Life After Bankruptcy

good afternoon everybody it’s jeff jenkins here um just make this minor correction

i’m going to start by myself eric may join me he had unfortunately had to do a thing with the judge in virtual court this afternoon so um today uh we’re continuing our facebook live series we do it 2 p.m every thursday afternoon and this afternoon we’re going to talk about a couple of different things we’ll see how much we have time for first of all we want to talk about life after bankruptcy and basically we want to talk about credit reports

and also getting loans when a bankruptcy is concluded then we’re going to talk about how bankruptcy interacts with states and probate matters so you know what if you file a bankruptcy and somebody leaves you money in a will uh once they leave you a home what if there’s a reverse mortgage in the home um what about life insurance uh what about debts they might have uh and so forth so we’re going to talk about all those things hopefully this afternoon um first of all as far as life after bankruptcy goes uh as you’re aware when you because we’ve talked about this before when you do a bankruptcy your object one of the main objects is really to get a discharge of your debts um and that would be your unsecured debts so credit cards medical bills things like that you want to get those erased if you do a chapter 13 probably another uh goal that you have is to deal with some kind of secured loan that you’re behind with and you want to keep whatever property it is your house if you’re behind your mortgage your uh if you’re renting a place you want to you want to hold on to that a car if you’re behind the car alone and so forth um but generally getting that discharge is is the goal and that kind of marks the end of either kind of bankruptcy that a person would do either seven or thirteen um

a lot of people i can’t tell you how many clients i’ve had over the last 35 years come in and say um jeff isn’t this going to hurt my credit report if i do this bankruptcy and i i think to myself i usually don’t say it but i think to myself well sometimes i will tell them i’ll tell them your credit report is ruined already or you wouldn’t be sitting here you know your mortgage companies foreclosing on you you’ve got fifty thousand dollars in credit card debt that you probably haven’t paid anything on in months and months and months and months um so your credit report’s not in good shape right now certainly filing the bankruptcy you’re not going to get a gold star for that from your credit report but it’s going to be a step on the path to get your credit report squared away in the long run um

the credit reporting agencies use different things to create a credit report score uh how much money you owe is certainly one of them so by eliminating a significant amount of debt to a bankruptcy proceeding you are um taking a step in the right direction in terms of having a higher credit score uh at our law firm we after your bankruptcy after you’ve got your discharge as a gift to you we don’t you don’t get charged for this we refer you to a person that we do business with who specializes in repairing people’s credit reports and he takes uh he’ll send you things over a period of like 10 to 12 months and if you do all the things that he suggests doing he’s going to try to get your credit score to 720 and generally he’s successful so um you know that’s that’s a great thing to do we encourage our clients to do that it’s free doesn’t cost you dime i’m paying him every month for that service so um that’s what happens with us in bankruptcies and helping people with their credit reports as far as getting loans a lot of people might think that um how am i ever going to get a loan again you know i want to buy a house or something and uh bankruptcy is not going to keep you from getting the loan forever it’s going to go in your credit report that’s for sure but um

a little while after after the bankruptcy like let’s say a year a year is a good benchmark a year after you get a discharge you’re going to be in very good shape for getting loans at normal interest rates if you fixed your credit report and if you follow that program that i just talked to you about you would have fixed your credit report by that time um you’ll be able to get market rate loans on mortgages certainly with a fha or a va loan they’re more lenient than other types of lenders uh in terms of bankruptcy and and offering market rate loans um a car you’d be able to get a car in normal interest rate again if you fix your credit report and you wait for a year after the bankruptcy’s over the bankruptcy itself doesn’t prevent you from getting things um we have clients who purchase cars all the time with a bankruptcy going on unfortunately their interest rates are usually pretty high uh i’ve had clients purchase houses with the chapter 13 going on so these things aren’t impossible and you shouldn’t think that they are um and certainly if you need to file a bankruptcy don’t hesitate you talk to an attorney talk to us we’re happy to talk to you for free and go over your situation with you but i can certainly answer your questions about credit reports and getting loans after the bankruptcy is started and then again after it’s finished um so that’s about it on uh credit life let’s call it after a bankruptcy um the other thing we want to talk about is a little more involved and that is uh how does bankruptcy interact with a state and probate law so um first of all if you have a relative that passes away um and you’re somehow you have something to do with the estate maybe you were appointed as an executor or an executrix or maybe there is no will but um you get appointed as the administrator by the probate court because your friends don’t want to do that see eric’s finished his his uh virtual court appearance the judge yes it went very well jeff um the uh judge being it was my phone the judge liked my tie and uh yes he did i haven’t worn a tie in um several months here we go so where we were we were just i was just starting bankruptcy and states and probate stuff and uh talking about if someone a relative of yours passes away um and there’s will or there’s not a will what about their debts what happens with their debts i didn’t like answer that it’s always easy to ask the questions isn’t it yeah so what do you think well if someone passes away um the it’s kind of like an accounting question you start with your assets and then you subtract the liabilities and after the liabilities are satisfied then there could be a distribution to those who are the beneficiaries in the estate and of course there’s certain assets that pass outside of that and that would all be from the decedent’s estate so just because you did a bankruptcy and you had a relative pass away there’s no way that you get drawn into their debt situation their estate has their estate has to satisfy the debts if they exist if there’s any money to do it after certain things are paid for after the estate is administered to a degree and you pay burial costs and things like that

