Janice: Good afternoon Atlanta and welcome to Legal Talk. Sorry we’re a few minutes late getting started this afternoon but I was over with the good people at Friendship Baptist Church right at Marietta and Northside Drive. One of the oldest churches in Atlanta. I found out that they were started in 1844, no 1866, which makes them 144 years old! But anyway, we’re going to talk today about bankruptcy. About what you can do to preserve your financial future, your economic stability. We’ve got our favorite bankruptcy expert in the studio with us today, Roger Ghai.
Roger: Hi, how are you?
Janice: I’m doing fine. I see you’ve got some shiny new cards!
Roger: I do and hopefully, it will, how do you say, follow the website.
Janice: And what is the website?
Roger: www.Chapter7attorneys.com
Janice: And you know, why did you think it was important to put that Chapter in the name of your firm and the name of your website? What is it about it and why is it important?
Roger: I think that it is important because when I had started this back in March of last year, I had to think about bankruptcy generally and about what I thought personally would help people the most. So I came to the conclusion, for a variety of reasons, that Chapter 7 bankruptcy is probably the best vehicle for most of the people. Now that’s not to say that there are not instances in which Chapter 13 bankruptcy should be filed. There are, indeed, instances where Chapter 13 bankruptcy should be filed but I think it is just over utilized.
Janice: And one of the reasons why you think it’s over utilized is because it’s not successful all that often.
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Roger: Right! Exactly. You hit the nail on the head. You’ve got 75% to 80% of the people that their cases are getting dismissed and then they end up filing the Chapter 7 bankruptcy anyhow. Then they’ve wasted all their precious dollars on attorney’s fees, which can amount to $3k to $4k and that are a small fortune.
Janice: Well there was something in the paper this week about Chapter 7 bankruptcy that I thought was just fascinating. Did you happen to see the bank lawyers or the bank executives who are filing bankruptcy?
Roger: I did. You’ll notice from that article, as you talked about earlier, just a few minutes ago, that you’ve got a lot of people picking Chapter 7 or choosing to file Chapter 7 bankruptcies. I think it goes to support my point, which is Chapter 7 bankruptcy is the best vehicle to get a fresh start and that’s what most people want. They are already under stress going through this process and most people don’t want to live the next 3 to 5 years with that hanging over their heads. Sometimes there’s not a choice, but if there’s a way to get into a Chapter 7 bankruptcy and get the client out, let’s go ahead and do it. In fact, this week I had a couple of people calling me on a Chapter 7 bankruptcy and technically, they don’t qualify right now for Chapter 7. But we’re going to go ahead and do some timing and do some planning and in about 2 or 3 months they’re going to be able to do Chapter 7’s.
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Janice: Now I notice that the, and we’re going to get back to what’s involved in that planning, but I noticed in the article about the bank executives that were filing for Chapter 7 bankruptcy protection that they had unemployment plus a pension or social security, some of them had like $3k or $4k a month in income. So you don’t have to be destitute, apparently, to file Chapter 7 bankruptcy. What about that?
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Roger: You don’t have to be destitute at all. In fact, let’s say for example, we have a family of 4. That household income might be as high as $68k. Now, the other interesting thing is this, let’s say that you’re above the $68k for a family of 4, but you have a mortgage that you’re paying, or that one of the spouses is paying child support. All of those types of factors, and that’s why you need to go to a good bankruptcy lawyer, need to be considered because it may allow you to actually qualify for a Chapter 7 even though initially it looks like you’re not going to qualify.
Janice: We’re going to talk about how to tell whether you need a Chapter 7 bankruptcy or not and how to find a good bankruptcy attorney. We’ve got an awful good one sitting with us right now, Roger Ghai. We’ll be back with more on www.Chapter7attorneys.com at News and Talk 1380 WAOK.
