you make up the missed payments all at once.

These plan only work if you have enough income to pay all of your debts back. It will take several years to complete the plan, during which time you will have no use of your credit cards. This type of arrangement will affect your credit score because you technically won’t be in compliance with your obligations to the creditors. After you finish the struggle to pay off your debts, the effects will stick with your credit score for years to come.

Debt consolidation usually has a more severe effect on your credit than bankruptcy, especially in the long term. With bankruptcy, you can start rebuilding your score right away. With debt consolidation, your score is going to stay low for a long time.

Debt Settlement instead of Bankruptcy

Debt settlement is sort of like a middle road between bankruptcy and debt consolidation. You won’t get all the legal protections and rights of bankruptcy, but you won’t have to pay off all of your debt. In a standard debt settlement situation, you make a monthly payment to a debt settlement company. That company puts your money in a separate account, sometimes called a “war chest.” That money will stay in that account, building up every month. When your war chest is big enough, the debt settlement company will write to your creditors. In that letter, the debt settlement company usually informs creditors that it’s handling your debts and that you’re willing to pay off those debts, but only with a steep discount. The debt settlement company will usually aim for payment of 30-40% of the total debt.

The creditors will not quickly agree to such terms, but as time goes by, some may eventually agree to take 50 percent or less, forgiving you of the remainder of the amount due. The debt is then settled and you owe that creditor no more. The debt settlement company has to try and do this with each of your creditors, and it can take many months or even a couple of years.

Remember that creditors are not under any legal obligation to work with the debt settlement company or settle your debt. Some creditors will absolutely refuse to work out such settlements and will continue collection activity, including eventually suing you. There are also scam debt settlement companies preying on debtors; they’ll charge you big fees and take your war chest payments and then disappear, leaving you far worse off than you were before.

Debt settlement is not only difficult to pull off, it’s extremely hard on your credit score. You’re paying into your war chest every month rather than making payments on your debt, meaning that your credit score is taking continual hits because your file shows missed payments every month. If your debt settlement attempt fails, you’re stuck with an even lower credit score than before. If your attempt succeeds, your credit report will show that you paid those debts for less than full value. That has a serious impact on your credit score because it’s treated as if you didn’t pay at all.

Bankruptcy and Your Credit

If you’re struggling with debt and considering your options, don’t avoid bankruptcy because you’re afraid of its effect on your credit score. Once you start missing payments, your score is already suffering. The sooner you get help with your debt, the sooner you can start to rebuild your score. In many cases, bankruptcy is actually easier on your score than debt consolidation, which takes years during which your credit will continue to drop, or debt settlement, which will knock down your score without any sort of guarantee that your debt will actually be settled. Bankruptcy exists to help you get your financial life back on track with the protection of the law. Before you make any decisions about how to deal with your debt, speak to an experienced debt counselor or bankruptcy attorney about your financial situation. They’ll help you determine the best option given your situation and your financial goals.

Free Consultation with a Utah Bankruptcy and Credit Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in for your free initial consultation today.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

Recent Posts

Bankruptcy Lawyer

Custody Problems

Can I Pay Back Family Before I File Bankruptcy?

Parental Liability

Probate Lawyer

Child Custody and Spousal Support

from Michael Anderson http://www.ascentlawfirm.com/how-does-bankruptcy-impact-my-credit/

Advertisements

Custody Problems

Custody Problems

Sometimes, a marriage or relationship ends badly. If children are involved, however, the former spouses must still communicate and cooperate to some degree, but child custody arrangements don’t always go according to plan. Custodial interference by a parent is one of the major problems that may arise after divorce or breakup, or in some non-divorce situations involving children. Here you will find tips on what to do if the other parent doesn’t fulfill his or her obligations under your parenting agreement or violates a court order related to custody or visitation. This section also includes information on out-of-state moves in child custody situations, parental abduction, and more.

Interference with Custody or Visitation

One of the biggest child custody problems is interference. This occurs when one or both of the parents intentionally disobeys the visitation schedule, fails to take custody of the children at the agreed-upon dates, or otherwise fails to live up to the parenting agreement. Sometimes this is done in order to retaliate against the other parent or simply to extend (or limit) one’s time with the children. Since a parenting agreement carries the force of law as a court order, failure to follow its directions can lead to criminal sanctions.

