Declaring Bankruptcy

Based in Hattiesburg, MS, Paul Caston practices law as a bankruptcy and debt relief attorney. Since 2010, he has owned his own firm in Hattiesburg that also serves the entire region of South Mississippi, offering help to people affected by job loss, divorce, illness, and other debt-inflicting circumstances. Attorney Paul Caston can help clients determine whether they should file for bankruptcy, an option that, due to the federal bankruptcy law, can often benefit a person facing financial stresses. How can declaring bankruptcy help?

Bankruptcy can give a new start to a qualifying debtor. Among other benefits, by declaring bankruptcy a person can obtain relief from severe debt or threat of property loss, and prevent collectors from making harassing calls. Two different types of bankruptcy most frequently employed are Chapter 7 and Chapter 13 bankruptcy. In Chapter 7, the debtor’s non-exempt property is liquidated to generate cash to pay off the debt; however, in most cases all property of the debtor is exempt and the debtor retains all property. Chapter 13 bankruptcy, on the other hand, creates a payment plan for some or all of the debt, allowing the debtor to repay it over a course of three to five years. The person is then able to keep his or her property and get caught up on payments.

In both cases, people typically are able to retain property. An experienced attorney should be consulted before making any decisions, and a consultation should be scheduled to determine qualifications and fee schedules. For more information, visit www.paulcastonlaw.com.

Two Different Kinds of Bankruptcy

Paul Caston Attorney at Law, PLLC, has practiced bankruptcy law for nearly 20 years. Paul Caston, an attorney in Hattiesburg, Mississippi, is a debt relief agency as defined by federal law. He helps people file for bankruptcy relief.

All potential bankruptcy clients receive an initial consultation free of charge. At these consultations, Caston provides the potential client with information about Chapter 7 and Chapter 13 bankruptcy as two common options. Differences exist between the two, but the goal of both types of bankruptcy is to discharge or reduce debt, and to deal with foreclosures, repossessions, garnishments and other financial problems.

In Chapter 7 bankruptcy, sometimes called liquidation or straight bankruptcy, a trustee is authorized to sell the debtor’s non-exempt property to raise money for the payments of debts. Most debtors, however, are able to exempt all of their property, so no actual sale occurs and the debtor is allowed to keep all property.

Chapter 13 permits debtors to suggest a full or partial repayment plan of three to five years for outstanding debts. This also allows debtors to catch up on payments on automobiles and houses if payments are behind. Chapter 13 also allows debtors to catch up on back taxes and child support arrears that are not eligible for discharge.

Determining which option to choose requires an extensive analysis of the debtor’s financial situation. Contact attorney Paul Caston at 601-329-8968 or visit his website, http://www.paulcastonlaw.com to set up a consultation.

How Are Homeowner Association Dues Treated In Bankruptcy?

Homeowner association dues are one category of non-dischargeable debts.  11 U.S.C. § 523(a) and 523(a)(16) provide:

A discharge . . . does not discharge an individual debtor from any debt —

(16) for a fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor’s interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable or possessory ownership interest in such unit, such corporation, or such lot, but nothing in this this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case[.]

More to come

Paul Caston is a lawyer practicing in Hattiesburg, Mississippi primarily in the areas of bankruptcy and personal injury law.

 

 

What is the “Means Test” In A Bankruptcy Case?

The term “Means Test” as used in the bankruptcy context is a standard in the Bankruptcy Code used to determine the debtor’s eligibility to file bankruptcy under Chapter 7.  The cornerstone of the means test is the concept of “abuse”.  If the debtor’s case is found to be abusive of the provisions of Chapter 7, the debtor may be required to convert to Chapter 13 or have his bankruptcy case dismissed.

