Shoebox Accounting
Nebraska Debt and Bankruptcy Blog
by Sam Turco
3M ago
The client runs a decent sized construction operation.  Revenues in excess of a quarter million per year. But he has no accounting system.  He just takes his bank statements, receipts and chicken scratch notes to the tax man once a year to crank out a tax return. No monthly bank account reconciliations. No computerized records. No accounting journals or ledger reports. The entire system is basically a daily glance at the banking account balance and then just fly by the seat of his pants.  It’s dancing on a hot plate. Who needs paid this week?  What blows up if I don’t pay ..read more
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Hiding Income: The Bankruptcy Marriage Penalty
Nebraska Debt and Bankruptcy Blog
by Sam Turco
3M ago
There is a marriage penalty in bankruptcy law.  Unmarried couples receive favored treatment, especially on the six-month income calculation called the Means Test. A married debtor who lives with his or her spouse must list all gross income of their spouse on the income schedules.  However, an unmarried debtor who lives with a partner must only show that person’s regular contribution to the household income. This difference represents a significant disparity of treatment. Unless the bankruptcy trustee investigates the income of a debtor’s partner, a debtor may be able to claim their ..read more
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Hiding Household Income: Household Size
Nebraska Debt and Bankruptcy Blog
by Sam Turco
3M ago
One of these days I’m going to write a post on how shitty we treat married couples in this county.  From a financial perspective, is it better to be married or to shack up? I’m going to write a list. There are some legal benefits to being married, but from what I see its more of a financial burden. Maybe I’m just getting old and cranky, but it seems like you can avoid a lot of financial regulations and limits by just living together. Need an example?  Well, if you are married you are responsible for the medical debts of your spouse, but not if you just live together.  In fact ..read more
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Misrepresenting Household Size & Income
Nebraska Debt and Bankruptcy Blog
by Sam Turco
5M ago
It’s September in Nebraska.  Labor Day is over.  The kids are back in school. Footballs are in the air, especially in Nebraska where our beloved Cornhusker football team has abandoned tradition and is throwing the football everywhere. Yep, I hate it. I so miss power football. Back to the topic at hand. The authors of the Bankruptcy Reform Act of 2005 believed that debtors frequently failed to report all their available income, so to address this issue the new law requires a debtor to disclose all “household income.” Household income is more than just the wages of the debtor.  I ..read more
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70% of Medical Debt is Being Wiped Off Credit Reports. Is That a Bad Thing?
Nebraska Debt and Bankruptcy Blog
by Sam Turco
7M ago
We view negatively a person who files bankruptcy after running up credit cards debts to fund an extravagant lifestyle, but we are less judgmental about the unlucky person who incurs medical debt.  Apparently the three major credit reporting bureaus agree and have decided to remove these debts from their credit reporting. Forbes Magazine has a break-down of the new rules: Starting July 1, 2022, medical debt that’s been paid will no longer be included on credit reports from Equifax, Experian and TransUnion—even if it’s been on your report for several years. In addition, the three cre ..read more
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Zoom 341 Meetings Coming Soon
Nebraska Debt and Bankruptcy Blog
by Sam Turco
11M ago
The Covid/19 pandemic has changed how we work forever, and bankruptcy practice is no exception. Just two years ago this is what we did: We met most new clients in person during office meetings. Most cases were signed in person. An 80-page bankruptcy petition was signed with ink signatures on paper. Debtors attended a Section 341 Meeting of Creditors at the courthouse. Agreements to reaffirm home and car loans were signed on paper and mailed to creditors. All that changed in March 2020 when the pandemic forced courts to close down.  Since that time we have signed all cases electronicall ..read more
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Does the income of my live-in girlfriend of five years count towards household income?
Nebraska Debt and Bankruptcy Blog
by Sam Turco
1y ago
Does the income of a live-in girlfriend of five years count towards household income?  I read that question in an online chat discussion recently. Here is the answer provided by a bankruptcy attorney: “No, her income will not be used to determine your household income unless you are attempting a modification and want to use her income as a contributor.” That answer is completely wrong. In fact, that answer could lead this person to commit perjury on his bankruptcy schedules and may result in a denial of his bankruptcy discharge. Important Questions: There are important questions that mus ..read more
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City of Chicago vs Fulton: The Disappearing Automatic Stay
Nebraska Debt and Bankruptcy Blog
by Sam Turco
1y ago
The experience of reading a Supreme Court opinion on bankruptcy law is like having a two-year-old in a China shop—you just want them out before they break more stuff.   The Supreme Court’s stumble through the City of Chicago v Fulton opinion is no exception to this rule.   The City of Chicago, itself an entity on the brink of filing bankruptcy, was desperate for revenue, so in 2011 the City increased impound lot fees. Many low-income residents soon found it impossible to pay the fees to reclaim their vehicles.  George Peake, one of the debtors in the case, drove a 2007 Lin ..read more
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What’s the true price of that car? A story of Chapter 13 & Subprime Lending
Nebraska Debt and Bankruptcy Blog
by Sam Turco
1y ago
The Massachusetts Attorney General recently settled a major consumer fraud case against subprime auto lender Credit Acceptance Corporation. The case is long and complicated, but the issue that caught my eye is the argument about the true purchase price of a vehicle. For example, assume a dealer sells a vehicle for $10,000 and the buyer signs an 18% loan spread over 60 months at $253.93 per month.  Then, assume the dealer immediately sells the loan to a subprime lender for $8,000 cash. What is the true purchase price of the vehicle? Is it $8,000 or is it $10,000. FORM OVER SUBSTANCE I wou ..read more
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Paying the Chapter 13 Trustee
Nebraska Debt and Bankruptcy Blog
by Sam Turco
1y ago
Chapter 13 cases are three to five year payment plans.  Creditors receive a monthly payment based on a debtor’s ability to pay, the type of debts they owe, and the amount of unprotected property they own. But how does one make the payment? Who do you pay? Chapter 13 payments are paid to the Chapter 13 Trustee, typically an attorney appointed to oversee the bankruptcy case. In Nebraska that person is Kathleen A. Laughlin. HOW DO YOU PAY THE CHAPTER 13 TRUSTEE? There are only two ways to pay the Trustee: Money Order or Cashier’s Check. Garnishment of paycheck. No other payment methods are ..read more
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