Many disputed estate cases involve differences between stepparents and stepchildren.
Whether the case involves a will, trust, or other end-of-life matters, the interests and motives of stepparents and stepchildren may be very different.
So, who is right? Unfortunately, the typical legal response applies: “It depends.”

IS THERE A WILL?

Mom or Dad may have a will that left assets to their spouse, children, or both. However, if the parent was under duress or lacked capacity (dementia, for example) the Will may not be valid and it could be challenged.

If the parent and recent spouse held assets in joint tenancy, these assets will belong to the spouse.
If there no Will, the spouse may receive a share that includes much of the estate. How property is titled may also provide the spouse with a life estate or the right to live in the marital home until death before it is transferred to the children.

PREPARE EARLY

Obviously, probate issues can be complicated. They can also be simple.
In either case, consulting an attorney early in the process may resolve problems, avoid the expense of extended legal fighting and prevent accidental or intentional illegal activity.

A probate attorney can help you determine your rights, the value of the estate and help you make an informed decision. The attorney can help evaluate the size of the estate, the cost of probate (or an alternative) and help you determine what, if any, legal action should be taken.

For small estates, there may be an alternative that will make financial sense. On the other hand, if legal action is necessary to protect your interest, it is better to know your rights as soon as possible and to be well informed.

We know probate law and we can assist your family. If you would like to speak with someone about your specific facts, please give us a call. We can help. If you need help, just text or call for a free consultation

The “Means Test” what does it all mean? The bankruptcy means test is used decide to see who is eligible for a Chapter 7 bankruptcy. People often are worried about the means test, but it is not as bad as it seems. If you make less than the median income for the state, here is a link to the numbers, then you do not have to take the means test. If you make more than the median income for your state, then you need to take the take the means test. If you take, you can still “pass” it and file Chapter 7 bankruptcy.
Before we go into the means test: filing Chapter 13 bankruptcy does not necessarily mean you will pay more than filing Chapter 7. You can reduce your interest rates on cars or cramdown the value in a Chapter 13, more on that here.

What is the means test?

The means test looks at your income (what you made the 6 months before you file – so if you file April 20, 2019, then it is the income you made from October 1, 2018 through March 31, 2019), your expenses, and your debts.

You calculate your gross income using for 122A-1. Click here to download a copy. (You do not have to include any income from social security). If you are above median you have to fill out 122A-2, if you are below median you do not have to fill out 122-A-2 and you can file Chapter 7.

If you are above median, then you will have to fill out 122A-2. When filling it out it takes into consideration the size of your household. The bigger your household the larger your deductions will be for housing, food, etc. You can deduct health care cost, if you are older than 65, then you can deduct more for healthcare expenses. Next you can deduct housing costs the cost for owning and operating your vehicles. You can also subtract out payroll deductions and other deductions. Once you get to the end, you will have to crunch the numbers and see if you pass.

Crunching the Numbers

If your income is less than the state median, the means test is relatively straightforward. For those with higher incomes, however, the means test is quite complex. Not only will you have to do pages of calculations, but you’ll have to find the correct income and expense figures for your area and household size. To find the figures, you’ll start by going to the U.S. Court’s means testing page. In the box entitled “Data Required for Completing the 122A Forms and the 122C Forms,” select the most recent time period and click “Go.” It will take you to a page with links to your state’s median income, as well as the state and national standards for food, housing, and other expenses. For example, to find a state-by-state median income chart, click on “Median Family Income Based on State/Territory and Family Size.”

Best of luck. If you need help, feel free to set up a free consultation with a bankruptcy lawyer in North Little Rock.

At the end of your bankruptcy, you get a discharge – a court order that relieves you from your obligation to pay your debts. You get a discharge at the end of your Chapter 7 or Chapter 13 bankruptcy only after completing all of the requirements for your case. The benefit of a discharge is that your creditor can never take action to collect that debt again. No more calls, letters, or lawsuits over discharged debts.

What debts get discharged?

