About "living wills"

 A while ago I came across a very short and simple "living will" published by the Twin Cities Medical Society.  "Living will" is an older term;  we call it "advance directive" or "health care directive" now.  

An advance directive is defined as:  Advance directives are legal documents that provide instructions for medical care and only go into effect if you cannot communicate your own wishes.

The Twin Cities Medical Society has now transferred its work on advance directives to a group called "Light the Legacy".  The address for that is https://www.lightthelegacy.org and you can download several versions of the advance directive at that site.  One of the versions is very simple:  You fill in your name, birth date, the name and relationship and phone number of the person you want to talk for yourself;  and then you sign the form and have your signature notarized or witnessed.  The form is literally one side of one sheet of paper, with instructions and suggestions on the back.  There are versions in English, Somali, Vietnamese, Chinese, Hmong, Russian and Spanish

The site includes a longer, eight-page version if you are willing to go into more detail about your wishes and hopes.

If you come to my office I will give you the short form -- free!  

I am also looking into a video version of a health care directive through an organization called Mideo.  Their website is:  https://mideohealth.com/ "Their website says:  MIDEO® is created via a facilitated medical evaluation with a licensed medical provider. From that evaluation a medical prescription for your care is created. It is then recorded and placed in our secure servers. We utilize ID cards called MIDEO ID cards and ask that they be kept with your insurance Cards and drivers license in your wallet or purse. You also receive a MIDEO Magnet for your refrigerator as we often train paramedics to look on the side of your refrigerator for your living will or advance directive."

There is apparently a cost, which may be covered by health insurance or Medicare.

I encourage you to at least have a paper short-form health care directive as part of your planning process.

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Some student loans to be forgiven

 A class action suit in California seems to provide that about 200,000 students who attended 151 particular colleges would have their Direct Loan or their FFEL loan and who filed requests for borrower defense will have their student loan automatically forgiven.

You should check to see if your institution is on this list!

Of interest to Minnesotans I see Capella University, Brown Institute and Minnesota School of Business on this list.

This is a little hard to read in this format;  if you send me your email address I will send you an easier-to-read copy of the list.

NOTE:  This is NOT the plan by the Biden Administration to forgive $10,000 worth of loans -- that is an entirely different issue.

But I love my credit union!

 Many of the people I meet have their accounts at a credit union.  Usually they like their credit union and assume that the credit union likes them back.  And that may be true, generally.

But I recently came across a credit card agreement from a local credit union, for a Visa card.

On the second page of the agreement was this language:

THE GRANTING OF THIS SECURITY INTEREST IS A CONDITION FOR THE ISSUANCE OF CREDIT UNDER THIS AGREEMENT.

YOU SPECIFICALLY GRANT US A CONSENSUAL SECURITY INTEREST IN ALL INDIVIDUAL AND JOINT ACCOUNTS YOU HAVE WITH US NOW AND IN THE FUTURE TO SECURE REPAYMENT OF CREDIT EXTENDED UNDER THIS AGREEMENT. YOU ALSO AGREE THAT WE HAVE SIMILAR STATUTORY LIEN RIGHTS UNDER STATE AND/OR FEDERAL LAW. IF YOU ARE IN DEFAULT, WE CAN APPLY YOUR SHARES TO THE AMOUNT YOU OWE.

Shares and deposits in an Individual Retirement Account or any other account that would lose special tax treatment under state or federal law if given are not subject to this security interest.

If you have other loans with us, collateral securing such loans will also secure your obligations under this Agreement, unless that other collateral is your principal residence or non-purchase money household goods.

On the face of it, this means that if you have a credit card through that credit union, and if you have your wages or other income deposited into a checking or savings account at that same credit union, your money could be taken by the credit union and applied to your Visa card.

And if you file bankruptcy the credit union may freeze the funds on deposit on the day of filing and try to apply them to the Visa bill.

This is just another reason to not keep your money in the same place you owe money to!

Is bankruptcy for me?

 

Bankruptcy is often feared, and the decision to file for bankruptcy can be a difficult choice.  But, bankruptcy can be necessary for someone facing overwhelming debt, because it can give them a fresh start financially.  If you wonder whether bankruptcy is the right choice for you, let’s talk.

 The two most common types of bankruptcies are Chapter 7 and Chapter 13.  (Chapter 12 is for farmers, Chapter 11 is generally for businesses):

Chapter 7:   In chapter 7 you may have to give up or buy back your “non-exempt” assets.   However, in very many cases there are no “non-exempt” assets.  A chapter 7 may remain on your credit report for 10 years, but usually you can obtain credit cards and auto loans soon after bankruptcy, although your interest rate may not be as good as if you had perfect credit.  I see people who filed bankruptcy getting perfectly routine home loans a few years after their case.

Chapter 13:   Sometimes known as “wage earned” bankruptcy, a Chapter 13 can restructure your debts, catching up mortgage payments, re-writing car loans, etc.  A chapter 13 lasts between three and five years, but ordinarily you do not lose any assets that you want to keep. A Chapter 13 filing can remain on your credit report for up to seven years.  