(commercial break)
Janice: Welcome back to Legal Talk. This is Janice Mathis and I’m in the studio today with Roger Ghai. Roger is the founder and chief attorney at www.Chapter7attorneys.com You can visit his, no, that’s not the name of the firm…
Roger: Yes it is. That’s Chapter7attorneys.com PC.
Janice: That’s the name of the firm?
Roger: That’s the name of the law firm
Janice: But that’s also the name of the website! That was cute! Did you come up with that?
Roger: I did, it was my creativity.
(laughter)
Janice: So if you can remember the name of the firm you can remember the name of the website!
Roger: That’s right.
Janice: Alright well if you need help. If you think you may need to file something to get out from under… you know, we were saying during the break, there’s death of a child, it’s supposed to be the most stressful thing you can ever go through. Death of a spouse. Divorce. But financial worries has got to be right up there on top of the list.
Roger: Absolutely. The top of the list. It affects a person’s health, mental health, physical health, all of those things. So it is definitely up there.
Janice: Now before we went to the break you said you were going to explain what you can do to qualify to file a Chapter 7 bankruptcy even if, initially, you think you may not be.
Roger: Right. Sometimes, and I’ll put this, without going in to all of the legal jargon, sometimes a person or a family won’t qualify at the initial glance to file a Chapter 7 bankruptcy because the income that they’ve made is above the amount of income that you can make for the preceding 6 months before filing your case. What I mean by that is this, when you file a bankruptcy case, there’s a back look period. The law says that we have to look at the income of the individual or couple or family or whoever for the preceding 6 months prior to the time that we file the case. Sometimes a client is above that income level.
I’ll give you an example, I have several clients that make very good money, $120-$130k last year but now they’ve had to take other positions and they’re only making perhaps 1/3 of that. So now they’re only making $35k-$40k a year and if we file the case, let’s say for example, immediately, they won’t qualify for a Chapter 7 bankruptcy. So what we’ve done in those instances, because the client is better off in the Chapter 7, is we’ve waited 2 or 3 months in order to be able to file for the client. So then, in that way they can get a fresh start, get rid of all their debt, a lot of times $50-$60-$70-$80-$100k that they incurred when they were making a healthy income and now they’re not making that income. To me, it doesn’t make any sense to put somebody in a Chapter 13 bankruptcy for a lot of reasons, but that’s a big deal.
Janice: I noticed that the bankers who were filing for Chapter 7 debt relief, some of them had pretty high, pretty steep credit card debts and other kinds of debts. They were just… hey, hasta la vista and walk away…
Roger: Absolutely. I have a lot of clients that are living in $400k to $500k homes and what they’re wanting to do, and they’re going to be eligible to do it because when they bought those homes they were making substantially more than they are now, is just go ahead and get a fresh start, discharge it. I’m finding that the consumers in our audience, and callers and so forth, are much more shrewd, and that’s probably due to the internet. I mean, people, by the time they’ve called me, they’ve gone ahead and done a lot of research. They’ve done a comparison between a Chapter 7 versus a Chapter 13. For whatever reason, I’m getting calls from people calling me saying I want to do a Chapter 7.
Janice: What are the big differences? How could somebody, they’re sitting at home, they’re looking at the internet, how do you know it’s time to pick up the phone and call a lawyer?
Roger: Well, one thing would be this: If you have judgments or you’re getting sued and you’re already in a week to week, hand to mouth type of a situation, one of the worst things that can happen to a person in that circumstance is for you to get garnished. I’ve seen some very unfortunate instances where the client has just waited for one reason or another until the time that they get garnished and then it makes it very very difficult. It adds to the stress. We can do away with the garnishment, but that’s not an overnight deal. So, a preemptive strike against your creditors is much more productive.
Janice: (laughter) Preventive maintenance
Roger: Yes ma’am.
Janice: Now, what’s involved in stopping a garnishment?
Roger: Well, we have to go ahead and have a case #. That is the bankruptcy case already has to have been filed, and then we have to notify the court and then we have to notify also the lawyer who filed the garnishment action.
