August 26, 2011

A-Z of Bankruptcy Errors

Posted in Bankruptcy tagged at 12:16 am by demetriagraves

Helping clients prevent heartache during bankruptcy filing is important to me. Many clients are embarrassed about certain areas and are reluctant to discuss them or perhaps certain things are forgotten about because they don’t seem important. But I’ve been in the difficult situation of helping a client file for bankruptcy and some important piece of information comes up that wasn’t disclosed early on and this has forced us to back-pedal. It’s really important to know before you go in any area of life, especially with a life changing experience like filling for bankruptcy. With this in mind I decided to compile a quick A-Z of common bankruptcy filling errors, that can even be used as a checklist to make sure we’ve covered all the bases when proceeding with a bankruptcy filling.

The A to Z of bankruptcy filing errors.

a. Not disclosing all your income.

b. Not disclosing all your debts, including family debts.

c. Not disclosing all major transactions in the past 4 years.

d. Not completing both financial courses when required.

e. Not showing up for appointments or the required Meeting of Creditors.

f. Leaving your money in a bank which will “freeze” it for 60 days.

g. Leaving money in a bank which will keep it to pay your credit card.

h. Not handling your car loan properly (there are alternatives).

i. Going on a spending spree before filing.

j. Buying luxury goods or services 90 days or less before filing.

k. Taking cash advances within 70 days of filing.

l. Not telling your attorney of prior bankruptcies.

m. Not telling your attorney about prior out-of-state addresses.

n. Paying off your car loan (or any other debt) before filing.

o. Thinking a living trust (that’s less than 10 years old) will protect home equity

p. Not bringing your drivers license and Social Security Card to the hearing.

q. Not disclosing all lawsuits you’re involved in.

r. Not disclosing a business you own in full or in part.

s. Not disclosing property if you are on title.

t. Not disclosing if you used a second social security number.

u. Letting your home be foreclosed before the filing.

v. Letting your car be repossessed before you file.

x. Letting a creditor or the government seize your business before you file.

y. Not disclosing money paid to other professionals within the past 4 years.

z. Believing you can do it yourself.

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Divorce Pranks

Posted in Divorce tagged at 12:13 am by demetriagraves

Divorce pranks seem to be a growing trend, but unfortunately while it seems that they may make you feel better in the short term, the long-term consequences can be very damaging and it won’t help your case. There’s been a lot of recent media attention regarding a divorce prank carried out by Danny Larivière who was ordered to haul away the boulder he’d gleefully dumped on his ex-wife’s driveway just a day earlier. Plucked from a quarry and lugged by front-end loader in the dead of night, the 20-ton rock was spray-painted with fluorescent orange birthday wishes for “Isa,” then topped with a pink bow. “She never had a rock big enough for her tastes, now she has one,” was Mr. Larivière’s response. The prank has earned Mr. Larivière possible mischief and harassment charges – another ugly turn in his lengthy, acrimonious split from former wife Isabelle Prévost.

Couples who are going through a divorce process, often find it’s the worst time in their lives and sometimes the pressure gets to them and they do things they wouldn’t normally do. Like taking hammers and screwdrivers to a spouse’s car.  Another common prank is strewing their exes’ lawns with garbage or playing hide-and-seek with precious items. Or running up huge bills on joint credit cards.
While Mr. Larivière’s boulder stunt has been widely treated as a gag, the recipient rarely sees it that way. They see this as an invasion of privacy, or that their former spouse is unhinged, somehow. This story is a powerful example of how family litigation can leave an enduring legacy of bitterness, despite the outcome. This is not a joke – this was retribution, this was a public humiliation of the wife, despite the fact that the court case ended last year and the husband won joint custody.
So why do spouses do it? The party that is doing the pranks often feels like they are the victim. They’re not getting the vindication they’re looking for, especially in the division of assets. While pranks can bring temporary euphoria to the mischievous spouse, they can also have dire consequences for litigation and spousal support. All of these things typically backfire. They’ll look very bad to a judge, and I always urge my clients to take the high road. Divorce pranks should be avoided in all circumstances.

