Frequently Asked Questions
We have tried to address the frequently asked questions in the areas we practice. In every situation it is best to sit down and speak with an attorney so we can give you advice specific to your situation. If you have any questions feel free to request a consultation or contact us.
When a case is filed, the petition, schedules and other related documents become a matter of public record. Credit reporting agencies regularly collect information from bankruptcy cases to report on their credit reporting services. Bankruptcy may appear on your credit record for ten years from the date your case was filed, pursuant to the Fair Credit Reporting Act, 6 U.S.C. § 605, as opposed to the seven years other credit information may remain on a credit report.
For those with large or a high number of delinquent accounts, the credit score may already be so low that a bankruptcy may actually help. Because it wipes out old debts, bankruptcy may free up income so that a consumer can pay current bills and obtain new lines of credit after filing bankruptcy. The decision whether to grant you credit in the future is strictly up to the creditor and varies from creditor to creditor depending on the type of credit requested.
Debts discharged should only be listed as having a balance of $0, with no remaining balance owed on the debt. Debts incorrectly reported as having a balance owed will negatively affect the credit score and ability to get credit after the case is discharged. Everyone should regularly review his or her credit report, before and after bankruptcy, to resolve any disputes in debts reported with the various credit bureaus.
The three main credit Reporting Agencies are:
Experian
Profile Maintenance
P.O. Box 9558
Allen, TX 75013
(888) 397-3742
Website: www.experian.com
Trans Union
Attn: Public Records Department
555 West Adams Street
Chicago, IL 60661
(800) 888-4213
Website: www.transunion.com
Equifax
P.O. Box 740241
Atlanta, GA 30374
(800) 685-1111
Website: www.equifax.com
It may make it possible for you to:
- Eliminate the legal obligation to pay most or all of your debts. This is called a “discharge” of debts. It is designed to “reset” your credit, so to speak, in order to allow you and your family a fresh financial start.
- Allow you to catch up on missed payments on your home or manufactured home and to avoid foreclosure while you do so. Bankruptcy does not eliminate your mortgage or other lien on your property, though, unless you pay the debt owed.
- Prevent repossession of a car or other property, if you file a case in a timely manner.
- Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
- Restore or prevent termination of your utility services.
- Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.
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Chapter 7 — Liquidation Bankruptcy
Chapter 7 is the liquidation chapter of the Bankruptcy Code, and cases filed under Chapter 7 are commonly referred to as liquidation cases. This is what people commonly do when all their debt is gone when they complete the bankruptcy and they do not have to make payments. Chapter 7 requires a you to give up property which exceeds certain limits (“exemptions”) so the property can be sold or liquidated by the appointed Chapter 7 Trustee to pay creditors, and to keep property and avoid liquidation to pay unsecured creditors. In other words, “liquidation” is the sale of a debtor’s property for the purpose of distributing the sales proceeds to the debtor’s creditors. Potential debtors should realize that the filing of a petition under Chapter 7 may result in the loss of property.
Chapter 13 — Debt Repayment
Also known as a payment plan form of bankruptcy, Chapter 13 is the debt repayment chapter. In a Chapter 13 case, debtors may keep their property by repaying creditors over the life of a plan that may extend from 36 to 60 months. The length of the plan may be fixed by law, depending on the debtor’s income. When a debtor files Chapter 13, the debtor proposes to make monthly payments to a Chapter 13 Trustee, who in turn disburses funds to various creditors according to the Plan, once the Plan has been approved by the Court. Upon completion of the payment plan, most debts are discharged.
Chapters 9, 11, and 12
Other types of bankruptcy are set forth under Chapter 9, 11, and 12 and include:
Chapter 9 (“Municipal or Governmental Bankruptcy”) is only for municipalities and governmental units, such as schools, water districts and similar entities.
Chapter 11 (“Reorganization Bankruptcy”) this chapter generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. The plan of reorganization which must be approved by the Court. In addition to the filing fee, a quarterly fee is paid to the U.S. Trustee in all Chapter 11 cases.