and they’re starting to talk about things that in a normal situation would pass outside the estate meaning uh they’re just not part of it they happen but it’s not affected by creditors creditors have nothing to do with it um it just passes outside these states so a couple some of those would be for instance sometimes life insurance you can name someone as a beneficiary absolutely and remember what i just said it’s typically accounting it’s assets minus liabilities and the rest goes to beneficiaries if someone passes away life insurance is different if it names a beneficiary specifically it goes right to the benefit we draw it this way it goes right to the beneficiary you see that goes right to eric claiming it goes right to the beneficiary and bills don’t have to be paid from it that’s different than for instance a bank account or a car that you choose to sell but jeff you made a very good point i’ve had over the years many people who say my father died he has two three hundred thousand dollars with a credit card debt and he had a car um if i uh what am i going to do while i’d be responsible for the 200 000 and the answer of course is no no no not not if you’re a name beneficiary or somebody who would inherit according to new jersey’s intestate laws it’s those aren’t your debts those are the person the debts the person who died and their state whatever things belong to them would be their estate after they pass away their state satisfy the debts if it’s able to like eric was talking about things are dealt with and there’s money left over then creditors can make claims they have a certain amount of time to make claims on the estate but certainly just because you are inheriting money or something like that that doesn’t make you liable on the various debts the person has yeah absolutely um eric we had a interesting well i mean this is an ongoing thing it happens all the time but it was one of those interesting things that you and i talked about and that is what happens if you have a husband and wife let’s say file a joint bankruptcy and uh and it’s a chapter 13. let’s let’s just say i mean it could be a chapter 7 i suppose but it’s a chapter 13 and you go along and they go to their meeting with the trustee and they’re making trustee payments and unfortunately one of the the husband or the wife passes away they die

can their state continue their part of the bankruptcy clearly an estate can’t file a bankruptcy if somebody’s died it’s too late for them to file a bankruptcy their their estate that’s their belongings after they die can’t start a bankruptcy but it can con continue one do you think well

certainly under chapter 7 and the bankruptcy rules the continued quote liquidation of the chapter 7 assets continue now as we’ve talked about many episodes chapter 7 is the quicker bankruptcy you’re in and out of bank between three to four five months six months and you get a discharge and we typically only file chapter sevens for clients where all of their assets are exempt or protected from creditors so you do a chapter seven you get a discharge of all your debts and you don’t owe anyone any money sometimes there are cases where people have a personal injury case pending or something that a chapter 7 trustee would have to liquidate for the benefit rarely do we get involved with that but it does happen under either of those situations noaa chapter 7 or the asset chapter 7 if the person passes away the case continues administration is my understanding however in the chapter 13 there’s no absolute rule and it’s up to the debtors family or the decedent’s estate representative to make a decision about whether they want to continue in chapter 13 and then if so the court and the trustee weigh in on as a balancing test will it benefit who will benefit to continue in bankruptcy right and it can get very complicated because again suppose the person had life insurance suppose a person had insurance through work it may not pay to continue in bankruptcy if it’s one of those insurance policies that go outside the estate you may not want it to then be included in a bankruptcy estate can be very complicated yeah absolutely and like eric was intimating there’s a split of authority among the bankruptcy courts about what should happen i’m sure it has to do there what they would decide has to do with what kind of bankruptcy it is what point it’s at certainly um but i most the time i mean for the last 35 years i don’t think we’ve had one time where a trustee fought us if somebody died and we wanted to continue the bankruptcy for their the decedent’s estate you’re exactly right jeff and at the end of a bankruptcy case before someone files bankruptcy they have to do a debtor education class and i’m sorry at the end before they have to they have to do a certification that says they’ve got completed of course at the end it’s the better education course well how can you complete the debtor education course if you’re no longer alive and we have filed motions on behalf of people who passed away to have that requirement waived and the judges have summarily signed those orders number one the debtor can get his discharge even though he’s dead and number two because he’s dead he doesn’t have to do the uh second class at that education purpose does that class if the first person’s dead so we’ve had judges sign off on that and now we’re having judges and trustees question whether they can remain in chapter 13 once they’re especially if it’s a spouse whether the other one can keep the case going for both of them there’s all sorts of policy reasons why they should be able to in the chapter 13 instance and jeff i’ll give you an example i think it’ll give you a good opportunity to explain this to people suppose someone owes old income taxes and they filed joint tax returns say 2014 2015 husband and wife madly in love but they pay but they owe the irs some money they filed bankruptcy in 2020 and they have a chapter 13 plan what happens if the debtor passes away and they don’t let the vote the case continue to be administered by in both names well the problem that you have there of course is you’re talking about taxes that are older that might be of an age where they’d be dischargeable even though their income taxes and we see this a lot in bankruptcy context not only with the situation where someone dies but also the situation where you’ve got the husband and wife sitting in front of you and the husband says i want to do it my wife says i don’t want to file a bankruptcy and they have taxes that they owe jointly and the problem is whoever follows through with a bankruptcy they’re going to get rid of all their liabilities in fact like i’m saying and you were talking about um some of those debt taxes may just be dischargeable and go away but if the the person doesn’t file the bankruptcy they don’t want to or they’re dead um they are going to continue owing those taxes and uh even though even if you had a situation where um taxes had to be paid through the bankruptcy and the one spouse pays them that doesn’t get rid of the for the other spouse it doesn’t get rid of any ongoing interest or penalties so at the end of the bankruptcy proceeding the irs could say well mr smith congratulations you’re finished with your bankruptcy and um your tax liability has gone away unfortunately for your wife she didn’t do the bankruptcy so she knows us now so much in penalties and so much an interest that needs to be paid and if mrs smith has passed away then really right in that situation she would only owe interest in penalties mr smith has a discharge of his debts mr smith one day wants to sell his home and quite passively by not allowing mrs smith to obtain her discharge this irs debt will circle around and have to be paid that’s quite possible if if the irs had a lien against these people when the bankruptcy was filed the lane an irs lien is pervasive it covers everything that you own all real estate all everything you have you have homes uh like our president does three different homes i don’t know exactly where he’s got them but uh he does i guess he’s what’s a big white one isn’t it well i guess that’s his fourth time that he doesn’t have to pay for that though no no but he’s done well in politics