Interference can happen with custody or visitation, by the custodial or noncustodial parent. But not all interference is considered a violation of the court order. For example, protecting a child from danger; being late because of bad road conditions or other such circumstances; or honoring previous agreements that deviate from the parenting plan (such as a summer trip) are generally okay.

Types of Custodial Interference

There are countless examples of custodial interference, but here are some of the more common ways in which it may occur:

  • Refusing to hand off child to the other parent for a scheduled visitation
  • Limiting child’s telephone or online contact with the other parent
  • Intentionally failing to return the child at the predetermined time
  • Visiting the child during the other parent’s scheduled time with the child

Child Custody and Relocation

It’s sometimes necessary for one or both parents to move out of the area after a divorce, often for work or for more affordable housing, but this presents a problem for child custody arrangements. Relocation is okay as long as the parents have signed a relocation agreement and subsequent change in the parenting plan. But if there is a dispute over the move, the court may step in decide whether the relocation is in the best interests of the child.

Often, the original child custody arrangement and parenting plan will stipulate whether relocation is allowed. Some states require the custodial parent to provide advance written notice of an intended move to the noncustodial parent. States have different ways of determining whether relocation is appropriate in child custody cases and the terms for doing so; talk to an attorney for more details.

Virtual Visitation

Actual, physical time spent with parents cannot be replaced. But family courts are increasingly offering “virtual visitation” as the next-best thing under certain circumstances. A virtual visitation is one that uses video conferencing (such as Skype) or other such methods to provide the noncustodial parent and child a chance to connect. In fact, virtual visitation is one way to help children stay connected to noncustodial parents who either live far away, are traveling, or otherwise unable to meet the child in person.

Free Consultation with a Utah Custody Lawyer

If you have a question about child custody question or if you need help with custodial interference, please call Ascent Law at (801) 676-5506. We will help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

Recent Posts

Best Child Custody Lawyers

Can I Pay Back Family Before I File Bankruptcy?

Temporary Guardianship vs Testamentary Guardianship

Loan Agreements

Parental Liability

Expungement

from Michael Anderson http://www.ascentlawfirm.com/custody-problems/

Can I Pay Back Family Before I File Bankruptcy?

In times of difficulty, we naturally turn to family and friends for help. The same holds when those difficulties are financial. Family and friends know you and understand your troubles; they’ll be willing to lend you a hand even when banks won’t. They trust you regardless of your credit score. If you borrow from people close to you, can you pay them back before you file bankruptcy? Salt Lake Bankruptcy Lawyer answers that question for you here:

Can I Pay Back Family Before I File Bankruptcy

Preference Payments to Insiders

When you file for bankruptcy protection, the court wants to round up all your creditors into one place and deal with them all at once. No one is supposed to be left out of the system. That includes your family and friends, if they’re your creditors. Basically, the laws are set up so that you can’t treat one creditor differently than the others. In order to ensure that all your creditors are treated fairly, the court requires you to list all your creditors and debts.

Your parents, siblings, other relatives, and close friends are “insiders” in bankruptcy law. 11 U.S.C. § 101(31). In other words, the court knows that you’re likely to choose to repay them over other creditors. So, they’ll look very carefully at any payments you make to friends and family before filing. Payments to insiders are called preference payments and they’re prohibited by bankruptcy law. If you repaid your friends and family within a year before filing bankruptcy, the court may “avoid,” or reverse, the payment. They can actually claw back money from your relatives.

Non-Insiders

In fact, preference payments need not be made to friends and family. If you repaid any creditor within 90 days of filing, the court will examine the payment to determine if it qualifies as a preference. Perhaps you were worried about keeping your car and chose to pay it off before filing without making payments to your other creditors. That may be deemed a preference and the money may be clawed back by the bankruptcy trustee.

What payments are safe?

The court isn’t going to claw back every payment you’ve made in the three months before you file. Regular payments, such as your mortgage and car payments, rent payments, and utility payments are allowed. The court is looking for extraordinary payments – ones that you didn’t have to make.

Insiders vs. Non-Insiders

So, the court will look closely at payments made to non-insiders within 90 days of filing. The look-back period for insiders is a full year. Part of the rationale for the longer look-back period for insiders is that they have an edge over other creditors. Given the option, most people will choose to repay a loan from their grandmothers before a loan from a big bank. The court doesn’t care where the loan came from or who the creditor is. In bankruptcy, they should all be treated the same way.