August 18, 2011

Stay at Home Parents Finances During Divorce

Posted in Divorce tagged at 8:51 pm by demetriagraves

What happens financially, if you find your marriage is breaking down and you’re not the the primary bread winner? This is a question many people find themselves asking. Last year there were approximately five million stay-at-home mothers in the United States. Plus it seems that the numbers of stay-at-home fathers are on the rise. The Census Bureau estimates the the number at 159,000, which has tripled over the last decade. Some say that’s a gross underestimation, because it fails to account for nearly 2 million more fathers who are now primary caregivers due to the recession as well as fathers who only work part-time so they can still care for their children.

Whatever the exact numbers, stay-at-home parents are vulnerable to substantial financial risk during divorce. There have even been reports that unemployed men face a greater danger of being left by their wives, particularly working wives. And though a wife’s employment status had no bearing on risk, neither does the law provide stay-at-home parents sufficient protections either, especially under our unilateral divorce laws.

In practical terms, if the breadwinner leaves, the first risk faced is lack of immediate access to funds. Even if you have a joint bank account, your spouse might decide to open a new one in which to deposit paychecks. Joint stock or savings accounts may require joint approval for withdrawals. This could leave stay-at-home parents hostage for money until they are able to secure a temporary order of support as well as funds with which to defend themselves.

New York recently recognized the inherent unfairness of this financial disparity when it came to the ability to defend oneself in a lawsuit for divorce. It amended its domestic relations laws to establish a rebuttable presumption that the monied spouse be required to pay for the non-monied spouse’s attorney and experts during the pendency of litigation. In other states, stay-at-home spouses without independent means are generally subject to the proper exercise of discretion by the judicial system to award them sufficient funds both to defend themselves and for support.

The financial risk stay-at-home parents face when it comes to spousal support can be even more troubling. When no-fault was instituted, permanent spousal support awarded to spouses who had given up their careers to become stay-at-home parents began to fall out of favor, permanent spousal support being deemed incompatible with the clean break idea behind no-fault. Unless you’re the victim of spousal abuse or have been married ten years or longer, or have physical or mental disabilities. Even then it is limited in amount and cannot exceed three years. Then there’s all the issues of child custody and child support to be worked out.

When you start looking at all these factors it can seem overwhelming. This is why you should consult with an experienced Family Law Attorney, sooner rather than later if you find yourself in a situation where there might be a divorce on the horizon. This will help make sure that you and your family are protected and you can weather the financial storm that can often accompany divorce proceedings. I offer a free initial consultation where you can get your questions answered.

Celebrity Bankruptcies – Top 10

Posted in Bankruptcy, Celebrity Bankruptcy tagged , at 8:45 pm by demetriagraves

I often feature articles about celebrities when they hit hard times financially and end up filing for bankruptcy. Somehow it makes it seem less daunting for the rest of us ‘mere mortals’ knowing that we’re not the only ones who can get into financial trouble and need to be bailed out by filing for bankruptcy. So I thought it would be interesting to compile a list of Top 10 Celebrity Bankruptcies. Many of the celebrities who are on this list have come out relatively unscathed by their bankruptcy ordeals, some are even sitting pretty financially. So perhaps there is hope for the rest of us.

In ‘celebration’ of this I’m running a bankruptcy special – just mention our newsletter and you’ll receive a discount. I hope you enjoy the following Top 10 Celebrity Bankruptcies:

  1. MC Hammer
    As one of the biggest hit makers during the 1990s, MC Hammer had an entourage that rivaled the Queen of England’s- and it showed on his bankroll.
    He paid 300 people approximately $500,000 a month.

    Apparently he wasn’t “Too legit to quit” because in 1996 he filed for bankruptcy to stop paying on the $13 million he owed. Notable debts included $110, 000 to an interior decorator, $100,000 to the IRS, and over $500,000 to an attorney.

  2. Burt Reynolds
    In the 1970’s Burt Reynolds was the man. He owned mansions on both coasts, a helicopter, a Florida ranch and a hot wife. Life couldn’t get better, so instead it got worse.

    After a few not-so-stellar movie choices, and a pretty pricey divorce from his wife, his finances weren’t the hottest. In 1996 Reynolds filed for a Chapter 11 bankruptcy, owing over $10 million in debt. He was able to keep his $2.5 million Florida home under the Chapter 11 homestead exemption, and paid back a portion of the debt over the next two years.