 I am often asked how bankruptcy will affect a credit score.  Usually, the credit score is already poor because you are overloaded with debt and may be in collection. If so, bankruptcy probably won’t sink your score a lot more and because it stops the reporting of future late payments you may be able to rebuild your credit faster.

 Once your bankruptcy is over, you likely can get credit in the future.  But that will depend on your income and how you handle credit after filing.  For instance, you can get a secured credit card and use that to show that you are responsible in making payments on time.  You want to not overload yourself with credit card debt in the future, however.

Debt problems can feel overwhelming.  Being broke is tough.  Being broke can be hard on marriages.  Bankruptcy lets you shed old debt.  Good resources for budgeting after bankruptcy are The Village Family Services (800-450-4019) or Lutheran Social Services (888-577-2227) or, in the St. Cloud area, Caritas (320-650-1550).

I understand being in debt is stressful, but I’ve helped many, many people through the process.

Call me for a no-obligation discussion of your situation at 320-252-4473.

Bankruptcy Trustee -- Foe or Enemy?

When you file a chapter 7 bankruptcy, the United States Trustee (which is a part of the Department of Justice that oversees bankruptcy cases) appoints a person whose title is "trustee". The US Trustee will invariably select someone for "the private panel of trustees" -- a list of people who are pre-qualified to serve.  Technically your creditors could elect a different person at the first meeting of creditors, but I have never seen that happen.  By the way, what I am saying here is about trustees in a chapter 7 case.  In other chapters there are trustees, but they function very differently.

The job of a chapter  7 trustee is to interview you (currently by Zoom or phone) and to locate and sell assets to pay your creditors.  The trustee will look at the paperwork you file with the court, and will ask questions at the trustee meeting.  I would say that there are three basic types of  questions:  

a)  you have little or no equity in your home, so you can use the federal exemptions.  The trustee's  questions are going to be pretty basic. 

b)  you have a lot of equity in your home -- over $27000 or so for an individual or $55,000 for a couple.  In that case you are likely to use the state exemptions, and the trustee will probe to see if you have things that cannot be protected by the state exemptions, such as guns, boats, tax refunds, etc.  This is because the trustee can take those items from you and sell them, although a trustee will ordinarily negotiate with us about selling them back to you.

c)  you have a complicated farm or business;  the trustee will spend a fair amount of time asking  you about individual assets.

In any of these three types of questions, the trustee will also ask if you have given something valuable to a relative or paid an unsecured creditor.  The reason is that if you have done so, the trustee is likely going to be able to go to the person who got the gift, or whom you paid, and try to get the money back from them.

For conducting this interview the trustee gets $60 (paid from the $338 filing fee paid to the court. There is a separate fund that sometimes pays trustees a little more.)  However, the trustee also gets a commission on the money he earns from collecting assets and selling them.  The commission rate is 25% of the first $5,000.00;   10% of the next $45,000;  5% of the next $950,000;  and 3% of anything over $1,000,000.00.  In addition, trustees frequently hire themselves to act as attorney at a rate of $350 an hour or so.

Frankly, in a huge majority of the cases the trustee gets $60 and nothing more;  but if the trustee sees that you have non-exempt assets  you can expect them to bore in on you.  That's why we meet and talk about your case;   that's why we put together detailed lists of what you own.  If you are accurate in telling me what you own and what it is worth, we can usually predict very closely what a trustee will and won't go after.

As always, each case is a little different.  Feel free to call me at 320-252-4473 to discuss your particular situation.

Don’t lose your contract for deed house

 

A prior post talked about the situation where you are the buyer on a contract for deed, are current, and the seller files bankruptcy.  (Basically the message is:  You’re okay for the term of the contract).

 But what if you are behind on your contract for deed?  Then the situation can be an emergency.   The reason is this:  In Minnesota a contract for deed can be canceled (terminated) by giving a particular notice which gives the buyer 60 days to catch up. (There are a few oddball situations where the timing would be different.)   If you don’t catch up within that 60 days you lose your purchaser’s interest and all the payments you have made and any equity you have built up. 

You say to yourself “The Bankruptcy Code stops foreclosures, so I’ll file bankruptcy.”  Well, it is true that bankruptcies can stop foreclosures, but once the notice of cancellation is correctly served, a “clock” is running.   And bankruptcy won’t stop that clock from running.

The Bankruptcy Code does give an automatic 60-days-from-filing extension on this “clock”, but Bankruptcy Judge Gregory Kishel wrote an opinion several years ago in which he said that the extension was in favor of the bankruptcy trustee, not the person who files the bankruptcy for themselves.   I don’t know how widely that opinion is honored in real life – sellers often just want their money, not the property back-- but it is certainly a concern.

So, what’s the moral?

If you are behind on your contract for deed, we should be talking about filing a chapter 13 bankruptcy BEFORE you are served with a notice of cancellation.  If we file BEFORE the notice is served, then the “clock” isn’t running and we can catch up the missed payments through the chapter 13 plan while you make the current monthly payments directly.  Or, if the financial hardship is temporary, we can file a chapter 7 to get rid of your other debts and you can catch up on the contract for deed yourself during or after the bankruptcy.

 As always, there are exceptions and exceptions to exceptions, so if this post applies to you, give me a call at 320-252-4473 and we can discuss it.