Janice: And then that lawyer has to take some action to… dismiss the garnishment and then that has to be communicated to the employer and then that’s got to be communicated to the payroll people who do the payroll… So, even if you do it very diligently, it still could take a minute.
Roger: It takes a little time, yes
Janice: So that’s why it’s good to know so if you’re threatened with garnishment… what about an IRS levy? Will a Chapter 7 bankruptcy stop that?
Roger: Yes, it will stop that also. No creditor has special protection as far as the bankruptcy code. The bankruptcy code states that once we file a case an injunction goes up. Even the good old USA government and IRS is bound by the code.
Janice: I had a friend who called me this week saying that the IRS didn’t just garnish their wages, but reached into the checking account and pulled out every penny. It just so happened he had $600 in his pocket and that was all the money he had until he could get it stopped and it took weeks… and, meanwhile, all his other checks were bouncing. I mean, do you see situations like that?
Roger: Yes I do. Again, that goes back to the point of wanting to go ahead and do planning. It takes a little time to get because of the requirements the client has to meet nowadays to be able to file. It’s not like you come into the bankruptcy lawyer’s office and the next day he or she is going to be able to file the case that day. There’s credit counseling that has to be done, and so forth. I do see, in a lot of instances, where people’s accounts have been garnished, in fact I’m dealing with that situation presently, and then checks, like you say, are bouncing, and that’s adding more stress to the client.
Janice: $35 every time
Roger: $35 per pop.
Janice: Not to mention the over the limit fees on the credit cards and it just can spiral out of control.
Roger: It does spiral out of control. I’m seeing a lot of people, even when this economy improves, I mean, just the credit card debt, it causes a lot of times, people to go into bankruptcy. A lot of times people give a good honest effort to try to get it done but, you know, the voluntary repayment plans just usually don’t work.
Janice: When you say voluntary payment plans… do you mean those that we hear advertised a good bit?
Roger: Yes. Those are the ones that, you know, if you’ve got $10k or more in debt, I don’t want to do any advertising for them, but… (laughter)
Janice: Well, how come they don’t work? The ones that haven’t worked, why did they fail?
Roger: Honestly, they fail for the same reasons that the Chapter 13’s fail. That’s simply that the folks do not have the funds to be able to pay. People, most people are living paycheck to paycheck and they don’t have these extra funds. A lot of times the debt was incurred because they’re living off their credit cards to pay this or pay that. So those fail just like a Chapter 13 fails.
Janice: The plans just aren’t realistic.
Roger: That’s absolutely true.
Janice: And you’re saying that some, 80% of Chapter 13’s fail ultimately?
Roger: Yes
Janice: That means that only 20% of the time they actually work to achieve the goal they set out to achieve.
Roger: That’s right. Well, 75% to 80%. 20% to 25% of the time the cases are successful. But the other 75%, they fail.
Janice: We’re going to talk more about this and answer your questions. If you’re thinking about filing bankruptcy, if you file bankruptcy and you’re in a Chapter 13, and you think, hey, maybe I should be in a Chapter 7… we want to hear from you at 404-892-2703. You’re listening to News and Talk 1380 WAOK.
(commercial break)
Janice: Good afternoon Atlanta. I hope you’re enjoying this beautiful weather. I want to shout out again to the good folks at Friendship Baptist Church where Dr. Boddie is the Pastor, Sonny Walker and Henrietta… Saw a lot of good friends this morning, I want to say hello to all of them and thank them for inviting me out to talk to them about Rainbow Push to help people avoid foreclosure. Roger, can I make a quick announcement and hone in on your time a little bit? Tuesday night, this coming Tuesday the 23rd we’re having a special forum. And I will be at Mt. Ephraim Baptist Church at 6pm and we’re going to have a public hearing so that the people who are in foreclosure, are facing foreclosure, or delinquent on your mortgage, not sure what to do, we invite you to come out to Mt. Ephraim Tuesday afternoon at 6pm. 1202 West Marietta Street, that is where Dr. White is co-pastor along with Dr. R.L. White who is the Senior pastor and we’re going to have some legislators there to talk about what changes are needed in Georgia law. But also what you can do to stop foreclosure if you’re in it. Roger we hope you’ll come out too!