  3. Larry King
    Larry King’s estimated wealth today is at $50 million, 30 years after filing bankruptcy. In 1978 King was in a dire financial situation. He had been accused of stealing money from his business partner and charged with grand larceny. The charges were dropped, but the scandal hadn’t help with his career.

    Eventually his talent shined as the scandal dimmed, and after a few good money moves (and a few good prenups -he’s been married seven times), he’s found monetary success.

  4. Willie Nelson Nelson had a similar problem as MC Hammer; he liked a big entourage and he paid them well. So well, in fact, that his sideman drummer is in the “Guinness Book of World Records” as the world’s highest-paid for his position.

    In 1990 the government was tired of waiting for $16.7 million in past taxes, so they seized his bank accounts, his Texas ranch, and his gold records. Nelson released an album called “The IRS Tapes: Who Will Buy My Memories?”- and became a Taco Bell spokesperson- to help settle his debts. In 1993 his bill was officially paid and his finances are back in stable order.

  5. Donald Trump
    Besides his hair, Donald Trump is famous for his successful real estate adventures and extravagant lifestyle. And then there are his bankruptcies, err, his casinos. His casino ’empire’ first filed bankruptcy in 1992. Then again in 2004. And then again in February 2009.

    He’s lost billions in this business venture, yet fortunately for Trump he has his TV gig and real estate to keep his personal finances afloat.

  6. Don Johnson
    Pay attention to this one, it has a better plot line than most of the shows this celebrity has been part of. Don Johnson, known mostly for his Miami Vice days, is the owner of a poorly named company called Timber Doodle Glad Equity Venture LLC, and he also owns a ranch called Woody Creek in Denver, Colorado.

    In March of 2004 Johnson owed $950,000 to City National Bank, which was just a small part of his $14.5 million in debts. City National Bank filed a lawsuit to auction off his house in order to pay for their portion. So Johnson had his company file Chapter 11 bankruptcy, to use the money that should have been going to creditors to pay off his personal debts, which he was able to with less than 24 hours before the auction of his ranch. Whew… what a nail biter!

  7. Mike Tyson
    As one of the youngest heavyweight champions ever, Mike Tyson earned millions for just one fight, receiving over $300 million in his career. He was a big guy, making big money, and spent it on a big lifestyle. One of those big purchases was a pair of pet tigers, which was just a small dent in his big debt.

    Tyson owed $13.3 million to the IRS, had $400,000 in monthly expenses, and had amassed a bill of $27 million dollars owed to creditors. In 2003 both he and his company, Mike Tyson Enterprises, filed for bankruptcy. Now all he has is his tattoo and gold teeth.

  8. Wayne Newton
    Wayne Newton, also known as Mr. Las Vegas because of his 30,000 solo shows in the city, had to file for bankruptcy in 1992. He spent years suing NBC in a nasty libel case about ‘apparent’ ties with the mafia and eventually accrued over $25 million in debt, including $341,000 for back taxes.

    Luckily for him, dark hair and fake tans brought him fame and fortune at the Stardust Hotel, which has a contract that ‘apparently’ pays him $25 million a year for performing 40 weeks out of the year for 10 years. He’s been sittin’ pretty in sin city since 1999.

  9. Kim Basinger
    Kim Basinger is a model turned actress, and a good one at that. Not only is she good looking, but she made good career moves that led her to win a Golden Globe Award, Academy Award and a Screen Actors Guild Award.

    Unfortunately, she’s not as good as an entrepreneur. In 1989 Basinger bought a small town in Georgia that she wanted to turn into a Hollywood hangout with movie studios and film festivals. She also decided to back out of the movie “Boxing Helena” (good career move). Basinger was sued for backing out of the movie and after encountering financial difficulties trying to make a small city in Georgia seem cool, she filed for bankruptcy in the early 1990’s.

  10. Cyndi Lauper
    In the 1980’s you couldn’t go an hour without hearing one of Cyndi Lauper’s pop hits, but it wasn’t always that way. Before her hit album “She’s So Unusual,” her previous band called Blue Angel released an album that did not make any money. The band fired their manager, broke up and then sued by their ex-manager for breach of contract.

    In 1980 Lauper had to file for bankruptcy and work in retail just to scrape by. Fortunately, she was soon just a girl having fun at the top of the charts and a huge pile of money.