Abuse may be found if the debtor’s income exceeds a certain threshold in relation to his expenses.  Put most simply, the means test seeks to force debtors who earn enough money to both meet their ordinary living expenses and pay back some part of their unsecured debts into Chapter 13 where the debtor subjects his future earnings to the jurisdiction of the Bankruptcy Court and, at least theoretically, pays back some portion of his unsecured debts. 11 U.S.C. 707(b)

So how much money is too much money to be eligible for Chapter 7?  The first step in that calculation is to look at the “Median Income” for the applicable state.  The median income data is compiled by the I.R.S. and can be found here.  As of this writing, the median income for the state of Mississippi is, in annual figures: $35,306 for a household size of one person; $44,149 for two or three people; $51,140 for four – and so on as shown in the tables.  These amounts are updated periodically and usually increase, so if a debtor is only slightly above the median income and likely to be forced into Chapter 13, he may decide to wait a few months to file if that is otherwise practical.

If the debtor is below the applicable median income for his household the means test is finished.  If, however, the debtor finds himself above the median, then the next step is to calculate his applicable deductions to determine if he may yet be eligible for Chapter 7.

Unlike median income which varies by state, some deductions such as food and clothing are the same nation wide, while others such as housing and utilities are calculated county by county as well as household size as seen here.  A debtor residing in Hattiesburg in Lamar County with a household size of 4 would be allowed $1164.00 per month for rent or mortgage expenses and $566 for non-mortgage housing expenses such as utilities.  The same Hattiesburg debtor living on the Forrest County side of the line would be allowed $964 for rent or mortgage and $591 for non-mortgage housing expenses.  Other deductions are allowed as well, for instance: reasonably necessary health insurance, operating and ownership costs for vehicles, expenses for the care of a family member who is disabled, elderly or chronically ill.  11 U.S.C. 707.

Once the debtor has taken all applicable deductions, the amount remaining is compared to certain limits set by the Bankruptcy Code.  If the debtor is below these thresholds, he will be allowed to proceed with Chapter 7; otherwise he may be required to convert to Chapter 13 and pay back a portion of his unsecured debts or face dismissal of his case.

Paul Bryant Caston

Attorney at Law, Hattiesburg, Mississippi

Asset Disclosure When Filing For Bankruptcy

At some point in any bankruptcy filing, your lawyer should thoroughly question you about any assets you own.  The term “assets” should be given its broadest possible meaning to include, among others: Real property (i.e. land), personal property, intangible assets such as debts that are owed to you and, as is the subject of this post, Choses In Action.  The purpose of all this questioning, of course, is to complete schedules “A” and “B” where the debtor is required to list all property that he owns.

One of the most commonly overlooked assets that debtors may have are “Choses In Action”.  A Chose In Action is, essentially, the right to bring a lawsuit to recover money or property, or the right of an heir in the interest of an estate.  In the bankruptcy context the most common manifestation of this issue is where the debtor has some sort of personal injury claim that he could bring such as a car wreck or a pending asbestos claim.  Lately, we have seen BP Oil damages claims as Choses in Action that the debtor owns.

There can be serious consequences to the debtor if a potential claim or lawsuit is not listed in the bankruptcy schedules.  First of all the debtor signs under penalty of perjury that his schedules are accurate and complete.  But there is another potential consequence: The doctrine of judicial estoppel.

Judicial Estoppel is a judicial doctrine that holds, essentially, that a party cannot assert contrary positions in different cases.  So for instance, if in listing your assets in your bankruptcy you do not list that potential right of recovery that you have against the drunk driver that hit you, you have, if only by omission, taken the position that you do not have a right of recovery against that drunk driver.  You will not then be permitted in a suit against that drunk driver to take the contrary position that you do now have a right of recovery against him.

Rest assured that the defense lawyer for the drunk driver and his insurance company will do a thorough PACER search to determine if you have filed for bankruptcy in the past and will review your schedules to determine whether or not you listed this potential lawsuit as an asset.  If you did not, he will file a motion to dismiss your case on the grounds of judicial estoppel and will be, in all likelihood successful.