Transfers of Property Before Bankruptcy

In addition to actual cash payments, the court will look at any transfers of property. They don’t want people to transfer property to friends or family in order to hide it from the bankruptcy process. In other words, you can’t give a valuable painting to your cousin before you file in order to avoid having to sell it to repay your creditors.

How to Protect Your Family When You File Bankruptcy

One common issue with loans from friends and family is the lack of formality of the loan. The court is worried about official creditors. A loan from your parents without an official promissory note isn’t enough – the court will treat that as though your parents gave you a gift. If you want your friends and family to receive payment through the bankruptcy process, you need to have an official document recording the loan amount, the parties to the loan, and the repayment terms. Otherwise the court will leave them out of the bankruptcy process altogether and everything you pay will go to your official creditors.

Of course, the benefit of dealing with friends and family is the familiarity you have with them. If there is no promissory note, you can choose to repay them after the bankruptcy process. If there is a note, they will probably only receive partial payment through the bankruptcy process. Your legal obligation to repay the loan will be discharged at the end of the bankruptcy, but you can always choose to pay the full balance afterward.

If you file under Chapter 7, your bankruptcy process will take only a few months and you’ll be able to start repaying whatever loans you’ve taken from family and friends as soon as it’s over. You can also use income you earn after you file; income earned after filing is not part of the bankruptcy estate. If you file under Chapter 13, the situation is a little more complicated. If the loan from friends or family is documented by a promissory note, you’ll be able to pay it back through your payment plan. However, those payments will be proportional to the size of the debt. If that note represents just 10% of your total debt, only 10% of any given payment will go toward it. You won’t be able to dedicate any more payments to it until the end of your Chapter 13 plan, which will last 3-5 years.

Planning to File for Bankruptcy

When you’re considering filing bankruptcy, make sure your attorney knows about any payments made to family and friends prior to filing. You’ll also want to disclose any loans you’ve taken out from insiders with official promissory notes. Your attorney can help you determine if the payments will be clawed back or if the court will allow them. If your payments are likely to be considered preferential, you may be better off waiting until those payments are no longer within the look-back period. You should also discuss the loan with the person you borrowed from. You may want to warn them that the payment may be clawed back. The court can sue them for the return of the money, so it’s probably best for you to discuss the issue with them before that happens. You can also work out repayment arrangements for after the bankruptcy, if you choose.

Free Consultation with a Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Parental Liability

Parental liability is the term used to refer to a parent’s obligation to pay for damage caused by negligent, intentional, or criminal acts committed by the parent’s child. Parental liability usually ends when the child reaches the age of majority and doesn’t begin until the child reaches 8 to 10 years old. Today, most states have laws relating to parental liability in various applications.

Parental Liability

Children’s offenses can be civil or criminal in nature. Civil cases are lawsuits brought by a person for money damages. Criminal cases, on the other hand, are brought by the government for violations of criminal law. Many acts can trigger both civil and criminal legal repercussions.

Civil Parental Liability

In most states, parents are responsible for all malicious or willful property damage done by their children. This is called civil parental liability because it’s non-criminal. The parent is obligated only to financially compensate the party harmed by his or her child’s actions.

Laws vary by state regarding the monetary limits on damages that can be collected, the age limits of the child, and the inclusion of personal injury in the tort claim. Hawaii’s parental liability law remains one of the most broadly applied as it doesn’t limit the financial recovery and imposes liability for both negligent and intentional torts by the minor child.

Criminal Parental Liability

Laws making parents criminally responsible for the delinquent acts of their children followed the civil liability statutes. In 1903, Colorado was the first state to enact a law against “contributing to the delinquency of a minor.” At least 42 other states and DC now have laws against contributing to the delinquency of a minor.

Other examples of criminal liability include firearm access and Internet crime related laws. Twenty-eight states and DC have child firearm access prevention laws that, generally, make it illegal for a parent to leave a firearm within reach of his or her child. Modernly, in some Internet access and computer hacking laws cases, a parent can be responsible for their child’s online crimes.

Minors and the Law

Parental liability only applies to your minor or underage children. The age of majority is the age at which a minor, in the eyes of the state law, becomes an adult. This age is 18 in most states. In a few other states, the age of majority is 19 or 21. You may want to check your state’s legal age of majority laws.

