Domestic Support Obligation

Most experienced bankruptcy lawyers know that a Domestic Support Obligation ("DSO") is a debt that is not dischargeable in bankruptcy.  Under 11 U.S.C. § 101(14A), a DSO is:

(14A) The term “domestic support obligation” means a debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is—
(A) owed to or recoverable by—
(i) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative; or
(ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of—
(i) a separation agreement, divorce decree, or property settlement agreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and
(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative for the purpose of collecting the debt.

Bucks County residents frequently come to me before, during, and after a divorce.  The biggest issue is whether they have debts with the former/separated spouse and what type of debt they have.   Shared credit card debt is likely not a DSO, unless it is assumed in lieu of a DSO.  Confusing?  Of course.  That's why you need to get a fresh start and get a free consultation immediately.

Why I Can't Stand "Debt Settlement" Companies for Bucks County Families and Individuals, Part 1 Billion

I was speaking to a Bucks County bankrupty client today who had tried "debt settlement".  I Googled the company's name and included "scam" in the search.  The first result was intriguing.

What is completely buried in the Terms of Agreement with the debt settlement company, which is highly unlikely to be slowly, and exhaustively, explained to the client is that debt settlement is that settled or forgiven debt is taxable.  But, discharged debt in a bankruptcy is not taxable.

So, not only does debt settlement not work, but you get hit with a tax bill at the end.

This makes me sick

A Washington Post investigative article shows the despicable state of tax liens in Washington, D.C.  Specifically, people are losing their homes over small (~$2,500) tax liens.  A lot of the properties were in low-income areas and had elderly homeowners.

I read the article twice and saw no mention of bankruptcy.  A Chapter 13 bankruptcy could have stopped the sale of these homes.  For $281 (the filing fee), a person can be in a Chapter 13 for 5 years and spread the payments over that 60 months.  I know the community legal services in the country  are tapped beyond their capabilities (just like Legal Aid in Bucks County is cutting back), but this would have been a quick fix if a program existed.  If you are looking for a Bucks County bankruptcy attorneys to stop a tax lien sale, call me immediately.  I do not want to see your home lost.

I can't believe I'm linking to TMZ.com

Here's a first for the Bucks County Bankruptcy Blog -- I'm linking to TMZ.com.  I'm not writing about the latest celebrity pregnancy, however.  I'm still writing about relevant issues relating to being a Bucks County Bankruptcy attorney.

It appears that Warren Sapp, former NFL superstar, had a "massive" collection of Nike shoes sold at auction pursuant to a Chapter 7 bankruptcy filing.

For those who don't know, when you file for Chapter 7 and have "excess assets", a Trustee can liquidate the assets.  If, for example, a person has a second home that is paid off, the Trustee could hire a realtor to

So, I have not read Warren Sapp's bankruptcy petition.  But what I guess happened was that he exceeded the debt limit on a Chapter 13 (reports say he was "millions in debt") and decided that he was willing to have some assets liquidated by the Trustee to satisfy some portion of the debt, while discharging the remaining "balance".  His attorneys told him that some of his assets that were "non-exempt" would be sold and he was willing to do that to have the vast majority of his debt discharged.

Now, if Mr. Sapp did not list these assets, he would be committing fraud and false pretense in a bankruptcy. You never want to do that as you are looking at significant jail time.  

A minor glimmer of hope for Bucks County bankruptcy filers

If you have student loans and are considering a Bucks County bankruptcy, the future may be a little brighter since the last time I blogged about student loans. Currently, it is very difficult to discharge student loans in a bankruptcy.  Even if you're a senior citizen with limited future earning potential (despite senior citizen's maintaining 4.2% of total student loan debt).  As law student Jason Iuliano studied, only 300 out of 69,000 student loan borrowers who entered a bankruptcy attempted a discharge of their student loans.

Now, however, a bit more movement towards justice, equality, and debt forgiveness is occurring.  Recently, the 9th U.S. Circuit Court of Appeals (out of California) softened the hard-line stance.  In a nutshell, after reading the opinion, the influential 9th Circuit has slightly relaxed the standards of the Brunner test.

Some practical takeaways for Bucks County bankruptcy lawyers and their filers:
1)  Look to fight for a discharge if you are "tapped" out on your budget
2)  Prior to filing, don't give the court any reason to believe you are not "tapped" out -- get rid of Comcast, timeshare payments, etc.

Fraud and False Pretense: Lenny Dykstra Sentenced in Bankruptcy Case

In December of last year, Lenny Dykstra was sentenced for bankruptcy fraud and related crimes.  Specifically, he pleaded guilty to bankruptcy fraud, concealment of assets and money laundering.  He received a 6 1/2 month sentence.  The crux of the case was that Dykstra was busted from taking and selling things from his mansion while he was in bankruptcy.

The biggest thing I tell my Bucks County bankruptcy clients is that they must realize that everything they own comes under the purview of the bankruptcy court.  Specifically, you can't conceal assets, sell assets, or hide assets.  There are creditors who are owed.  A Trustee must determine if you have assets that can be liquidated (after your exemptions) and be paid to your creditors.  If you take those assets and liquidate them (or hide them) on your own, you are committing fraud.  In Dykstra's case, it was pretty egregious.  He tried to sell some memorabilia and furnishing from his home to, presumably, pay for his lifestyle.  You can't do that.

Thus, what I tell my Bucks County Chapter 13 clients and my Bucks County Chapter 7 clients is "when in doubt, wait and check."  You cannot take matters into your own hands and you cannot seek to liquidate assets while in bankruptcy.

Cancer and Bankruptcy

I tell a lot of my Bucks County bankruptcy clients that people come to see me for one of six reasons:

1. Death of a spouse
2. Divorce
3. Sickness
4. Unemployment
5. The economy
6. Some other life tragedy

The CBS article, "Cancer patients more than twice as likely to go bankrupt, study shows" is a telling sign about our health care system, the reason bankruptcy exists, and support for #3 on my list.

I have represented many people, as a Quakertown bankruptcy lawyer, who are in similar positions.  Rounds of tests, months of treatments, huge co-pays, and loss of wages due to sickness all create an unfortunate, perfect financial storm.  It is a crying shame to see people in this situation.

Frequently, the most difficult issue relating to a medical debt bankruptcy is the timing of the bankruptcy.  If a person has a chronic condition, the potential for post-petition debts may prevent a true "fresh start".  If a person is unsure of when their condition/sickness/illness may end, it may make sense to wait until the health situation is resolved.

In the end, if there ever were a reason for bankruptcy, medical debt seems to be it.  When someone gets sick and incurs debt simply trying to live, they are entitled to relief to move on.