Roger: I will be there
Janice: Ok great, love to have you there. You mentioned, I want to pick up on something that we talked about in the last segment, that it’s not an immediate fix. That the injunction in Chapter 7 bankruptcy is strong, in bankruptcy it’s a strong injunction, it affects every creditor but it does take a little preparation. What kind of documents do you need from your clients in order to get them ready to file?
Roger: Usually, if the person is employed, we will need the last 60 days of their paycheck stubs. A lot of times people are unemployed now, so it’s really helpful to have the statement that you have from the unemployment office. Or, sometimes there’s, for example, Social Security income, so we need to see what that statement shows that is helpful. In addition, to that you’ll have to have a copy of your most recently filed tax return. For most people at this time of year it’s probably going to be the 2009 income tax return. Then, a list of your creditors is needed as well. I usually won’t meet with clients until they do that because, honestly, it’s a waste of time. What I did, is I put on my website, if you go under free case review, the first download there is a creditor list form. Sometimes people don’t know who all of their creditors are and so we have to order a credit report. Between ordering the credit report and then completing the creditor list form, we should be able to get it squared away. I
Janice: Because it’s very important to list each and every one of those creditors.
Roger: Absolutely. If you don’t list them it’s going to be a world of hurt later, there will be additional attorney fees and court costs.
Janice: Sometimes I think that people think that, well, I don’t want to not pay this creditor, I don’t want to discharge this debt, I want to keep this credit card, or I want to keep this car note… so they think that they can get away with not listing it. What do you think about that?
Roger: That’s bankruptcy fraud. I try to explain and most of the time, quite candidly, clients do not do that with a fraudulent intent, they do it out of fear. In other words, the client thinks well if I list my house or I list my house I’m going to lose it and that’s not necessarily, that’s absolutely not true. It just means that we have to give full disclosure to the bankruptcy court because you are asking to be relieved and released from the legal obligation to pay your creditors. So, if the court is going to give you a discharge then we have to be up front and tell the court exactly what we have.
Janice: And with computers and social security numbers, it’s not likely that it won’t turn up at some point.
Roger: Absolutely. And you never know, if you have an angry creditor or something who informs the U.S. Trustees office, and then you know what? You’re dealing with felonies. Federal time by the way, so you’re not going to get probated sentence and get out in 120 days.
Janice: Yea, federal time is real time isn’t it?
Roger: Yes ma’am.
Janice: You know, you mentioned something else about the income eligibility guidelines and you just mentioned that sometimes now people are unemployed. Is it still true that you have to have earned income in order to file a Chapter 13 bankruptcy? Do you have to have wages or not?
Roger: You have to have, just a source of income. For example, you could have unemployment income and do a Chapter 13 or you could have only Social Security income and do a Chapter 13. The legal standard is it has to be regular income. It doesn’t really matter what the source is.
Janice: But suppose you have no income, can you file a Chapter 7 bankruptcy?
Roger: You can file a Chapter 7 bankruptcy but you can’t file a Chapter 13 because the other standard for a Chapter 13 is that the bankruptcy repayment plan has to be feasible which means that you have to be able to show the court that you’re going to be able to repay the creditors in the Chapter 13. So, if you don’t have any income that isn’t going to work.
Janice: Ok. What other considerations should people think about when they contemplate whether to pick up that phone and call you? What is that phone number, by the way?
Roger: 770-792-1000
Janice: Say it one more time.
Roger: 770-792-1000
Janice: Now, I love your website. You know why I like it?
Roger: No
Janice: Because it is so easy to get around! I mean you go to a lot of websites and they’ve got so much junk, and it’s so poorly organized that you can’t find anything that you’re really looking for. One of the best features, I think, about your website, if you pardon my saying so, is the FAQ. Can you explain what that is?