A minor is considered a resident of the same state as the minor’s custodial parent or guardian. If your minor child spends time with two parents in two different states, each parent is responsible for the child’s actions while in their care.

Insurance Coverage

Since homeowners or renters insurance includes both property and liability coverage, wrongful acts of children or negligent supervision claims may be covered even if the act took place away from a policyholder’s home. These policies typically cover legal liability in the event that anyone suffers an injury while on the insured property, even if the injury was committed by another household member or the result of negligence on the part of the policyholder.

Free Consultation with a Family Law Lawyer

If you have a question about parental liability in Utah, divorce, custody or other family law matters, please call Ascent Law at (801) 676-5506. We will help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Temporary Guardianship vs Testamentary Guardianship

A guardian is a person appointed by the court to make legal decisions for someone who is unable to make decisions for him or herself. Two of the main types of guardianship, testamentary and temporary can be confused due to their similar names, but they’re quite different. Both are explained below.

Temporary Guardianship vs Testamentary Guardianship

Testamentary Guardianship

Generally, parents may, in a properly drafted will, state their preference for a guardian for a minor child or an adult child with a disability who requires supervision over his or her person, estate, or both.

If the parents pass on while the child is still a minor or remains disabled, the court will determine the availability or appropriateness of the parents’ testamentary guardianship selection. If the selected guardian is unable, unwilling, or found unfit to be a guardian, the court will appoint a different guardian. The court typically uses the same state’s legal procedure for appointing guardians as when there’s no will to indicate a preference.

If you have a minor or disabled child that you care for, you may want to consult with an experienced attorney in your area about drafting a will to state your preference of guardian for your child.

Temporary Guardianship

Some state statutes provide for temporary or limited guardianships. Temporary guardianships are generally granted by the courts to achieve a specific purpose for a certain amount of time. Once the purpose is accomplished, the guardianship is terminated.

Limited Guardianship

A temporary guardianship is different from what some states call a limited guardianship, which remains until a court order ends it. This is also called a limited conservatorship in some states, such as California. In California, limited conservatorships are only for adults with developmental disabilities. This type of limited guardianship isn’t “limited” by time like other limited guardianships, but is limited by the types of decisions the guardian is legally able to make for the person who needs care.

As guardianship laws vary by state, it’s a good idea to consult a qualified attorney in your state if your loved one needs a temporary guardianship.

Emergency Guardianships

One form of temporary guardianship is the emergency guardianship. This guardianship is generally granted where an emergency exists and someone is needed to give approval for the person to receive immediate services. A temporary guardian is appointed by the court to serve during the emergency only.

Generally, the person being served by the temporary guardian is disabled or incapacitated in some way. The court must determine that this person is unable to make the decisions because of minor age, mental disability, addiction, debilitating disease, or some other similar limitation. The court must generally also determine that if a guardian isn’t appointed, the person is at risk of serious harm or even death. Finally, the court must determine that there’s no other person available who can make the emergency decisions for the incapacitated person.

The emergency guardianship order is generally granted for a short period, long enough to properly handle the emergency. For example, in Ohio, the emergency guardian may only act for up to 72 hours. After the emergency has ended or subsided, the temporary guardian must file a report with the court detailing the nature of the services he or she provided and describing the outcome.

Free Consultation with a Guardianship Lawyer

If you have a question about child custody question or if you need help with a guardianship, please call Ascent Law at (801) 676-5506. We will help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Domestic Violence and Gun Ban

Domestic Violence and Gun Ban

In the United States, federal law prohibits domestic violence offenders from purchasing, owning, or using guns. Domestic violence gun laws vary somewhat from state-to-state, some stricter and some less strict, but all states must accept the basic federal rules. The domestic violence offender gun ban requires one of two things:

  1. That the abuser has been convicted of a domestic violence felony/misdemeanor.
  2. That the victim has a restraining order against the abuser.

If you are a victim of domestic violence, please read ahead to understand how you can keep guns out of your abuser’s hands. Deadly weapons are frequently used to threaten and potentially injure victims in domestic violence cases (sometimes out of revenge for having contacted the authorities). Understanding the domestic violence gun laws may help protect you and your family from harassment and future violence.

Did the Abuser Commit a Domestic Violence Misdemeanor?

