It seems that at least half of my clients use credit unions without knowing how a credit union differs from a bank. Here is a very brief summary of the differences:
|- not for profit
- has “members”
- there is some sort of mutual association between its “members” (examples include teachers, farmers, people living in a particular small town, etc.)
- a member draws on his or her “share” in the union
- a member issues a “share draft” to assign funds to a third party
- the union is not FDIC insured
- the union is not taxed
- usually simpler banking principles and functions
|- for profit
- has “customers”
- no relationship needed between the customers (i.e. anyone can obtain an account)
- customer draws on his or her ”account” with the bank
- customer issues a “check” to assign funds to a third party
- the bank is FDIC insured
- the bank is taxed by state and federal governments
- the bank usually has very complex functions it can achieve
For a discussion of the feud between credit unions and banks, I invite you to read Kathryn Reed Edge’s article “Feud is Alive and Raw for Banks and Credit Unions” in the Tennessee Bar Journal’s April 2010 Edition, pages 29-30.
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In 2005, Congress began requiring debtors seeking bankruptcy relief to complete a credit counseling course in order to file for bankruptcy. In addition, a debtor must complete a debtor education class on financial management before discharge. These classes can be completed online, in person, or over the telephone. I like to give my clients the complete listing of the approved agencies in Middle Tennessee to let them find a the most cost-effective one. Some courses are priced at $50, while others are only $11. It is worth the time to shop around online for the best deal.
This review was recently posted on the google maps website by one of my clients:
By Kristine – Jul 9, 2010
Image: djcodrin / FreeDigitalPhotos.net
Image: Filomena Scalise / FreeDigitalPhotos.net
Tennessee has increased its personal asset exemption limit from $4,000 (which was written into the laws in 1980) to $10,000. The new law was passed April 5, 2010, and it went into effect July 1, 2010. This law will help debtors in Tennessee keep a greater amount of possessions, which will help reduce the chance of them becoming burdens of the State. See TCA 26-2-103 (http://www.michie.com/tennessee/lpext.dll?f=templates&fn=main-h.htm&cp=) (not yet updated on the official TCA website as of July 5, 2010) for reference.
Many of my debtors come to me, and they are panicked about the thought of the trustee in a bankruptcy taking their belongings. Tennessee does not have expansive exemptions, so there is some concern, but, as always, it depends on the situation. Generally speaking, a single debtor is permitted $10,000 worth of assets (this limit is new as of July 1, 2010). This includes the money in your bank accounts, your furniture, and the equity in your car, among other things. Your 401(k), IRA, and clothing come under separate exemption categories and are not included in the $10,000. What the exemption limit means is that, as a debtor, if your assets are worth more than $10,000, the trustee can conceivably come to your house and take your property that exceeds the $10,000 limit. This is a scary thought. Remember though, that actions involving a court do not happen willy-nilly. Rather, the trustee and your attorney will be having discussions about the value of your assets, and you will have more than adequate warning if the trustee needs to come and value your assets to potentially seize them.
Now, some people ask me then, “well, can I just give my car to my mom?” No. You will need to account for any such gifts of assets on your statement of financial affairs. If you sell your assets for a reasonable price and use the money for living expenses, the trustee generally does not take issue with such actions. However, it is generally a bad idea to transfer ownership for a nominal or no price to a relative immediately before filing bankruptcy. The trustee could cite you with committing bankruptcy fraud, and then you would not be granted a discharge and could face stiffer consequences involving the federal courts. Being honest is always the best policy.
Remember that if you have any concerns, please speak with your attorney, who can help you value your assets and explain how the exemptions will apply to your case.
In the past several months I have had several phone calls and inquiries about what to do when your child turns 18. In most cases a child support obligation terminates when the child reaches the age of 18 or graduates from high school. However, there are some exceptions to this, including but not limited to, the agreement of the mother and father, disability of the child, health concerns of the child, etc.
What happens when it is time to stop paying? If you are paying directly to the other spouse, you may simply be able to stop paying. However, if you are paying through the state child support office a Motion to Terminate Child Support is necessary. In either case, it is the best course of action to simply file a motion to terminate child support. This way, there will be no surprises later on down the road.
If you have questions regarding your child support obligations or need assistance in terminating your child support, contact an experienced Tennessee Child Support Attorney.