After completing the Chapter 7 or Chapter 13 bankruptcy, most of the unsecured debts that remain unpaid will get discharged. Debts that are likely to be discharged in bankruptcy include credit card debts, medical bills, lawsuit judgments, personal loans, obligations under a lease or other contract, and other unsecured debts.
There are some types of debt. However, that cannot be discharged in either type of bankruptcy. These can include domestic support debts (child support or alimony), fines and penalties from criminal activity, most student loans, and debts not included on your bankruptcy. Is some situations you can discharge tax debts and student loans, but it requires filing a separate lawsuit inside of the bankruptcy case.

When do debts get discharged?

Discharge for a Chapter 7 bankruptcy usually occurs about 4 months after filing for bankruptcy. In a Chapter 13 bankruptcy, the remaining debt not paid in the course of your bankruptcy will be discharged after all of your plan payments have been made and you have completed all other requirements. If you don’t take the required second bankruptcy course, the bankruptcy court could deny your bankruptcy discharge.

The End of a “No Asset” Chapter 7 Case

In most Chapter 7 cases, all of the debtor’s assets are exempt, which means nothing will be paid to the trustee and the trustee will not take any property to pay creditors. This is a no-asset Chapter 7. It what everyone wants, you do not have to pay anything or lose anything. To learn more about which assets are exempt, see Link to exemptions blog
In a no asset bankruptcy case, the trustee files a report after the creditor meeting (link to creditor meeting) stating there are no assets, then the court enters the discharge order. Then, in most cases, the court enters an order closing the case. At this point, the case is no longer active.

The End of an “Asset” Chapter 7 Case

In some cases, the debtor will have non-exempt assets that the trustee will have to manage and sell. The process of gathering and selling assets can take months or years. The trustee may have to file lawsuits against creditors or others, or sell assets like real estate, vehicles or businesses.

Creditors in an asset case will get notice and file claims in the bankruptcy case. The trustee will file objections with the court to any claim that is deficient or improper and the court will hold hearings on the objections. When the claims are resolved, the trustee then mails checks to those creditors whose claims have been allowed by the court. That process may also take months or years.

When the non-exempt the assets have been gathered and liquidated (sold for cash), all the claims have been filed and resolved, and funds have been distributed, the trustee will file a report with the court. Only then will the court close the case.

What about debt with cosigners?

While your liability for debt is removed upon bankruptcy discharge, the cosigner is on the hook for the entire balance of the debt. Your bankruptcy protection does not extend to your joint applicants or cosigners. Creditors are still allowed to collect from (or even sue) the cosigner for the debt. However, you can voluntarily make payments on the debt to ensure that it’s paid in full, especially if you received the benefit from the debt.

What should I do after I get my discharge?

Check your credit report. Get them only in writing from annualcreditreport.com and use the mail in form available at that site to obtain the credit reports from all three credit reporting agencies (Equifax, Experian and Trans Union). The form to get all 3 credit reports is located here. Attach a copy of your driver’s license and utility or other bill that ties you to the address you want the credit reports mailed to and so you can show that you are who you say you are. This is the absolute best way to get your free credit reports when you want to dispute erroneous information and it avoids many problems.

You may think it easier to get them from the bureaus, but DO NOT get the credit reports directly from the credit reporting agencies (Equifax, Experian and Trans Union) or you may lose important rights due to binding arbitration agreements. If they have incorrect information on your credit report you can sue and get paid, but not if you click something on their website and agree to binding arbitration.

If there is anything incorrect on your credit report, bring it to us and we can help you fix it. Click now to contact a bankruptcy lawyer in North Little Rock.

If you’re falling behind on debt payments, two of the options you can explore are bankruptcy and debt consolidation. So how will you know which is right for your situation?

First, some definitions:
• Bankruptcy: The legal process of eliminating or reducing the amount of debt owed under the United States Bankruptcy code.
• Debt Settlement: Debt settlement is the process of paying off debt after negotiating with a creditor for less than what is owed. Usually only unsecured debt, such as credit cards and medical bills, is eligible for settlement. This can be done with the assistance of a debt settlement company or, in some cases, an individual may choose to do this on their own.
• Debt consolidation: Taking out a one big loan and paying off smaller loans – usually this means a better interest rate and smaller monthly payment. A third party simplifies the repayment process and reduces the monthly payments and interest rates.