The domestic violence offender gun ban is a permanent ban (on purchasing, owning, or using a gun) if the abuser has been convicted of a domestic violence misdemeanor. But what is a domestic violence misdemeanor?

A domestic violence misdemeanor involves the use or attempted use of physical violence or force, or the threatened use of a deadly weapon, against a person who is in a close personal relationship with the abuser (for example, a spouse, parent, girlfriend or boyfriend). Basically, if the abuser was convicted of a crime for threatening or committing violence against a close relative or significant other, then it’s highly likely that this conviction would count as a domestic violence misdemeanor. If you know the state in which the abuser was convicted, you can also try contacting the district attorney’s office to confirm whether the abuser was involved in a domestic violence misdemeanor.

One of the benefits of a domestic violence misdemeanor gun ban is that the ban applies to abusers in law enforcement, the military, and government employment in which guns are issued. Because of this, domestic violence misdemeanor offenders who are in these positions may get fired — if they are banned from using a gun, then they cannot perform their duties. If you are a victim and you know that your abuser has been convicted of a domestic violence misdemeanor but is working in a job where a gun has been issued, please contact your local police. The abuser could still pose a danger to you and your family with a workplace-issued gun.

Did You Get a Restraining Order?

If you’ve gotten a final restraining order or an order of protection against the abuser, you may be able to prevent the abuser from purchasing, owning, or using a gun for as long as the order lasts. The restraining order has to meet certain requirements, however:

  • The abuser has to be close to you in some way – they should be a current or ex-spouse, the mother or father of your child, or have lived with you at some point.
  • The abuser should have been notified about the restraining order hearing so that they get a chance to attend.
  • The restraining order should specifically prohibit behavior that threatens or creates a fear of physical injury (and should identify the abuser as a threat to the victim’s or child’s physical safety).

Keep in mind that, unlike with domestic violence misdemeanors, the restraining order gun ban does not apply if your abuser is in law enforcement, the military, or government employment in which guns are issued as part of the official duties of the position. State laws vary, however, so please explore your available options with a qualified local attorney. To help you determine if the language of your particular restraining order qualifies for the gun ban, contact a local attorney or a helpline such as the National Center on Protection Orders.

What to Do if You Think the Abuser Has a Gun

Once you determine that you have a) a restraining order, or are sure that b) the abuser was convicted of a domestic violence misdemeanor or felony, contact local law enforcement and let them know the reason why you believe the gun ban applies. Law enforcement will then investigate the situation. The important thing is that you determine whether there’s a strong possibility of a gun ban in your case. The police can sort out the details. Contacting a domestic violence attorney or legal aid group is also a good option, whether for guidance on what to do legally or simply to receive counseling.

The domestic violence offender gun ban is a useful tool for protecting you and your family. The gun ban removes a potentially deadly weapon from the hands of your abuser and sends a clear message: you have the law and local law enforcement authorities on your side.

Free Initial Consultation with a Lawyer in Utah

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Can Your Bankruptcy Be Denied?

I’m often asked about bankruptcy denials because I’m a Bankruptcy Lawyer; and while there are certain debts that cannot be discharged in a personal bankruptcy case, or are very hard to discharge (such as student loan debt), there are a variety of circumstances under which a court can deny you your ENTIRE discharge. This means that you will still be liable on all of your debts, essentially leaving your bankruptcy ineffective.

Can Your Bankruptcy Be Denied

In addition, a discharge denial due to fraud still allows the trustee to administer non-exempt assets. This means that you could lose property to the trustee and still not receive debt relief. While such a finding is very serious, an open and honest debtor should have nothing to worry about. Normally the only way for a court to deny you a discharge is if you are either dishonest or you fail to follow court rules and requirements.

If the court finds you violated one of the following provisions, you will not receive a discharge of your Chapter 7 bankruptcy and all of your debts will remain in place, and you won’t begin working to rebuild your credit. Here are six ways to lose your bankruptcy discharge:

Attempt to Defraud in Bankruptcy

One common ground for denying a discharge is when the debtor — with intent to hinder, delay, or defraud a creditor — transfers, removes, destroys, mutilates, or conceals property within one year before the date of filing for bankruptcy or any time after the date of filing.