The law uses many terms that may not be widely understood by people not familiar with the law. One question that I was asked recent is; What is an arriagnment? This is a widely understood term by lawyers, but may not be as well known by people that dont spend as much time in court as I do. The following is a brief definition:
In Tennessee an arraignment is the formal reading to the accused of the charges alleged to have been commited by the accused. At this stage of the process an accused can enter an initial plea. There are three possible pleas that are most often used: not guilty, guilty, no contest.
Following the entry of a plea the court will generally set a review date and/or a settlement date. If a person pleads guilty at the first appearance the Judge may pronouce sentence immediately. In some cases, a plea of guilty may result in the judge pronouncing sentence immediately.
You are generally required to attend the arriagnment. Should you fail to attend the arriagnment you may be faced with additional criminal charges, fines, and most likely an warrant for your arrest being issued by the court.
If someone is being held in jail, without specific charges, he or she must be arraigned within a short time period, usually 24 to 48 hours of the initial arrest.
If someone is being held in jail for a specific charge they are also entitled to a timely arraignment proceeding to be formally charged. Bail may be set following the arraignment, bail may be denied if the crime is of a serious and/or violent nature and/or the person may be released to return at a specific date. It is important to remember that a release from custody and/or a determination of whether bail will be set or at what amount it will be set is within the discretion of the trial judge.
When new clients meet with me for the first time, I often advise them that as soon as they know they are going to be filing for bankruptcy within the next 90 days, they should stop paying any creditors. The main reason for this is so any of those payments will not be treated as a preferential payment, and the trustee will not have to ask for that money to be given to the bankruptcy estate. Another reason I advise this include that I want to make sure my client is as stable as possible going into the bankruptcy. One of the few items I stress for my clients to pay as the bills become due are utilities and secured debts that involve assets the client wants to keep (such as a house or a car). The utility companies do not negotiate — either you pay them and get their services or you do not pay them and do not receive their services. A lawyer can do very little to no negotiating with a utility company. In addition, if a client is behind on utilities going into the bankruptcy, the utility company can request the debtor submit a security deposit to ensure payment of services. As for the secured debts, a creditor generally will not agree to the debtor reaffirming (read: keeping) the debt and the asset unless the debtor has proven himself to be worthy by staying current. So, in the end, pay your utlities and the bills for the things you want to keep!
Will You Put Anyone in a Bankruptcy?
No. Contrary to how some attorneys practice, I will not put just anyone in a bankruptcy, and I am judicious about who I accept as clients. When I am considering whether to help a client file for bankruptcy, I consider the following factors:
- Whether the debtor is financially stable if the debt is removed. To put this another way, if the debtor doesn’t have the bills hanging around his or her neck, can he or she afford the cost of living. My rationale is that if the debtor cannot afford the cost of living, I am not using the protection of bankruptcy to the fullest extent. I want to time the bankruptcy so I maximize the amount of debt owed, and I want to really be able to give the debtor a fresh start. In addition, if the debtor is still living on credit at the time of filing and afterwards, then the debtor could be cited for bankruptcy fraud (incurring debt while planning to file for bankruptcy), and the debtor will be barred from filing for bankruptcy for the next seven years.
- Whether the debtor has an income that fluctuates wildly.
- Whether the debtor is serious enough to go through with the bankruptcy proceedings to the point of reaching a discharge.
- Whether the debtor has stopped living off of credit.
- Whether the debtor is truthful about his or her assets to me.
- The amount of debt owed to the amount of creditors versus the debtor’s income.
- The amount of debt that is non-dischargeable (such as tax debt, student loans, and domestic support obligations).
When considering to hire an attorney to help you file for bankruptcy, it’s a good idea to make sure the attorney is looking out for your best interest. I invite you to come into the Gordon Law Group and meet with me to discuss your debt-relief options.
I am inspired to write this article today after a meeting I had this past week. I met with an individual to complete their estate planning documents (will, living will, powers of attorney for assets and health care) and as we were finishing up and thanking them for coming in they said the most wonderful thing- “This was my birthday present!”
When I asked what they meant, they explained that the costs associated with getting the documents prepared had been the birthday present of a close friend. I was struck by what an unusual gift this was. Certainly paying for the costs is a gift in and of itself, but the peace of mind that the individual can now have having their estate done is a gift as well.
We all worry about buying gifts- whether they are the right size, right color, or right for the persons’ tastes. But here is a gift that fits, and will continue to provide the best gift of all – peace of mind.