Roger: Frequently Asked Questions
Janice: Most sites you go to, they have FAQ, but the answers, frankly, are not the frequently needed answers! You got real answers on your website.
Roger: Real answers for real cases for real people
Janice: (laughter) Is that your slogan now? You just made that up?
Roger: No, no I just made that up. The idea behind my www.Chapter7attorneys.com is to eliminate debt and rebuild your credit.
Janice: How long does it take to rebuild your credit?
Roger: Quick! I have clients right now who are being soliciting, even though their Chapter 7 bankruptcy cases has not yet been discharged, they are being solicited by the credit card companies for credit cards. So it’s a very quick process. The other thing is, under the FHA guidelines, at least as of about 90 days ago, a person could still qualify for a FHA loan provided that they had been out of bankruptcy for 2 years in a Chapter 7 case. That’s a good deal.
Janice: So not only can you look forward to having a credit card again, you may actually qualify for a FHA mortgage 2 years after your discharge from your plan, which is what… 3 to 6 months after you file it?
Roger: Exactly. It’s like 3-4-5 months, something like that and in that ballpark.
Janice: So, 3 years after you file a Chapter 7 bankruptcy, it wouldn’t be unusual for you to be able to qualify for a new mortgage.
Roger: Usually it’s 2 years.
Janice: 2 years. Ok, give us an example, I mean, are these super rich people who are getting these mortgages after being in a Chapter 7? Or is it anything special about them?
Roger: No, all people are special. But it’s the general working class.
Janice: Ok, so it’s not like they’ve got, you know, all of a sudden, maybe Gramma died and left them $100k or something…
Roger: Nothing like that. You just have to meet the income to pay the mortgage payment requirements.
Janice: That’s what I think is one of the reasons that people won’t file a Chapter 7. They believe that they will be financially ruined forever.
Roger: That’s a big fear but it’s a big fallacy.
Janice: So that’s not something you should be afraid of?
Roger: No that’s a big myth.
Janice: It used to be true.
Roger: It used to be true a long time ago. But now, of course, with so many people and so many different portions of society being affected by bankruptcy, it’s not a stigmatized as it used to be.
Janice: I like that word, stigmatized. We want you to go to www.Chapter7attorneys.com Visit the FAQ section for Frequently Asked Questions and then call us at 404-892-2703. You’re listening to News and Talk 1380 WAOK.
(commercial break)
Janice: Good afternoon Atlanta. I know it’s beautiful today, you must be out in the yard looking at the flowers, trimming back the rose bushes, getting ready for Spring. Spring has sprung in Atlanta! It won’t be long before we have azaleas and dogwoods, I can’t wait! It’s my favorite time of the year even though I suffer a little bit with allergies I don’t mind because it’s so pretty. The number you need to write down, I’m going to give it to you once again before we have to go off the air, but the number is 770-792-1000. You may not need it, but you may have a family member or friend or a child who is head over heels in debt and they don’t have to suffer. You know and sometimes people keep this to themselves. They walk around with a frown on their face, they’re grumpy and touchy and they’ve got insomnia and they can’t sleep at night because they’re ashamed. They’re ashamed to admit that they’re so far into debt that they don’t know how to get out of debt. If you see somebody like that and you suspect that it might be financial trouble that is giving them the blues, give them this number, 770-792-1000. They can get out of debt and rebuild their lives and return to a sane normal existence. They want to call Roger Ghai. Now, one of you did call Roger a couple of weeks ago. Hey Roger, were you able to get the message?
Roger: No. Somebody left a message actually this week, a nice lady, that wanted to schedule an appointment but I could not hear clearly the telephone number. So, if you’re out there, please call back.
Janice: Yea, if you called Roger this week and you didn’t get a call back, he’s not ignoring you, he just couldn’t hear your number. That has happened to me a number of times. So call him again at 770-792-1000. Now, those of you that are internet savvy, they can email you at Roger@Chapter7attorneys.com.
