Friday, January 27, 2012

Gambling Losses and Bankruptcy

In Bucks County and elsewhere, there is a definite stigma attached to gambling losses and you may be embarrassed to admit such losses. However, it is imperative that these losses, which are considered unsecured debt, be disclosed when filing. From time to time, I have filed bankruptcies in Bucks County for a Chapter 7 or a Chapter 13 where Donald Trump's casinos have been a creditor.

Whether or not gambling losses can be discharged depends on many factors. For instance, if you
gambled excessively (by taking cash advances on a credit card) one day and lost, then filed for bankruptcy the next day, chances are the trustee will doubt you ever intended to make an attempt to repay the losses especially if the money used was obtained through a credit card cash advance. In such a case, you would most likely be required to pay back the money owed to the credit card company. Also, the credit card company has the right to object to the discharge of such a recent debt (less than 90 days prior to filing). Here is an interesting article by an Indiana Trustee related to gambling losses.

In some cases in a Bucks County bankruptcy, however, gambling losses can be discharged. With the proliferation of casinos in New Jersey and Pennsylvania (especially in Bucks County) it is inevitable that gambling losses and subsequent filing for bankruptcy will increase. Be upfront with your bankruptcy attorney if you fall into this category and rely on him/her to guide you to the proper course of action.

Tuesday, January 24, 2012

How Does Gambling Income Affect a Bankruptcy?

Bucks County is home to Parx Casino, a place where millions are won and lost each year. In addition, Philadelphia Park hosts horse racing, a longtime staple in the area. If you have won at a casino in the last year, your winnings are reportable in your Bucks County bankruptcy (I will address gambling losses in a future post). It will be factored into your "income" per the bankruptcy laws.

If income from gambling was obtained within the year of filing, it must be reported when filing for bankruptcy. However, gambling winnings include not just winnings in casinos but also lotteries and horse racing. Even if you win a 50/50 raffle, bingo game, or any other game of chance, you must report it.

Whether you have filed for a Bucks County Chapter 7 or a Chapter 13, it does not matter. The income must be reported.

What happens if you don't report the income? First, it is against the law to not report the income. Also, the Bucks County trustees are smart. They may find it on your tax returns. They may find it deposited in your bank account from your bank statements.

As a result, the Trustees may object to your discharge. Be smart, consult a Bucks County bankruptcy lawyer to make sure you file the right bankruptcy and report the right facts.

Thursday, January 19, 2012

What happens if you receive an inheritance after filing for bankruptcy in Bucks County?

The first thing to remember is to be truthful! Any debtor who receives an inheritance within 180 days after filing must report the inheritance to the trustee (normally done through your Bucks County Bankruptcy Lawyer). Failure to do so is a violation of federal bankruptcy law with the potential consequence being imprisonment or other sanctions. Here is an example of bankruptcy fraud where an individual was sentenced to 39 months of prison for failing to reveal an inheritance to the U.S. Trustee.

It does not matter what the inheritance is; whether it is cash, stocks, furniture, automobiles it must be reported However, the debtor is entitled to claim the legitimate exemptions allowed by the bankruptcy law.

In a Chapter 13 bankruptcy in Bucks County, any unprotected inheritance will be included in the repayment plan. In a Bucks County Chapter 7, any unprotected inheritance assets are liquidated and distributed to creditors. As with any other aspect of bankruptcy, the advice of an attorney is critical and paramount.

Saturday, January 14, 2012

How Long Is a Person in a Chapter 7 or Chapter 13 Before Discharge?

A Bucks County Chapter 7 case is generally discharged within four to five months and a Bucks County Chapter 13 usually takes a five year repayment plan to be fulfilled before discharge. On occasion, a Bucks County debtor may opt for a three year repayment plan.

Typically, in a Chapter 7 case, after the Bucks County Trustee's Hearing/341 Hearing, the Bucks County trustee will recommend a discharge. Provided a debtor completes their post-filing debtor eduction requirement, they will receive a discharge within 90 days of the hearing. At a minimum, the debtor will have to wait 60 days, as creditors have 60 days after the 341 Hearing to object to the discharge of their debt.

If the Chapter 7 Bucks County Trustee does not recommend a discharge at the hearing, they will normally "hold the case open" for a period of time. Holding a case open generally means that the Trustee has questions regarding a person's case and requires additional information. For example, I have had trustee's request "cash value statements" regarding life insurance policies, pictures of a doll collection (to make sure they were not valuable), or for additional bank statements. Normally, if the debtor is diligent about providing their Bucks County Bankruptcy Attorney with the requested documentation, a delay to discharge does not occur.

Typically, in a Chapter 13 case, if timely payments are made pursuant to the bankruptcy plan, a debtor will receive a discharge at the end of 60 months/5 years.

Monday, January 2, 2012

What is a Priority Claim?

Although not much of an issue for many Bucks County bankruptcy filers for Chapter 7 or Chapter 13, priority claims do pop up from time to time.

The public policy behind priority claims are that not all unsecured claims are equal. There is an order in which claims are paid. This is called “Priority”. Examples of priority claims are: unpaid child support, bankruptcy administrative costs, unpaid employee wages up to $10,950 per employee and unpaid contributions of employee pension plans.

All priority claims must be paid in full before other lesser claims in a Chapter 13. In a Chapter 7, these debts are not discharged, though the attempt to collect is temporarily halted under the 'Automatic Stay' provision.

Most frequently, unpaid taxes and child support are encountered most frequently when people meet with a Bucks County bankruptcy attorney. Just remember -- You will still be "on the hook" for priority claims, even though they are not part of a Reaffirmation Agreement and even though they are not secured by real property.