Although this sounds somewhat complicated, it is basically a rule that prohibits a debtor from giving away assets on the eve of bankruptcy. However, whether or not a court will find specific fraudulent “intent” necessary for a denial of discharge, is a highly fact-specific inquiry. As such, full disclosure to your bankruptcy attorney about all transfers or changes in property prior to or after the filing of bankruptcy is very important. If you are not completely honest, you run the risk that a court may deny you your discharge.

Concealing or Destroying Information in Bankruptcy

Your bankruptcy also can be denied if you conceal, destroy, falsify, mutilate, or fail to keep information regarding your financial condition. This would involve destroying records that could lead the trustee to property you haven’t disclosed or simply not being able to back up assertions about your finances contained in your bankruptcy schedules.

Lying in Your Bankruptcy Case

If you lie in connection with your case or make a false statement, your bankruptcy can be discharged. When you file for bankruptcy, you represent under penalty of perjury that everything contained in the filing is true and accurate. If it is later revealed that omissions were made, the trustee or a creditor can challenge your discharge. It is vitally important to be totally and completely truthful with your attorney and the court.

Loss of Assets in Bankruptcy

This is when you cannot satisfactorily explain a loss of assets or deficiency in assets. Be sure to note that under a Chapter 7 bankruptcy, most debtors keep their property — so your assets most likely will be protected.

Refusal to comply with the Trustee or a court order

This seems like a no-brainer, but if a debtor refuses to obey a lawful order of the court, they could be in trouble. And if your bankruptcy case is denied simply because you failed to comply with a simple court order, you’re going to keep getting those harassing creditor phone calls. Keep in mind that after a discharge, collectors who still call are violating federal law.

Failure to take instructional course

When you fail to complete an instructional course about personal financial management, you run the risk of getting your bankruptcy denied. Under U.S. Bankruptcy Code, two instructional courses must be taken. The first is a credit counseling requirement that must be fulfilled before you can begin your bankruptcy case. The second requirement is a financial management course that must be completed during your case and is a requirement for getting a discharge. Your attorney can advise you on the proper instructional course to take to meet this requirement, which could cost anywhere from $20 to $100, depending on where you file. Much cheaper than having your bankruptcy case denied and refiling all over again.

A Successful Bankruptcy Starts with Your Lawyer

While reading the possible ways a court may deny your discharge may worry you, you must remember that all of these grounds for denial can be avoided by your full, open, and honest communication with your attorney. Even if you think a court might find you in violation of one of the above acts, the law surrounding these provisions is highly litigated and fact-dependent. Only a qualified bankruptcy lawyer can tell you whether there is a possibility that you may be denied a discharge.

Free Consultation with Utah Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Paternity

As a Child Custody Lawyer, I’ve often asked about family law and paternity questions. The term “Paternity” refers to the legal establishment of who is the father of a child. While the identity of a child’s biological mother is usually by nature easy to establish, the father’s identity may in some cases be uncertain. Paternity issues often arise in cases involving child support, but they can also be important in relation to adoption, inheritance, custody and visitation, health care, and other issues.

Paternity

Paternity Actions in Utah Courts

An action to establish paternity is a civil proceeding. Most states require that paternity be established by a “preponderance of the evidence,” which means that it must be more likely than not that the man is the father of the child. Other states, like New York, apply a higher standard, requiring clear and convincing evidence of paternity. In reality, however, the different standards have little practical impact in light of recent developments in scientific testing.

DNA Testing and Utah Paternity

The advent of DNA profiling was a major breakthrough in paternity testing. In a DNA test, the scientist examines the genetic material that the child inherited from its biological parents. First the child’s genetic characteristics are compared to those of the mother. The characteristics in the child that are not found in the mother are determined to have come from the father. If the man being tested does not have these genetic characteristics in his DNA, he can be scientifically excluded. If the man does have such characteristics, the probability of his paternity is calculated. DNA testing can establish a father’s paternity with over ninety-nine percent accuracy. DNA testing can be done even before the child is born.

Establishing Paternity in Utah

DNA testing is generally done only when one party contests the paternity allegations. For instance, the putative (or “alleged”) father in a paternity action that is the basis for child support collection may require proof that he is the child’s father before he consents to payment of support. In other cases, the mother may contest the putative father’s paternity, such as when a man attempts to gain custody of or visitation with a child he believes to be his. In many other cases, there is no argument between the parents, and paternity can be established voluntarily. Paternity may also be established by circumstantial evidence, such as when a man takes the child into his home and holds the child out to the public as his own. A married man is presumed to be the father of a baby born to his wife during or shortly after their marriage.