Roger: Absolutely
Janice: I know that because I emailed you this week.
Roger: And it was successful
Janice: (laughter) We want to answer your questions about Chapter 7 bankruptcy. About bankruptcy. About debt. About the different kinds of debt. About the injunction. What are some of those questions that they can answer on the website, Roger?
Roger: Well a lot of people want to know what IS a discharge? What do I qualify for Chapter 7? What is means testing?
Janice: What is a discharge, now that you mention it?
Roger: It’s a court order which releases the client from the legal obligation to pay the creditor the amount that the client originally agreed to pay.
Janice: It means that you’ve been set free.
Roger: Set free.
Janice: Suppose a creditor comes back, you know, the way the banks change hands and all that stuff, is your discharge still good if the creditor is sold or goes out of business or some credit agency gets a hold of your debt?
Roger: It is. Usually I don’t see a lot of problems with that so long as the creditor was originally listed on the client’s bankruptcy petition.
Janice: Ahhh so that’s what I said before, to list everybody. There’s another reason why.
Roger: Every single time
Janice: Should clients hold on to their discharge papers, keep up with their case number in case they ever have to go back and prove that they got that discharge?
Roger: Yes, clients of course should keep all their legal paperwork.
Janice: Forever?
Roger: Forever and ever
Janice: (laughter) For at least a few years right?
Roger: For at least 8 years because you can only discharge a debt every 8 years. So I would recommend that a client keep up with their paperwork for at least 8 years.
Janice: So that they don’t have to go back and go through that whole process, well you can’t go through it again for at least 8 years.
Roger: That’s right
Janice: So you want to be able to prove that you filed. Well, what are some other questions that are on the website?
Roger: A lot of them are can I file or does my wife or my spouse have to file with me? So if you have a question as to whether you and your wife should file together or whether you should file separately or whether you should file just only one of you file. That would be one of the big questions that I have.
Janice: Give us an example of when it might be a good idea for a couple to file, or for only one member of a couple to file.
Roger: Sure. Sometimes one spouse has a lot more debt than the other spouse. So it makes no sense for the other spouse to file when they don’t have an equal amount of debt. Because, otherwise, we’re wasting the non-filing spouse’s right to discharge debt. Something could happen later on and that spouse could incur a lot of bills and at that point it might be a reason to file a Chapter 7 bankruptcy.
Janice: I see. Unfortunately a lot of people get divorced these days and sometimes when you get divorced the judge will say well wife, you pay credit card #1, and husband you pay credit card #2. They divide up the marital debt between the parties. Can you file a Chapter 7 bankruptcy and discharge a debt that you’re ordered to pay in a divorce?
Roger: No. If it’s construed to be like alimony or property settlement, you’re not any longer going to be able to discharge that debt necessarily. The best thing to do if you’re going through that process is to file the bankruptcy beforehand.
Janice: File it beforehand.
Roger: That’s one of the strategies I would use.
Janice: Don’t wait until after.
Roger: Right.
Janice: Very very interesting. What are some other questions that people can find the answers to on your website www.Chapter7attorneys.com ?
Roger: Well, they will ask how long do I have to wait? I think we’ve already talked about that, as far as filing. How long should I file, like I said before, with my spouse or not file, how much is it going to cost. If you have questions as to how much it’s going to cost, generally, most lawyers that I know of, they’re going to charge a base rate of about $1000. Sometimes the attorneys’ office are saying $1000 to $2000 but, generally, your standard garden variety Chapter 7 bankruptcy case, it’s going to be about $1000. Most lawyers will work out a payment plan for you. That does not include the court costs. The court costs are $299. Clients have questions about do I have to go to a hearing? Yes, you have to go to a hearing. Usually it’s about 30 days after we file your bankruptcy case.
Janice: So when you see those billboards that say ‘Bankruptcy $299’. That’s not the fee, they’re asking for the filing fee up front.