Chapter 12 is designed for “family farmers” or “family fishermen” with “regular annual income.” It enables financially distressed family farmers and fishermen to propose and carry out a plan to repay all or part of their debts. Under chapter 12, debtors propose a repayment plan to make installments to creditors over three to five years. Generally, the plan must provide for payments over three years unless the court approves a longer period “for cause.” But unless the plan proposes to pay 100% of domestic support claims (i.e., child support and alimony) if any exist, it must be for five years and must include all of the debtor’s disposable income. In no case may a plan provide for payments over a period longer than five years.
- Wage garnishment: If a parent falls behind on child support payments, their wages may be garnished in order to pay off the arrears.
- Suspension of driver’s license: The state of Arkansas can suspend the driver’s license of a parent who fails to pay child support.
- Interception of tax refunds: The state can also intercept tax refunds in order to collect child support arrears.
- Contempt of court: A parent who repeatedly fails to make child support payments may be found in contempt of court and face fines or even jail time.
- Liens on property: The state can also place liens on the property of a parent who is behind on child support payments, which can make it difficult to sell or transfer ownership of the property.
- Document your concerns: Keep detailed records of any incidents that you believe put your child in danger, including dates, times, and a description of what happened.
- Speak to the other parent: If possible, speak to the other parent about your concerns and try to work together to find a solution. Be sure to remain calm and non-confrontational, and focus on finding a solution that will protect your child.
- Contact child protective services: If you believe that your child is in immediate danger, you should contact child protective services or your local law enforcement agency. They will investigate the situation and take steps to protect your child if necessary.
- Seek a modification of the custody agreement: If you believe that your child is in danger on an ongoing basis, you may need to seek a modification of the custody agreement. This may involve filing a motion with the court and providing evidence of the danger to your child. An experienced family law attorney can help guide you through this process.
- Follow the court’s orders: If the court orders a modification of the custody agreement, be sure to follow the court’s orders and cooperate with the other parent as much as possible. Failing to follow the court’s orders can result in legal consequences and may harm your ability to protect your child in the future.
- Communicate openly and honestly: It’s important for parents to communicate openly and honestly with each other about their concerns, needs, and expectations. Both parents should be willing to listen to each other and be open to finding a solution that works for everyone.
- Focus on the child’s best interests: When making decisions about custody, both parents should keep the child’s best interests at the forefront of their minds. This means putting aside any personal conflicts or disagreements and focusing on what is best for the child.
- Consider all options: There are many different custody arrangements to choose from, including joint custody, sole custody, and bird’s nest custody. Both parents should be open to considering all options and be willing to compromise to find a solution that works for everyone.
- Seek professional help if needed: If parents are struggling to come to an agreement on their own, it may be helpful to seek the assistance of a professional mediator or family law attorney. These professionals can help guide the parents through the process and find a solution that works for everyone.
- Be willing to revisit the agreement over time: As circumstances change, it may be necessary to modify the custody agreement. Both parents should be willing to revisit the agreement over time and make any necessary changes to ensure that it continues to meet the child’s best interests.
- Physical custody: Physical custody refers to where the child lives on a day-to-day basis. In some cases, one parent may have primary physical custody while the other parent has visitation rights. In other cases, the parents may share joint physical custody, meaning the child spends a roughly equal amount of time with each parent.
- Legal custody: Legal custody refers to the right to make major decisions on behalf of the child, such as decisions about education, healthcare, and religious upbringing. In some cases, both parents may share joint legal custody, while in other cases, one parent may have sole legal custody.
- Sole custody: Sole custody means that one parent has both physical and legal custody of the child, and the other parent has no custody rights. This is relatively rare, and is typically only awarded if the other parent is deemed unfit or a danger to the child.
- Joint custody: Joint custody refers to any arrangement in which both parents share some form of custody. This can include joint physical custody, joint legal custody, or both. Joint custody can be beneficial for children as it allows them to maintain a close relationship with both parents, but it can also be challenging to coordinate and may not work for all families.
