Monthly Archives

May 2016

BANKRUPTCY

CAN YOU FILE BANKRUPTCY ON YOUR OWN?

Let us paint a scenario that is all too common today: an individual has been persevering, but can finally take it no longer as far as the mounting debt and the inability to save enough to even put a dent in outstanding obligations. So you stand in line to file a Chapter 7 bankruptcy. But can or should you do it yourself?

You certainly can, but be careful. First, from a strictly legal standpoint, an individual may represent himself or herself in bankruptcy and it is not a requirement to have an attorney. You would be appearing as a Pro Per for Pro Se litigant. Note how this is different if you are filing a business bankruptcy and have an LLC or Corporation. In those cases, that business is considered a separate person or entity. If John Jones, the President of ABC Corporation were to represent himself on behalf of the Corporation, you would actually be practicing law without a license. In other words, representing someone else. But in your individual name, it is legally permissible.

Proceedings under Chapter 7First, some basics. Proceedings under Chapter 7 (known as straight bankruptcy or liquidation) is where the debtor keeps certain exempt assets, liquidates the rest, and typically is able to discharge all its unsecured debts (an example of a secured debt would be a mortgage or judgment lien). California examples of exempt assets, that cannot be sold or distributed are: ordinary and reasonably necessary household items and personal effects; jewelry, heirlooms and works of art (up to $7,625); bank accounts holding Social Security payments (up to $3,050); 75% of wages; retirement accounts; unemployment, Worker’s Compensation and disability benefits; and tools of your trade and one commercial vehicle (up to $7,625).  Other states have similar exemptions.  By definition, these individuals usually have little if any bank accounts or assets and the creditors receive nothing. However, certain assets cannot be discharged, including taxes, secured debts, student loans, alimony and child support, debts for personal injury and debts or judgments based upon intentional misconduct.

The equity in a vehicle is also exemptThe equity in a vehicle is also exempt and depends upon state law. The exemptions can be from $2,000 to $5,000 (California is between $2,900 and $5,100, depending upon the nature of the exemption). So assume the car has a fair market value of $10,000 and the exemption in the state is worth $5,000. The trustee cannot force a sale to pay off the balance. But if the equity value is above the exemption, the trustee could require the sale.

How do you get the forms? In days gone by, you would go to a stationery store and fill them out manually in hard copy format. But because of the prevalence of pro se filings, you can get a hold of the bankruptcy forms online at: Courts at www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms.aspx.

This will allow you either to print them out or even still, fill the forms out online.

Obviously, bankruptcy courts are federal in nature and therefore, you go to the District Court in your jurisdiction. To find out your specific jurisdiction, go to: to www.justice.gov/courtlinks.

bankruptcy attorneyActually, there is a better way of proceeding. Instead of having an attorney represent you through the entire proceeding which could easily cost, even for a simple chapter 7, $5,000 plus, use an experienced bankruptcy attorney as a coach. Agree to pay the attorney for a couple hours consultation before the filing. So he or she will show you the ropes. They will go over exemptions, the overall procedure, the right forms, schedules to fill out, let you know what to expect, which debts to include, which ones are dischargeable or nondischargeable, and other general advice.  At the meetings, bring along a set of the bankruptcy papers and the attorney will go over it with you briefly so you are checking the right boxes. Frankly, the filling out the forms themselves, as long as you have the requisite knowledge, is rather ministerial and be can be done by most people.

There will also be advice as to what debts you do not want to discharge. For example, if have been using a charge card for the last 10 years and it has always been current, you want to preserve it. It should not be included in the bankruptcy schedules. Especially if you are discharging all other charge cards and credit cards. You need to have at least  one for future charges. This will also help you rebuild credit because of those repeat timely payments.

credit counseling classIn most bankruptcy courts, you will be required to take and pass a credit counseling class, followed by financial management classes. You must file completed certificates in order to receive your final discharge. They certainly give good information, but is not it is nothing in comparison to the advice given by an experienced bankruptcy attorney. These classes only give general information.

Your bankruptcy attorney can also warn and counsel you about potential adversary motions. In other words, if you attempt to discharge a debt improperly, you’ will be stuck with an adversary proceeding which requires legal advice. For example, assume you have been sued for breach of contract, negligence and one of the causes of action in the complaint is for fraud or misrepresentation. Even though you deny it, the plaintiff in that action could bring a motion for non-dischargeability. But if you had discussions with your attorney before filing, you could develop a strategy.

So who is the perfect candidate for a pro se Chapter 7 filing? Typically people with lower income, high debt, little or no equity or assets, no creditors alleging fraud.

spreading out your mortgage paymentsBut also bear in mind the possibility of a Chapter 13. This is useful if you need help spreading out your mortgage payments, reducing a car loan, or paying back non-dischargeable priority debts. But remember, these proceedings are much more complicated. They require you to thoroughly design a repayment plan, which is not required in Chapter 7. And if you do not submit the correct paperwork, your Chapter 13 can be dismissed.

In conclusion, you certainly can file your own Chapter 7 bankruptcy, but it is highly recommended that you have advice before jumping into this proceeding.

 

OCGA 14-2-202

OCGA 14-2-202 Legal Requirements For Filing Articles Of Incorporation In Georgia

If you’re thinking of starting a new Georgia Corporation, the first thing you should have in mind is how to file with the Secretary of State the articles of incorporation. As you may know, the articles are the initial paperwork which establishes your corporation with the State of Georgia. Requirements of doing so are in Georgia statutes OCGA 14-2-202.