Before comparing the three and deciding which is right for your situation, let’s take a closer look at each of the options

Debt Settlement:

While debt settlement can be good option for people with too much debt and not enough income, there are some very important things you need to know about settlement before taking the plunge.
There are no guarantees that you’ll be able to settle all of your debt. Although debt settlement is a large industry and has negotiated many settlements with many creditors, there is no guarantee it will work.
Debt settlement won’t prevent debt collection activities. As you become delinquent with your creditors, they may continue to attempt to collect their debt, including the possibility of them suing you for the unpaid debts.
You must follow through on your agreement. If something happens and you are forced to miss payments, you could lose the offered settlement amount and be responsible for the remainder of the entire balance.
You will face tax implications on the forgiven debt. You will get a 1099 from the creditors in the amount of the debt that they have forgiven. You will have to pay taxes on that forgiven debt. Seek the advice of a tax advisor to understand if you would be impacted.
And watch out – there are also fees associated with debt settlement and it can have a significant impact on your credit score.

Debt consolidation:

Consolidation of debt involves lumping multiple debts into one single payment. You must take out a new loan to pay off the existing loans that you already have. The idea is that if you have a handful of credit cards, it will be easier to make one payment than to make multiple payments. The hope for debt consolidation is that the new loan will have a lower interest rate than the existing debts.

Bankruptcy – Chapter 7 or 13

Bankruptcy is a legal remedy for individuals (or businesses) who cannot pay their debts. Bankruptcy may be able to eliminate debts all together, as compared to debt consolidation which retains the same amount of total debt for an individual. The truth is debt consolidation loans and debt settlement companies don’t help you get rid of massive amounts of debt. In fact, you could end up paying more and staying in debt longer because of so-called consolidation. Here are some of the most important facts about debt consolidation:
• Debt consolidation is a refinanced loan with extended repayment terms.
• Extended repayment terms mean you’ll be in debt longer.
• A lower interest rate isn’t always a guarantee when you consolidate.
• Debt consolidation doesn’t mean debt elimination.

A Real Life Example of Debt Settlement

It’s common for debt settlement companies to take their fees after a settlement is agreed upon. They may take their entire fee after the consumer accepts the settlement offer or they may take their fee over a series of payments. The amount you’re charged for a debt settlement plan will vary depending on the agency and the size of your debts. Right now, there are two popular fee structures for debt settlement:
1. Pay a percentage of your total debt (usually between 20-30 percent) – Example: you owe $20,000 and the settlement company charges 25 percent. You would pay them $5,000.
2. Pay a percentage of the amount that you save (highly variable) – Example: you settle a $20,000 debt at 50 percent ($10,000) and then owe the debt settlement company $2,000 (in this case, 20 percent of the $10,000 you saved). On top of this, companies may charge an additional monthly fee to be in their program.

The Cost of Debt Settlement:

So, you settle your debt for $10,000 plus $2000 fee, plus the taxes $2,500 (25% of the 10,000 you saved). The cost of debt settlement on a $20,000 debt can be $14,500.
A Real Life Example of Debt Consolidation
Let’s say you have $20,000 in unsecured debt. The debt includes a five-year loan for $10,000 at 12% ($13,347), and a four-year loan for $10,000 at 10%. ($12,174) Your monthly payment on the first loan is $223, and the payment on the second is $254. That’s a total payment of $447 per month.
You consult a company that promises to lower your payment to $322 per month and your interest rate to 9% by negotiating with your creditors and rolling the two loans together into one. Sounds great, doesn’t it? Who wouldn’t want to pay less money per month in payments?
But here’s the downside: It will now take you longer to pay off the loan, and you’ll end up paying about 28% more to pay off the new loan ($27,030). So does this sound like something that would be beneficial for you? Not exactly.

So What Could Bankruptcy Do for Me?