Once paternity is established, the father may be ordered to pay child support for his child. A father who is not married to the child’s mother generally will not be awarded custody of the child if the mother is providing reasonable care, but he may receive preference over third parties, such as grandparents or prospective adoptive parents.

Paternity issues, like most family law issues, can have far-reaching implications, both financially and emotionally. When faced with these issues, it is important to seek the counsel of an objective, experienced lawyer.

Free Consultation with a Utah Paternity Lawyer

If you have a question about child custody question or need family law or paternity help, please call Ascent Law at (801) 676-5506. We will help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Unmarried Partners, Medical Directives and the Durable Power of Attorney for Finances

Unmarried Partners, Medical Directives and the Durable Power of Attorney for Finances

Unmarried couples, including many domestic partnerships, aren’t typically allowed to make emergency medical and financial decisions for each other. If you ever become seriously injured or are otherwise unable to make these decisions and you want to make sure your partner has a say, then you need to create at least two things:

  • A medical/healthcare directive (which consists of a health care declaration and a durable power of attorney), and
  • A durable power of attorney for finances.

If you do not create these documents to empower your partner, these decisions will largely be made by your biological relatives who may or may not respect the input of your partner.

Medical Directives Generally

Each state has its own laws governing the creation of medical directives, but all such directives allow you to name someone to direct your medical care if you become incapacitated. Medical directives are particularly important for unmarried couples because, although most states list biological family members and spouses as potential decision makers, they do not generally list unmarried partners. Even if a state does list unmarried partners as potential decision makers, they are given lower priority than married spouses and biological family members. Finally, even if your state does recognize unmarried partners, if you are injured in another state, that state may not recognize your partner’s rights.

Medical Directives The Healthcare Declaration

The first document you need to create to ensure that your medical wishes are honored is the healthcare declaration. This written document sets out how you should be cared for in an emergency or if you are otherwise incapacitated. Your healthcare declaration will set forth your wishes on topics such as resuscitation, desired quality of life and end of life treatments including treatments you don’t want to receive. This document is primarily between you and your doctor, and it advises them how to approach your treatment.

Medical Directives The Durable Power of Attorney for Healthcare

The durable power of attorney for healthcare is given to the person you want to make medical decisions for you in an emergency. Even though you set out your wishes in your healthcare declaration, such documents can never cover every circumstance, and the person who has a durable power of attorney for healthcare is the person who makes decisions not covered by your healthcare directive. Keep in mind that the person with a durable power of attorney for healthcare can never contradict the terms of your healthcare declaration.

Depending on your state, the person you grant a durable power of attorney for healthcare will typically be called your “agent,” “proxy,” or “attorney-in-fact”. The typical rights for this person include:

  • Providing medical decisions that aren’t covered in your healthcare declaration
  • Enforcing your healthcare wishes in court if necessary
  • Hiring and firing doctors and medical workers seeing to your treatment
  • Having access to medical records
  • Having visitation rights

Finally, note that in some states they combine the healthcare declaration and the durable power of attorney for healthcare into one document called an “advance health care directive”.

Durable Power of Attorney for Finances

The durable power of attorney for finances works similarly to the durable power of attorney for healthcare, in that it allows whomever you designate the ability to make decisions in that area. The person you appoint with a durable power of attorney for finances will have the ability to make financial decisions for you if you are incapacitated.

Just like in healthcare, if you want your partner to have a say, you have to put it in writing. Most states will only recognize biological relatives and married spouses. If you do not expressly grant your partner a durable power of attorney for finances, he or she will have no legal say in your financial matters.

It is also worth noting that there are two basic forms of durable power of attorney for finances, usually referred to as “springing” or “immediate”. A springing durable power of attorney for finances would become effective once you were incapacitated, but not before. A springing durable power of attorney for finances makes sense in many situations, but for unmarried couples it may not. If you make the durable power of attorney for finances immediate, then your partner can make financial decisions for you during your life just like a married spouse can.

Finally, here are some of the rights and responsibilities that whomever you grant a durable power of attorney for finances will have to make:

  • Paying your bills
  • Paying your taxes
  • Conducting your bank transactions
  • Managing and investing your money
  • Purchasing insurance for you
  • Buying, selling and managing any of your property
  • Operating your business

Collecting your government benefits and inheritance.

