It is not uncommon for close family members to transfer ownership of assets to one another. It is also common for one family member to own assets by proxy in the name of another family member. But before you do such things, you should be aware of the sticky issue of ownership should bankruptcy take place.
Let’s consider a hypothetical situation. John Doe has bad credit but his sister, Jane Doe has excellent credit standing. John desires to buy a car but because of his bad credit record, he is not able to secure financing, so he asks his sister Jane to purchase the vehicle in her name. John even pays the down payment and promises to pay the monthly installments so that Jane does not have to fork out a single dime.
All goes well for a few months until Jane runs into problems of her own. Let’s say she runs into massive financial difficulties, loses her job and incurs high medical costs for a chronic and serious illness. She is no longer able to clear her debts and files for bankruptcy. Another hypothetical scenario can be Jane is an innocent spouse whose husband has absconded leaving her straddled with huge back taxes she is liable for because she and her husband are joint filers of their income taxes. The IRS might even file a levy on her properties (including the car she bought in her name). Again, the situation is critical and Jane is forced to file for bankruptcy protection.
In these hypothetical situations, the car immediately becomes part of the bankruptcy estate. This means the car might be sold to help pay off Jane’s debts. She cannot transfer the ownership back to her brother because it is not allowed and the bankruptcy trustee would simply reverse the transfer if she tried to do so.
The only way for John to obtain ownership of the car is to buy it back from Jane. Even if the car is fully paid up, as long as it is still under her name, John cannot lay any claim to it. The bankruptcy trustee does not take into consideration who has been paying the monthly installments or maintaining and using the car. As far as the trustee is concerned, the car belongs to Jane because it officially says so on paper.
So if this type of incident happens to you, you should be aware of the legal implications of ownership of assets.
Are you facing huge debt problems? Consider filing for bankruptcy protection to avoid losing your assets and get your creditors off your back. Call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Jan 31st, 2012. Comment. 
For some people, getting sick means going bankrupt. Here’s the true story of a couple who experienced just that.
The husband, a man without much education, worked for minimum wage at a foundry sweeping floors. The wife worked before coming down with cancer. They could not afford the medical bills and were not on any social or welfare program, neither did they have insurance. As a result, the hospital started garnishing 25% of the husband’s salary.
Eventually, they could not sustain their expenses and filed for Chapter 7 bankruptcy that allowed for complete liquidation of whatever little assets they had to pay for their debts and cancellation of the rest.
The wife’s condition improved but a few years later, she experienced a relapse of the cancer. This left them with another huge hospital bill and further garnishment of the husband’s salary. But this time, they could not apply for Chapter 7 again as it had not been 8 years since they had taken it the first time. This compelled them to apply for Chapter 13 bankruptcy instead that provided for gradual repayment of debts over time up to five years. But this left them very little to live on after paying for the medical costs in installments each month.
This went on for 2 years. Then the husband fell ill. Despite his sickness, he worked for 2 days more before going to the hospital. He died within a few hours of pneumonia. He was just 62 years old. Now his widow was left with no means of support and eventually lost her home, still straddled with about $30,000 in medical expenses she could not pay. Her attorney who had some documents for her to sign, tried to locate her but she had moved without leaving any forwarding address. Nobody really know where she is today.
There are those who feel that the new Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) that took effect in 2005 contain lots of inequalities. For instance, where you live does make a difference. Judges in Tulsa in the Northern part of Oklahoma would interpret the law differently from those in the Eastern district. The new law states that only those whose income is below a certain threshold qualify for Chapter 7 while everyone else has to apply for Chapter 13 bankruptcy. But when you file Chapter 7, all your assets are to be liquidated to pay for your debts. If you choose to keep some of your assets, you have to take Chapter 13.
In Chapter 13, you have to reaffirm the unsecured debts (like medical expenses) that the judge determines you can repay. Then 100% of your income that is not required for basic living expenses is utilized to pay off your debts, usually over 5 years. But the problem is the amount allowed for living expenses does not always commensurate with what your actual expenses are. For some people, this becomes a very real problem that may be insurmountable.
If you are faced with insurmountable debts, consider filing for bankruptcy before things get worse. Call us at (813) 200 4133 for a free consultation or visit http://tampabankruptcy.pro.
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Filed under Chapter 7 (Tampa) by on Sep 7th, 2010. Comment.