As with any legal doctrine there is a bushel basket full of exceptions, exclusions and caveats to the general rule’s application.   But the lesson to be taken from this is that in listing your assets you must be thorough and you must list any rights that you have to recover money from third parties, lest you lose that right by judicial estoppel.

Paul Caston Attorney Hattiesburg, Mississippi

The information contained herein is not intended to be and should not be taken as legal advice. You should consult with a qualified attorney concerning the facts of your particular situation.

The law offices of Paul Caston, Attorney at Law, PLLC is a debt relief agency as defined by the United States Bankruptcy Code.  We help people file for bankruptcy relief under the bankruptcy code.  We may be reached at:

Paul Caston, Attorney at Law, PLLC

807 West Pine Street

P.O. Box 1742

Hattiesburg, MS 39403

Tel. 601-544-2516

email: paul@paulcastonlaw.com

Tenancy By the Entireties Law In Mississippi

The Law Office of Paul Caston Attorney At Law in Hattiesburg, Mississippi assists clients in all aspects of Chapter 7 and Chapter 13 bankruptcy cases.  Our office recently received a favorable decision for a client in a case of first impression in Mississippi dealing with the law of tenancy by the entireties.

The facts of the case were somewhat unique in that the client owned her home free and clear of any liens.  This presented an uncommon problem in that the equity in the client’s home exceeded the $75,000 exemption amount allowed in Mississippi for homestead exemption.  Our office took the extra step of carefully researching the title to her home and in doing so discovered that she owned her home as Tenants by the Entirety with her husband.

Tenancy by the entireties is a form of ownership of property that is only available to married couples.  Essentially, neither the husband nor the wife own the property, but the marriage itself owns the property.  Under Mississippi law, when property is held by the entireties, the property cannot be seized to pay the individual debts of either spouse.  Furthermore, the bankruptcy code specifically grants an exemption for “any interest in property . . . as a tenant by the entirety . . . that is exempt from process under applicable non-bankruptcy law. 11 U.S.C. § 522(b)(3)(B).

After carefully reviewing the client’s debts we discovered that all of her debts were hers individually, that is, her husband was not liable on the debts with her.  Applying the two principles in the preceding paragraph, we took the position that the client’s entire homestead should be exempted from the claims of her creditors even though the equity in the property might have exceeded the amount otherwise allowable under Mississippi’s exemption scheme.

Since this was in issue of first impression in Mississippi the bankruptcy trustee objected to the proposed plan and the Bankruptcy Court requested briefing of the issue.  After hearing from the parties the Court, in a well-written decision, overruled the trustee’s objection holding that:

Mississippi case law clearly states that in an estate by the entirety each spouse simultaneously is seised of the whole estate, that is title, interest and possession, and the Mississippi Supreme Court has emphasized the no action taken by one of the two tenants in the entirety can terminate the rights of the other to the full panoply of rights in the estate. (Citations omitted).  Allowing judgment creditors to execute process against an estate in entirety by virtue of the actions, i.e., the accumulation and non-payment of debt and the associated liability incurred by only one spouse violates these core principles. Opinion at page 12.

Applying these principles to the facts of the case, the Bankruptcy Court overruled the trustee’s objection and the client and her husband were allowed to insulate the entire value of their home from the claims of creditors.  The full text of the Court’s opinion can be found here.  Further discussion of this particular case can be viewed here.

Article by: Paul Caston

The information contained herein is not intended to be and should not be taken as legal advice. You should consult with a qualified attorney concerning the facts of your particular situation.

The law offices of Paul Caston, Attorney at Law, PLLC is a debt relief agency as defined by the United States Bankruptcy Code.  We help people file for bankruptcy relief under the bankruptcy code.  We may be reached at:

Paul Caston, Attorney at Law, PLLC

807 West Pine Street

P.O. Box 1742

Hattiesburg, MS 39403

Tel. 601-544-2516

email: paul@paulcastonlaw.com