Free Initial Consultation with an LGBTQ+ Family Law Attorney

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Offer in Compromise or Bankruptcy?

Tax settlement firms love to advertise the offer in compromise, a method for resolving IRS back taxes that theoretically involves payment of a small portion of the outstanding tax bill owed and forgiveness of the rest. Tax settlement firms love to imply that the IRS will simply forgive the majority of your back taxes once they get involved. Oh, if only this were true! Although it’s not impossible to get an offer in compromise approved, there are some big hurdles for taxpayers in the quest for tax debt relief.

Offer in Compromise

Can an Offer in Compromise Help Me Avoid Bankruptcy?

Tax Masters was accused of fraud and deception for false advertising, in large part because the company claims to be able to settle tax debt for pennies on the dollar when in most cases this isn’t possible. Similarly, TV’s “Tax Lady”, Roni Deutch, found herself in hot water after misrepresenting the abilities of her law firm to hundreds of customers. Nevertheless, most promises of tax settlement, whether fraudulent or not, refer to offers in compromise. How likely is that your offer to the IRS will actually be approved? Unfortunately, the majority of offers in compromise are turned down. In most years, less than 20% of settlement offers are accepted by the IRS.

Eligibility for an Offer in Compromise

As a threshold matter, you’ll need to prove to the IRS that you’re eligible for an offer in compromise. In order to do this, you’ll have to demonstrate that there is serious doubt that your tax bill will EVER be paid. That’s right, the IRS only accepts offers in compromise when it’s become readily apparent that the taxpayer simply can’t pay the full balance owed. All assets must be disclosed to the IRS as part of the process, if you fail to disclose assets and the IRS later finds out about it, you risk revocation of a successful offer. The bottom line is this: if you have resources you’ll likely have to pay the full balance of your back taxes in installments (with late penalties and interest) or the government will levy your property by garnishing wages or repossessing a car. Think of it as a matter of public policy. If it were easy to escape a tax bill, people wouldn’t pay taxes and the IRS certainly doesn’t want to incentivize people to skip out on their “civic duty.” Death and taxes, death and taxes, remember?

Amount of a Utah Offer in Compromise

If you’re dead set on pursuing an offer in compromise, despite the rather long odds, it is important to be strategic about how much you offer. The amount of the offer must be equal to the present net value of your assets plus the present value of the total sum the IRS could collect under a monthly payment plan. To put it simply, the IRS will evaluate the value of your assets minus any debts that encumber the property as well as your income. If you owe $50,000 in back taxes but make $150,000 per year in annual salary and own a home with significant equity, your offer will be rejected unless it contemplates 100% payment. Taxpayers that have assets in excess of their tax debt will very likely have their offer to the IRS rejected.

Offer in Compromise or Bankruptcy?

Can an offer in compromise help you avoid bankruptcy? Well, yes, assuming you can get the offer approved and the primary debt problem you face is tax debt. Tax debt is only dischargeable in bankruptcy if it is at least three years old and the following conditions are met:

  1. The tax must have been due and owing for a period of more than 3 years (think April 15th of the following tax year, your 2006 taxes are due April 15th of 2007). The taxes that meet this rule would be taxes where the due date is more than three years before the bankruptcy case was filed;
  2. The tax return for the tax debt at issue must have been filed more than 2 years before the bankruptcy case was filed;
  3. The tax debtat issue has been assessed by the taxing authority for more than 240 days prior to the filing of the bankruptcy case (federal taxes are usually assessed within 6 weeks of the filing of the return, the States vary);
  4. The debtor, in filing the return must not have attempted to evade the paying of the tax nor can the return filed by the debtor be a willfully “fraudulent” return. The above is a brief summary of the rules or criteria that must be met before a personal income tax may be discharged in a bankruptcy case.

Assuming the above conditions are satisfied, your back taxes will be dischargeable in bankruptcy. However, if your returns haven’t been filed or the tax debt at issue is not yet three years old, a successful offer in compromise would help avoid bankruptcy and resolve your outstanding tax debts. However, as we’ve seen, the problem is getting the offer in compromise approved.

Free Consultation with a Utah Attorney

If you are here, you probably have an offer in compromise issue or a possible bankruptcy you need help with, call Ascent Law for your free tax law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506