Archive for January 2016

I Want To File Bankruptcy But My Child Is Attending A Private Catholic School In New Jersey. Is That A Problem?

The answer is maybe.  In the last several years Chapter 7 bankruptcy trustee’s have become hungrier and have had to search a little deeper to net a dividend to unsecured creditors.  A bankruptcy trustee is a person, very often an attorney, is appointed to over see your Chapter 7 case and to ensure there are no unprotected funds that could be used to pay your creditors.  In recent years, Chapter 7 trustee’s have began pursing tuition payments already made by parents through a process called a claw-back.  In essence, the trustee could you previous paid tuition money to pay your unsecured creditors.  Even more recently Chapter 7 trustee’s have gone even further trying to claw back payments made for debtors’ children’s college tuition.

Bankruptcy can sometimes effect student's tuition payments made by their parents.

Bankruptcy can sometimes effect student’s tuition payments made by their parents.

A trustee can bring suit to recover money paid to third parties by a debtor if the debtor did not get “reasonably equivalent value” for the money that the debtor paid. The Bankruptcy Code does not define the term “reasonably equivalent value,” giving trustees some leeway when it comes to pursuing what they may consider to be improper pre-bankruptcy payments or transfers of money.  The Chapter 7 trustee’s position is that the payments qualify either as a gift, which allows for a 1 year look back period or a fraudulent transfer which encompasses a look back period that can range from 4-6 years.

Congressman Chris Collins Republican representative for the 27th district of New York, has introduced the Protecting All College Tuition (PACT) Act which aims to amend the Bankruptcy Code Section 548. Its stated purpose is to stop trustees from “clawing back tuition money from universities,” although there is a school of opinion that believes trustees will still be able to sue under various individual state’s “fraudulent transfer” statutes to recover money previously paid out in the form of fees.

If the PACT Act is not adopted, or if it proves to be inadequate in terms of stopping bankruptcy trustees from targeting universities, institutions might start demanding that students or approved third party funds or trusts take legal responsibility for tuition payments. Alternatively they might demand that parents responsible for fees provide financial statements when the make payments. This would aim to verify that the payee was solvent when the payment was made.  This is absolutely something that parents should be aware of if they are starting to navigate college payment options with their children.

There are things that can be done through a process known as bankruptcy estate planning which can help you strategize prior to filing bankruptcy so that your children’s education can gone on as uninterrupted as possible.  If you are considering filing bankruptcy and have children in either private school or in college be sure to consult with experienced bankruptcy counsel.


When Was The Last Time You Requested A Copy Of Your Chex Systems’ Report?

Have you ever tried to open a checking or savings account only to have been denied?  It could be because of what is on your Chex Systems’ Report.  Bergen County New Jersey residents are denied requests to open accounts with financial institutions daily.

Chex Systems, Inc. (ChexSystems) is a nationwide specialty consumer reporting agency under the federal Fair Credit Reporting Act (FCRA).  ChexSystems’ clients regularly contribute information on closed checking and savings accounts.


You must routinely check your credit reports to ensure accuracy.

You must routinely check your credit reports to ensure accuracy.

Chexsystems’ clients regularly contribute information on closed checking and savings accounts. ChexSystems provides services to financial institutions and other types of companies that have a permissible purpose under the FCRA. ChexSystems’ services primarily assist its clients in assessing the risk of opening new accounts.  According to its website its current practice is to retain record of reported information for a period of five years from the report date unless the source of the information requests its removal or ChexSystems becomes obligated to remove it under applicable law or policy.

Even if a delinquent account was paid the source of the information is under no obligation to remove an accurate report of account mishandling.  However, the source of information is obligated to update the report with a paid in full or settled in full date when applicable.

Under the Fair and Accurate Credit Transaction Act (FACTA) amendments to the Federal Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your consumer report, at your request, once every 12 months.  You may request a copy of your consumer disclosure report through any of the methods listed below.  The report will be sent to you, free of charge, via U.S. mail within five business days of receiving your request.  You can request a copy of your report by completing this form.

You can click on this link to view a sample report.  This report is something we should all be monitoring just like our other credit reports.

Make 2016 The Year You Take Back Your Life With A Fresh Financial Start In Hackensack, NJ (Bergen County)

There is something about starting a new year that makes people more optimistic than any other time of year.  Every January 1st we get another chance to begin fresh.  For many people it means admitting their financial affairs need to be addressed so that they can get that fresh start.

Picking up the phone is the most difficult part of the process according to my clients and most clients tell me it takes weeks, months or sometimes years to build up the courage to make a phone call to simply discuss bankruptcy as an option. My response is that there is nothing to worry about because it is just a conversation–a way to gather information– so you can make an informed decision.  Education is power!

It is not too late to start off the new year right!

It is not too late to start off the new year right!

As most of you know if you are reading this blog, the economy is in the gutter and despite what they say about unemployment, unfortunately unemployed is extremely high.  So is it all doom and gloom?  No!  It is possible to get a fresh financial start so you do not have to look over your shoulder afraid that one garnishment ended and another is set to begin.  Why not ensure that you get your tax refund as appose to a judgment creditor who is just waiting to execute on a bank levy for a debt that is so old and was transferred so many times you do not even know who or if the debt was yours.

People that come to see me come because it is an absolute last resort.  They are ashamed and still in shock that their financial life has come to this.   Most people have exhausted savings and retirement plan because they felt that was the right thing to do.  There should be no shame in having to filing bankruptcy but it should be used as an experience you can learn from so that you can make better choices in the future.  With age comes wisdom and that wisdom can be used to avoid past mistakes if those were mistakes were even your fault.  Unemployment, separation, divorce, illness, deaths in the family and other devastating events almost ALWAYS precipitate the need to file for bankruptcy.  Those are simply not your fault!

My clients come to my office for debt relief and a fresh start and what they find is compassion and sympathy.  My office is not judgmental.  We are here to help you!

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