- The child’s wishes
- The relationship between the child and each parent
- The mental and physical health of each parent
- The ability of each parent to provide for the child’s basic needs
- The child’s adjustment to his or her home, school, and community
- The presence of any domestic violence or other forms of abuse
- The length of the marriage
- The age and health of each spouse
- The income and earning potential of each spouse
- The contribution of each spouse to the marital estate
- The needs of any children involved
- The tax consequences of the property division
- The length of the marriage
- The financial resources and earning capacity of each spouse
- The contributions of each spouse to the marriage, including both economic and non-economic contributions
- The age and health of each spouse
- The standard of living established during the marriage
- The education and training of each spouse
- The child’s wishes
- The relationship between the child and each parent
- The mental and physical health of each parent
- The ability of each parent to provide for the child’s basic needs
- The child’s adjustment to his or her home, school, and community
- The presence of any domestic violence or other forms of abuse
- The length of the marriage
- The age and health of each spouse
- The income and earning potential of each spouse
- The contribution of each spouse to the marital estate
- The needs of any children involved
- The tax consequences of the property division
- One or both parties were underage at the time of the marriage and did not have the consent of their parents or legal guardians.
- One or both parties lacked the mental capacity to consent to the marriage.
- The marriage was entered into under duress, fraud, or coercion.
- One or both parties were already married to someone else at the time of the marriage.
- The parties are closely related by blood.
Your estate is everything that you own, no matter the location, including:
- Your home or any other real estate belonging to you
- Your business
- Your bank accounts, including your share of any joint accounts
- The full value of your retirement accounts
- Any life insurance policies belonging to you
- Any property owned by a trust and over which you exercise a significant control
Your taxable estate consists of the total value of the assets you own, minus liabilities and deductions.
Your assets include:
- Your home or any other real estate belonging to you
- Your business or any business interests
- Your bank accounts, including your share of any joint accounts
- The full value of your retirement accounts
- Any life insurance policies belonging to you
And examples of the liabilities and deductions you would subtract from your assets are:
- Funeral expenses paid for by the estate
- Debts you owe at the time of death
- Bequests to charitable organizations
- The value of the assets inherited by your spouse (as long as he or she is a U.S. citizen)
Any taxes assessed on the taxable part of the estate are paid from the estate itself before the assets are distributed to your beneficiaries.
- A personal injury case has a limit of three years, usually starting from the day it occurred.
- A property damage case has a limit of three years from the date of the incident, such as a car accident.
- A contract dispute may have a limit from three to five years from the date a breach of contract occurred.
- A personal injury case has a limit of three years, usually starting from the day it occurred.
- A property damage case has a limit of three years from the date of the incident, such as a car accident.
- A contract dispute may have a limit from three to five years from the date a breach of contract occurred.
There are three main reasons to avoid probate: 1) Cost, 2) Privacy, and 3) the length of time probate takes.
Costly
Probate is not cheap or quick. Probate requires a hearing in busy Arkansas courts; the process will tie up your property for a minimum of 6 months and possibly years. This means your loved ones will not get the property you intended for them until the probate process is complete.
In addition, probate is very expensive. The Executor and attorney’s fees add up. If they were both allowed the maximum fees by Arkansas statute on a $500,000 estate the probate attorney fees would be $14,050 and the Executor’s fees would be $15,150 and that does not include court costs and other expenses. And unfortunately, you’re no longer around to do anything about it.
Not the Kind of Publicity You Want
The courts are public and do not afford privacy. Everything that comes before a judge is public record and the same is true with your estate. A Will is a very personal document, and may reveal private family and financial issues and concerns. After it enters probate it becomes public and can be inspected by anyone.
A living trust, also known as a Revocable Living Trust or a Family Trust is a legal document that holds legal title or ownership to your property and assets. When you create a Revocable Living Trust you transfer ownership of your assets to your trust. When you transfer assets into the trust it is called “funding” the trust. When you transfer title you do not lose any control. You can still buy, sell, borrow or transfer any of your property.