Some of the requirements are mandatory under OCGA 14-2-202 and others are merely optional.

Legal Requirements For Filing Articles Of Incorporation In GeorgiaAs far as the mandatory requirements, the articles must contain the following information:

  • Your corporate name. It is usually followed by the wording: Corporation, Inc. or Limited.
  • The number of shares the Corporation is authorized to issue. Authorized shares mean the total amount of shares that can be issued over time in the future. In other words, if you authorized 100,000 shares, you can decide the issue 50,000 at this point, and keep the rest for additional partners or investors. For smaller corporations, it would make sense to have more than 1 million.
  • The address of the corporation’s initial registered office and initial registered agent. The initial registered office is typically the principal place of business. It can be an actual business address or in someone’s home. Both it should be within the State of Georgia. You cannot use a post office box for the address. On the other hand, you can use mailbox or drop services for the address. Or alternatively, you can hire a local registered agent. The purpose of the registered agent is to have someone who can be served in the event there a lawsuit against the Corporation. And alternatively, how the Secretary of State may contact you for certain business.
  • The name and address of each incorporator. It is not uncommon to have one person as the initial incorporator, even though there is more than one partner.

georgia incorporationOn the other hand, the following information is merely optional under OCGA 14-2-102:

  • The names and addresses of the individuals who will serve as the initial directors. You will be having your first meeting of directors shortly after formation and that is where each of information for the directors will be present. However, that initial meeting and resolutions need not be filed with the Secretary of State.
  • The purpose of the Corporation. Usually, people simply state: “Any business lawfully entitled to conduct in the State of Georgia .”
  • The par value of the shares of stock. The par value is the approximate value of each share of stock. So, if you had 20,000 shares issued at one dollar par value, the value the shares would be $20,000.
  • Probably one of the most important optional provisions is limiting the liability of the shareholders and directors for acts or omissions done in the course and scope of the corporate business. Under Georgia law, you can limit their liability. But, the following exceptions apply: misappropriating a corporate opportunity, intentional misconduct, a knowing violation of the law, or a transaction in which a director receives an improper personal benefit. Basically, a director is immune from liability if that person to the best of his or her knowledge, is acting in the best interest of the Corporation.

Seal_of_Georgia.svgCheck with the Secretary of State, because sometimes you can do the filing right online.

What is the next step? Bear in mind that a corporation will insulate you from personal liability as long as you observe corporate formalities. This means having the required meetings, minutes, and resolutions. The first thing you need to do is to create a minute book and have your first meeting of shareholders in which the directors are elected. It is usually for one year terms. Then immediately thereafter you will have the first meeting of directors. One of the matters they will accomplish initially is the appointment of all the officers, including a president, vice president, secretary and treasurer. Other items on the agenda would be a CPA, corporate attorney, bank account, subchapter S election, and other matters.

The good news is you can do this by phone conference so that everybody does not have to physically travel to one office. And, most people use a waiver of notice form so that a formal notice of the meeting or agenda is not have to be mailed out.

Kentucky Disposition Of Property In Dissolution Of Marriage

KRS 403.190 Kentucky Disposition Of Property In Dissolution Of Marriage

In Kentucky, when the parties go through a divorce proceeding, one of the main questions is how to dispose of property. This includes property held in the name of one spouse as well as joint marital property. What are the factors used by the court in making that distribution? The good news is that there is a statute, KRS 403.190, which lays out the factors to be considered by the court in making at disposition.

The determination is made on a case-by-case basis. Here are some of the factors to be considered by the divorce court under KRS 403.190:

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  • How much money has been invested by each spouse in the property. For example, as to a family residence, who has paid the mortgage, taxes, insurance, or improvements. In making that determination, the value of a spouse as a homemaker can also be considered. The court would assign a fair market value for those services
  • The duration of the marriage. Typically, the longer the marriage, the more each spouse has an interest in the property. The idea is to take care of each spouse because as they get older, they may not be as employable. This especially applies to the wife, who traditionally does not have a leg up in the job market.
  • The economic circumstances of each spouse. For example, the spouse that has a substantial income and long-standing job, as compared to the other spouse who is a homemaker, might mean that the higher paying spouse receives less in the final distribution.
  • As to the family residence, there will be preference to awarding it to the spouse who has custody of the children and who live in that residence. That does not mean that the spouse would receive the property free and clear, but it might be a quasi-unequal division where that spouse receives a larger percentage.

KRS 403.190In making determinations, we have to define the phrase marital property and separate property. Marital property is property that has been acquired during marriage, as well as income derived during marriage. So if the husband is the only one working during marriage, that income is marital property, even though he is the sole breadwinner.

On the other hand, separate property is property acquired by gift or inheritance. So if the wife receives inheritance after her parents die, that is her sole and separate property. The only exception would be if she made a gift to her husband, or if it is co-mingled for the purposes of it becoming joint property.

What about how title is held? What if the title is held in the names of one of the spouses? It doesn’t make any difference if the property is acquired during marriage. In other words, if the property is acquired while married, title is immaterial and is considered marital property.

What about retirement benefits under KRS 403.190? If for example, the husband has separate property retirement benefits, and he receives them 100%, then the retirement benefits of the of his spouse must automatically be given to her.

In the last analysis, the court has discretion to make the award, which is deemed equal and equitable between the parties. For this reason, there is no set formula under KRS 403.190