This year, more than 8,000 families in Idaho are expected to file for bankruptcy, a third coming from South East Idaho. This was the estimate of Bankruptcy Judge Jim Pappas of the District of Idaho.
According to Pappas, three main reasons precipitate the need to file for bankruptcy.
The first is medical costs that are too high to be paid by the bankruptcy filer. This primary reason accounts for half of all bankruptcy cases in Idaho. Most of the bankruptcy filers affected by exorbitant medical fees do have insurance, only not enough. So they have to resort to paying off their medical bills using their credit cards which puts them further in debt. Due to this, a reform of health care in the country is a necessity. But whether the recent health care reform initiated by the government is the correct answer remains to be seen.
The second most prevalent cause of bankruptcy is the loss or interruption of jobs and careers. Most people’s assets are so highly encumbered that even being out of work for two or three months might result in bankruptcy.
The third major contributing factor to the rising cases of bankruptcy is marriage and family problems. The most severely affected are single mothers who generally have more limited means of income compared to men.
There has been a disconcerting trend lately where bankruptcy filers are increasing among the very old and the very young. Generally those in their middle age are not affected as much. The elderly have had to file for bankruptcy largely because of high medical bills. On the other hand, the younger ones file for bankruptcy mostly due to overspending with their credit cards coupled with the skyrocketing cost of going to college.
Although there still exists a social stigma attached to bankruptcies, Judge Pappas sees it as a vital economic safety net that fosters risk taking and entrepreneurism that America is known for. He notes that even Abraham Lincoln had filed for bankruptcy in his lifetime, after he failed in becoming a storekeeper.
Part of the reason for the social stigma is that bankrupts are seen to be people who cop out of their responsibilities to pay their debts and use bankruptcy as a means to game the system. But in all his years of experience as a bankruptcy judge, Pappas estimates that only 1 to 3% of filers have questionable motives for filing bankruptcy. The vast majority of Americans and certainly those in Idaho who file for bankruptcy are genuine people. 93% of bankruptcy cases are filed by individuals not businesses.
Are you someone thinking of filing for bankruptcy? Call us for a free consultation at (813) 200 4133.
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Filed under Chapter 7 (Tampa) by on Jun 30th, 2010. Comment.
This year, more than 8,000 families in Idaho are expected to file for bankruptcy, a third coming from South East Idaho. This was the estimate of Bankruptcy Judge Jim Pappas of the District of Idaho.
According to Pappas, three main reasons precipitate the need to file for bankruptcy.
The first is medical costs that are too high to be paid by the bankruptcy filer. This primary reason accounts for half of all bankruptcy cases in Idaho. Most of the bankruptcy filers affected by exorbitant medical fees do have insurance, only not enough. So they have to resort to paying off their medical bills using their credit cards which puts them further in debt. Due to this, a reform of health care in the country is a necessity. But whether the recent health care reform initiated by the government is the correct answer remains to be seen.
The second most prevalent cause of bankruptcy is the loss or interruption of jobs and careers. Most people’s assets are so highly encumbered that even being out of work for two or three months might result in bankruptcy.
The third major contributing factor to the rising cases of bankruptcy is marriage and family problems. The most severely affected are single mothers who generally have more limited means of income compared to men.
There has been a disconcerting trend lately where bankruptcy filers are increasing among the very old and the very young. Generally those in their middle age are not affected as much. The elderly have had to file for bankruptcy largely because of high medical bills. On the other hand, the younger ones file for bankruptcy mostly due to overspending with their credit cards coupled with the skyrocketing cost of going to college.
Although there still exists a social stigma attached to bankruptcies, Judge Pappas sees it as a vital economic safety net that fosters risk taking and entrepreneurism that America is known for. He notes that even Abraham Lincoln had filed for bankruptcy in his lifetime, after he failed in becoming a storekeeper.
Part of the reason for the social stigma is that bankrupts are seen to be people who cop out of their responsibilities to pay their debts and use bankruptcy as a means to game the system. But in all his years of experience as a bankruptcy judge, Pappas estimates that only 1 to 3% of filers have questionable motives for filing bankruptcy. The vast majority of Americans and certainly those in Idaho who file for bankruptcy are genuine people. 93% of bankruptcy cases are filed by individuals not businesses.
Are you someone thinking of filing for bankruptcy? Call us for a free consultation at (813) 200 4133.
Filed under Chapter 7 (Tampa) by on Apr 14th, 2010. Comment.