If you have $20,000 in unsecured debt, the amount you pay back is dependent upon how much property you own and how much income you have. In many cases, you will not have to repay any money back to your creditors. If you do have a significant amount of property or are making more than the IRS determination of median income, you may have to pay a portion of the debt back, but it would certainly not be more than the amount owed at the time bankruptcy is filed.
What are some other considerations of debt consolidation and bankruptcy?

Issue:

Taxes: Debt Consolidation-If some of your debt is forgiven by lenders, the IRS treats the forgiven debt the same way it treats your weekly paycheck: it’s income.
Bankruptcy-If debt is discharged during bankruptcy, it is not taxed as income.

Creditor Harassment: Debt Consolidation-Nothing is in place to stop creditors from continuing to contact you, even if you are making payments through the debt consolidation agency.
Bankruptcy-From the moment you file bankruptcy, it becomes illegal for a creditor who has notice of the bankruptcy to contact you, meaning the unwanted calls will stop.

Total cost: Debt Consolidation-The total cost for debt consolidation can be 15% – 35% of what you owe. Then, any amounts forgiven can be taxed by the IRS at your income tax rate.
Bankruptcy-Bankruptcy filing fees are around $335, plus attorney fees starting at $650.

Time: Debt Consolidation-The repayment time frame can range from between three to five years.
Bankruptcy-The bankruptcy process can last around 3 months.

If you’re considering bankruptcy or debt consolidation, give us a call and we can help you decide what is best for your individual situation. Contact a bankruptcy lawyer in North Little Rock today!

Unsecured Debts

Debts that are unsecured (e.g. credit cards, medical bills, etc.) are those which are not secured (secured means if you do not pay, the can repo or foreclose, e.g cars, house, etc.) anything you own. The creditor does not have a right to repossess anything if you don’t pay the debt. In general, it’s easier to deal with unsecured debt than secured ones in bankruptcy.

Unsecured Debts Turning into Secured Ones

Unsecured debts can turn into secured ones if you don’t pay them. A credit card holder or medical provider can sue you for the balance owed, get a judgment against you, and usually can record that judgment as a lien against your home and other possessions. If you don’t pay your federal income taxes, the IRS can record a tax lien against your real estate and personal property without suing you.

Under some circumstances, bankruptcy can turn an unsecured debt that had been turned into a secured one by the creditor back into an unsecured one. But not always. For example, an older income tax debt that could have been completely “discharged”—written off without paying anything—may have to be paid in full once a tax lien was recorded on it. So, in general it’s better to file a bankruptcy case before creditors can turn unsecured debts into secured ones.

Secured Debts Turning into Unsecured Ones

When a secured creditor repossesses or forecloses on something you own and sells it and credits the sale proceeds against your balance, any remaining debt is now unsecured. Many times, when a creditor asks you to voluntarily surrender your car, they do not tell you that they will sell it at auction and come after you for any remaining amount due. It is not uncommon for someone to voluntarily surrender a car and then get a bill for $5,000 to $15,000 after it is sold.

“Priority” versus “General Unsecured” Debts

There are two broad kinds of unsecured debts.
Priority debts are those that the law treats as special because of different policy reasons for treating that particular kind of debt more favorably. For example, unpaid child support and income taxes are priority debts. Congress has determined that bankruptcy should not be able to discharge child support or hinder its collection because of the high value Congress places on the payment of child support. And income taxes are considered a social obligation that we should not be able to avoid easily. And yet income taxes can be discharged if they are old enough and meet some other conditions.

General unsecured debts are simply unsecured debts that do not fit into any of the “priority” debt categories. General unsecured debts include most unsecured ones, such as medical and credit card debts, retail accounts, personal loans, many payday and internet loans, unpaid utilities and other bills, claims against you arising out of vehicle accidents other injuries, and out of contractual and business disputes, overdrawn checking accounts, bounced checks, the remaining debt after a vehicle repossession or real estate foreclosure, many kinds of debts from operating a business, and on and on.