To many a living trust is very similar to a will. It includes the details and instructions for how you want your estate to be handled at your death. Unlike a Will, however, a properly funded trust:
- Does not go through probate.
- Prevents the courts from controlling your assets at incapacity.
- Gives you control over the assets you leave to your minor children or grandchildren.
A properly drafted and funded revocable living trust offers a number of estate planning advantages over dispositions under the terms of a Will.
Management of Assets in Event of the Grantor’s Incapacity: The trust can provide for management of the trust assets by a person you can select if the grantor becomes incapacitated through physical disability, incompetency, etc. Third parties frequently question the authority of an agent when they are attempting to use a power of attorney, so the revocable living trust is generally superior to that instrument.
Continued Property Management after Death: The trust provides management of the trust assets both before and after the grantor’s death. If the trust is funded properly, then it controls without interruption for probate and estate administration.
Avoidance/Reduction of Probate and Estate Administration Costs and Delays: The trust insulates the trust assets from the probate and estate administration process that assets passing under a Will are subject to, thereby saving those fees and costs. Moreover, it reduces if not eliminates the delays in distribution of estate assets that may result from probate. This could be particularly helpful if the grantor owns real estate in other states, which may otherwise require a separate probate proceeding in each state.
Avoidance/Reduction of Litigation: It is more difficult for a unhappy heir to contest a revocable living trust than a Will. During the probate of a Will, the heirs must be given written notice of their opportunity to contest the Will. A trust is not subject to this requirement.
Confidentiality of Dispositions and Identity of Beneficiaries: Upon your death, the Will is filed in the probate court and become available to the public and more and more is posted online through the court website. A living trust agreement is typically not filed in court system and does not become public record.
Selecting Law Most Favorable to Property Disposition and Administration: The trust may enable the grantor to avoid restrictions on disposition and administration of his property imposed by the law of the state of his domicile. These laws would apply to property passing under his Will. A living trust allows him to choose more favorable laws of another state to apply to the disposition and administration of the property placed in the trust.
To Act as a Receptacle for Non-Probate Assets: The trust can act as a receptacle for non-probate assets (life insurance proceeds, retirement plan death benefits, etc.) after death to coordinate their disposition under the plan along with the other assets you own.
- Documentation: Collect any documentation that supports your claim, such as emails, performance evaluations, or written warnings. This can help demonstrate that your termination was unjustified and not based on your job performance.
- Witnesses: If there were any witnesses to the events leading up to your termination, ask them if they would be willing to provide a statement or testify on your behalf.
- Circumstantial evidence: Circumstantial evidence such as the timing of your termination, any recent complaints or protected activities you engaged in, and the reasons given for your termination can be used to support your claim.
- Employment contract: If you have an employment contract or an employee handbook that outlines your rights and protections, it can be used to demonstrate that your termination was in violation of the terms of your contract or handbook.
- Expert testimony: Expert testimony from professionals in your field can be used to show that your termination was unjustified and not based on your job performance.
- Lost wages: This includes any wages or benefits that the employee lost as a result of their termination, such as unpaid wages, commissions, bonuses, and benefits.
- Front pay: If the employee cannot be reinstated to their former position, they may be entitled to receive front pay, which is compensation for the wages and benefits they would have received if they had not been wrongfully terminated.
- Emotional distress: An employee may be entitled to recover damages for emotional distress caused by the wrongful termination, such as anxiety, depression, or loss of enjoyment of life.
- Punitive damages: In cases where the employer’s conduct was particularly egregious or malicious, a court may award punitive damages, which are intended to punish the employer and deter similar conduct in the future.
- Attorneys’ fees and costs: An employee who prevails in a wrongful termination lawsuit may be entitled to recover their attorneys’ fees and costs associated with the lawsuit.
Busy now? Schedule a talk for later. Feeling chatty? Call Andi.