Roger: They’re asking for the $299 court costs up front to start the filing normally.
Janice: So that’s a little misleading. You got to ask more questions than just that because you’re not going to get a full bankruptcy for $299.
Roger: No, you won’t. There’s no way to do that.
Janice: Because of the time involved in it and how many sheets of paper is in those schedules and all those petitions and stuff that have to be filed?
Roger: Probably about 55 to 60 pages a lot of times.
Janice: Yuck
Roger: Just like a real estate closing.
Janice: And you prepare all of that?
Roger: Yes we do
Janice: And make sure it’s accurate.
Roger: Yes we do
Janice: And how many times does the client have to go to court?
Roger: In a Chapter 7 bankruptcy case, typically, it’s just once. Unless there’s fraud or something else or some creditor wants to allege fraud and then sometimes other hearings can be held. But generally for 98% of the people it’s just one time.
Janice: One time. And compare that to Chapter 13 bankruptcy which could be…
Roger: Well it’s going to be a minimum of two times. A lot of times what happens in a Chapter 13 is the client is not able to make the payments and so the creditor then wants to go ahead and take the house back and foreclose on it, so that might be another hearing that is stressful for most people. Or maybe a vehicle, a creditor wants to take the vehicle back and so that’s another reason that it’s stressful.
Janice: Now when you file Chapter 7 bankruptcy, I know that you’re an advocate, I believe it’s fair to say, of not holding on to anymore old debt than is absolutely necessary. Say, the mortgage on your home. But people have to have an automobile, especially in Atlanta. Would it be permissible to save up a couple of thousand dollars and get you a car and then file a Chapter 7 bankruptcy? Or is the trustee going to look at that and say no, no, no?
Roger: No, you’re ok on doing that. I am a strong advocate of people doing that just because once they get their discharge, I don’t want to see a client, if they’re not making a lot of money, have a $600-$700 car payment left at the end of the day. I’d rather see them go ahead and live within their means and to go ahead and be able to use that money toward a residence and qualify for a mortgage later on. I mean, it just makes more sense.
Janice: You know, a large part of what we saw during the last 10 years was people going out and getting these home equity loans of credit. HELOC. They locked a lot of he’s up with those. Would you advise, looking back, to take a credit card debt and make it essentially part of your mortgage?
Roger: No, that’s the worst thing that a person can do. A lot of times people, again, they’re searching and they’re trying to do the best that they can do and they’re honest and they’re really truly trying to repay those creditors. But one of the worst things that can be done is taking $50k of unsecured debt and then getting that all paid off and having a 2nd mortgage on your home. A lot of times what will happen is they can’t pay the 2nd mortgage and so then that 2nd mortgage holder will go ahead and foreclose. The only advantage to having that is to consolidate and taking a 2nd mortgage is that now you have a tax deduction on the interest. But still… it’s not something that I would recommend.
Janice: Debts have various priorities assigned to them. Is that still true? That some debts or all debts are not created equal?
Roger: True
Janice: Some debts are more important than others?
Roger: That’s true. Student loans cannot be discharged. Government backed student loans, and most are in fact, government backed. Child support, obviously for public policy reasons cannot be discharged. You cannot discharge, for example, if you’re an employer and you have employees but you haven’t paid the withholding taxes, those are never dischargeable. Sales taxes are non dischargeable. Income taxes, personal income taxes sometimes are dischargeable. Especially, the fundamental rule is if they’re 3 years or older since the date of filing of the tax return, generally speaking, those can be discharged.
Janice: We learn something new and important every week here at Legal Talk, especially, when my good new friend Roger Ghai, is in the studio. You want to remember to visit www.Chapter7attorneys.com and Roger, let’s have that phone number one more time before we get out of here.
Roger: Sure. 770-792-1000
Janice: This is News and Talk 1380 WAOK.
Call or text (770) 792-1000 or complete a Free Case Evaluation form