and if uh so he’s got three homes to say in three different states if he were to file a bankruptcy with an irs link well forget about the bankruptcy but the irs lane would attach to each one of those homes with you have 10 homes 20 homes two homes it attaches to everything cars furniture all personal property yeah bank account and you know we deal with this with the irs all the time and valuing assets to see what might have to be repay to the irs if they do have a lane or a secure creditor so and and you know this gets a little bit complicated i hope we didn’t lose you today um the the bottom line is we know how to deal with this stuff i mean we understand exactly what needs to be done and could answer all our clients questions if some instance like that was to arise and so for our clients they just have to know i’m going to go see jeff and eric and i’m going to ask them the questions and they’re going to fix things for me and that’s what’s going to happen that’s our goal and we’ve had many many many happy clients over the last 35 years yes we can yeah that’s why we’re still in business yeah we wouldn’t still be business if we’re in business we didn’t have happy clients so it is a complicated area and it’s a difficult area because we need to understand the facts in a rational straightforward basis talking to people who’ve just lost the spouse who are local right so it’s a very very difficult time and we understand that but with death comes less income typically yeah there’s all kinds of problems especially if a couple’s been married for a long time i don’t want to go on and on about things like this but it’s just uh there are a lot of things to deal with and we can certainly help we’ve people are married for 50 years the husband’s been paying the bills for 50 years the wife comes in to see us and said my husband died of a heart attack last week i have no earthly idea what to do i don’t know if we have a checking account i don’t know what bills have been paid i don’t know anything or it could be the other way around the wife was paying the bills and the husband comes in and sees us and he’s distraught but that’s uh that’s something that happens a lot of times yeah hopefully hopefully you can refer this video or any of our other videos on the jenkins and clayman brand new and improved website yes and there is on the top right there you can go to click right about there you would click the videos and then um you can get all the facebook videos from the past uh 13 months at this point i think and um this one should be referred to anyone who you know is going through the tragedy of a uh of a spouse who’s passed away or a loved one who they live with has passed away and it’s causing financial issues we’re here to help yeah we didn’t really talk about reverse mortgages today but we’re kind of about our timeline yeah and we did we’ve talked about reverse mortgages before pretty thoroughly um i don’t know that we need to go through it now or next week so um when we wrap things up for today and next week we may be taking a vacation because i won’t be here but one of us will be taking a vacation right um so we may we may have to skip next thursday afternoon but we’ll certainly be back following thursday afternoon and we’ll probably pick up with bankruptcy and how it interacts with other areas of the law like family law how does that work um but it’s and it those things all do get complicated but it’s it’s worthwhile i think just to discuss a little bit to give you some general idea of what what goes on i i agree jeff it really does and we appreciate you tuning in and just give us a call we’re here all day today and uh monday friday give us a call we can help you out absolutely so uh until next week or the following week goodbye and stay safe and god bless