Chapter 7 vs. Chapter 13

If most of your debts are classified as general unsecured debts, and are not “priority” ones, you’d lean towards filing a Chapter 7 bankruptcy case. That’s because it usually discharges (writes off) those debts quickly – let’s say 3 or 4 months – and almost always without you needing to pay anything on those debts.
In contrast, in a Chapter 13 case you would usually have to pay some portion of your “general unsecured” debts (although in some situations you may not pay anything). Also, the discharge of the remaining unpaid portion would not happen until the end of the 3-to-5-year payment plan.

To learn more, click here to contact a bankruptcy lawyer in North Little Rock today!

Sen. Dick Durbin has proposed a new bill that has an escape clause for people with student loans that are forced to carry the debt to their graves.

44,000,00 Americans owe on student loans. The amount owed is more than $1.5 trillion. The only kind of dent that exceeds this figure is  credit card debt. The act is supported by Sens. Tammy Duckworth, D-Ill. and Elizabeth Warren, D-Mass., and U.S. Reps. Jerrold Nadler, D-N.Y., and John Katko, R-N.Y.

The Student Borrower Bankruptcy Relief Act of 2019 was introduced last month would remove a section of bankruptcy law that makes student loans nondischargeable unless the you can show the loans present an “undue hardship.” If the act is passed, it would allow the loans to be treated like other forms of consumer debt. Senator Durbin stated, “We’ve created a standard for discharge that is so high that in a recent survey across the United States, they could only find four cases despite the millions of people who have student debt . . . that were discharged in bankruptcy.” “People literally carry this debt to the grave. We have millions . . . of Americans under the age of 50 who are still paying off student loan debt and many who have reached retirement age who are still facing these debts that are not discharged. I think it’s time for that to come to an end,” Durbin said. We all know that people who took out student loans intended on paying it back. But with the rise of tuition and interest rates on student loans, that has become next to impossible. The Senator hopes the is one that crosses party boundaries and the vast majority of the debt is owed to the federal government. The senator said he’s going to ask the judiciary chairman for a hearing on the bill because “it’s time to come to grips with this reality.” If he’s able to get the hearing, and then get the bill to the floor of the Senate, then Durbin believes there’s a chance to pass it.

Congratulations to all those who passed the February 2019 Arkansas Bar Exam!

Here are the results: 2019FebruaryBarExamResults

Enjoy scrambling around to find a judge to swear you in on Tuesday.  Let the fun begin!

But seriously—we are pleased to have you all as colleagues. Do well.

Looking for some extra reading? After You Get Your Bar Exam Scores

 

Hey fellow Arkansans,

Looking for Wilson & Haubert law firm? Yes, you found us! We have simplified our name from Wilson & Haubert to  wh Law. We want our name to promote our goal: We Help.

Now, when you see our name, it may be in a combined fashion, the company name “wh Law” along with the company tagline “We Help”

“wh Law | We Help.”

Why did we change our name? Well, we aren’t your average law firm, so we don’t want an average law firm name (no one wants to type out Wilson & Haubert, PLLC, anyway). We got into this business to help people, and we think people should know what we do, not who we are. Ultimately, our name is not as important as the help we provide our fellow Arkansans here in Central Arkansas.

So, if you are looking for Wilson and Haubert, it is still us. We are here, we will be here for a long time to come, and we will help.

Many people gift property to others to qualify for Medicaid only to find out that they’re still not qualified. Usually this situation is caused by Uncompensated Transfers.  These transfers trigger “penalty periods.” So, what is an Uncompensated Transfer? How do such transfers incur a penalty? What is the Transfer Penalty and how does it work? Here are some useful definitions.

Uncompensated Transfer:  This is the transfer of assets (cash, cars, real estate etc.) where less than equal value was received for the exchange.  That means you gave something to someone without getting paid the full value of the thing you gave away. For example, you gave your ’67 Mustang to your son for $10.  If you gave away anything valuable and didn’t get equal value back in exchange, that is an Uncompensated Transfer.

Look Back Period:  There is a time limit on looking at Uncompensated Transfers.  The state may only look back in time for a period of 60 months.  If the Uncompensated Transfer occurred more than 60 months prior to an application for Medicaid, then the transfer is not a penalizing transfer.  If the Uncompensated Transfer occurred within 60 months of applying for Medicaid, then the transfer gets you a Penalty Period.

Penalty Period:  This is the time period where the Medicaid applicant is disqualified from Medicaid because of the Uncompensated Transfer.  In other words, the applicant is otherwise qualified for Medicaid, but because of the Uncompensated Transfer, they are disqualified for a period of time.

Penalty Divisor:  This is a number set by the state which is used to determine the Penalty Period.  It is based upon the current average semi-private bed rate for nursing homes in your state.  It is adjusted once a year in order to stay accurate. In Arkansas as of the date of this article, the Penalty Divisor is $5,493.  

Calculating the Penalty Period:  The Penalty Period in Arkansas is determined by the following formula:

Amount of transfer (divided by) Penalty Divisor = Penalty Period.

Example:  If a person made Uncompensated Transfers totaling $100,000 during the 5 years prior to applying for Medicaid, those Uncompensated Transfers would result in a Penalty Period of 18.2 months

$100,000 (divided by $5,493) = 18.2 month Penalty Period.

Penalty Period Start Date:  The Penalty Period incurred for Uncompensated Transfers does not begin to run until:

1, The applicant is institutionalized (in a nursing home)

  1. An application has been submitted
  2. The applicant is Resource Eligible:  meaning the applicant had less than $2,000 in resources on the 1st day of the month when the application was submitted.  
  3. The applicant was Income Eligible:  meaning the applicant’s income was less then the state published Income Cap or a Miller Trust was in place on the 1st day of the month in which the application was submitted.  The Income Cap in Arkansas as of the date of this article is $2,250 per month.  Otherwise the applicant does not qualify for Medicaid or the start of the Penalty Period.

What is a Miller Trust?

There are a lot of rules to navigate when it comes to Medicaid qualification.  We know those rules and we can assist your family in the preservation of family wealth.  Give us a call if you have questions.

If your wages are currently being garnished, or if you are in danger of having them garnished, the attorneys at wh Law | We Help can stop the process.  We have a bankruptcy lawyer in North Little Rock who will use the bankruptcy code to prevent your wages from being taken from you, once and for all.

A little known feature of the bankruptcy code, known as the “automatic stay,” can prevent your creditors from collecting any debt you owe, in addition to stopping your wages from being garnished.  The automatic stay goes into effect as soon as you file for bankruptcy.  It is a court order which stops all collection efforts against you.  Wage garnishment is a collection on a previous judgment against you, and so your creditors must stop the garnishment.  Creditors can ask the court to get rid of the stay, but it is incredibly rare for bankruptcy courts to do this.

Wage garnishment typically happens when a creditor has sued you and gotten a judgment against you for a debt you owed.  Next, the creditor has to get a second court order allowing for a wage garnishment.  Finally, the sheriff usually has to serve the garnishment order on your employer, who then withholds part of your check for your creditor.

There are a few exceptions to the automatic stay, in which case the garnishment would continue.  The most notable, and most common, is garnishments for child support.  Because of the government’s interest in making sure children are supported, wage garnishments for child support continue, even when the automatic stay is in place.

As soon as you file for bankruptcy, you must provide a list of your creditors to the court.  The court will then send notice of your bankruptcy petition to your creditors, who must then stop all their collection efforts against you.  You can speed up this process by delivering a copy of your bankruptcy filing directly to your creditors.

Most of the time, when your bankruptcy case ends, the court will discharge your debts.  This means you’re no longer responsible for the discharged debts.  What this means, is that your creditors won’t be able to go back to garnishing your wages.

There is something you can do.  If you’re having trouble paying your bills or making ends meet because of a wage garnishment, we can help.  The first step to getting your creditors off your back, and stopping your wages from getting garnished, is giving us a call.  If you need help you can text or call.

wh Law, is a debt relief agency. We help people file for bankruptcy protection under the U.S. Bankruptcy Code.

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