 

August 11, 2011

Life After Bankruptcy

Posted in Bankruptcy tagged at 2:52 pm by demetriagraves

If you have recently filed for bankruptcy or are considering that filing for bankruptcy may be your best option, perhaps you can find some comfort in the fact that you are not alone. According to the American Bankruptcy Institute, the total number of bankruptcy filings in the United States increased 8 percent in 2010, to a total of 1.6 million, and the numbers for 2011 are expected to rise even higher.

Click here to find out more!But just because bankruptcy is increasingly common doesn’t make it any less stressful. People who file for bankruptcy often feel ashamed, overwhelmed, and hopeless. When all bankruptcy issues have been settled, people may think the financial problem has been completely solved. The truth, however, is that life after bankruptcy can be challenging, particularly when it comes to rebuilding your finances. Here’s some tips on how to recover:

Address what caused the bankruptcy. Perhaps you need to set a new budget or look for new types of employment, so you don’t find yourself in the same financial straits five years from now.

Identify your goals. Recovering from bankruptcy can mean anything from reestablishing a healthy credit score to paying off all of your debts. To help focus your progress, pick a handful of top goals to work toward.

Check your credit score. Inaccurate information often plagues credit reports, which can affect everything from job applications to mortgage rates. Simply removing incorrect information often significantly improves your score.

Gradually re-establish credit. Taking out two credit cards and paying them off fully each month can help rebuild a credit score that’s been dragged through the mud. After one year, that score will start to improve, and after seven to 10 years, it could look as good as new.

Find a new credit card issuer. While lenders often hesitate to give credit cards, car loans, and other forms of credit to people with a history of troubled loans, it’s usually possible to find a willing lender. The terms might not be ideal, but new accounts will help rebuild credit history.

Over the last two years, card companies have tightened their standards in the wake of rising default rates and have raised interest rates even on reliable customers. Card comparison sites can help maximize the chances of getting the best deal possible. Secured cards, which function more like debit cards, are often the best option for those trying to rebuild their credit.

Avoid unfair deals. Predatory lenders often target vulnerable groups, including people who’ve recently filed for bankruptcy. That’s why recent filers should be wary of organizations and companies offering payday loans and rent-to-own deals that carry high interest rates. Consumers are often so eager for credit approval that they jump on contracts with high interest rates, but it’s usually better to wait.

Seek support. People recovering from bankruptcy can feel like social pariahs; finding yourself in this situation can be embarrassing and even shameful. But online communities of people going through the same thing can help provide the much-needed emotional support.

Think positively. Most people’s credit improves after filing for bankruptcy, because debts are cleared to give them a fresh start. While the bankruptcy filing will stay on your credit report for 10 years, many creditors are willing to take a chance on lending to those who have been in bankruptcy.

You can still open a business. A person’s personal credit history will not usually directly affect their ability to open a business. Entrepreneurs who want to continue running a business after bankruptcy should get in touch with the Small Business Administration. In addition, it is generally advisable to change the name of a business after it has gone under financially.

Working with a professional credit counselor or bankruptcy attorney can help make the recovery process easier. It’s not always expensive. Some professionals provide services at reduced rates or even for free. But if anyone promises to improve your credit score quickly or makes another offer that sounds too good to be true, there’s a good chance it’s a scam. Be sure to research any company or individual counselor online before working with them to ensure your path away from bankruptcy is as smooth as possible. You’ve been given a fresh start, so why not make the most of it.

If you would like more information on filing for bankruptcy including the best ways to recover quickly please contact me for a free 30 minute telephone consultation where you can get all your questions answered.

Linda Evangelista’s Child Support Demand

Posted in Celebrity Child Support tagged at 2:48 pm by demetriagraves

Super model Linda Evangelista, who once remarked that, she doesn’t get up for less than $10,000 a day, has recently asked a New York court to award her $46,000 a month in child support from her child’s father, Francois Henri-Pinault. Who is the CEO of PPR-SA, a luxury brand corporation and his annual earnings are rumored to be around $5.2 million. The annual total of the child support requested is less than 11% of Pinault’s annual income. While recent events may have put a damper on Evangelista’s earnings, she is reported to be worth $8 million, far from an income level where her child is in danger of becoming a public charge.

However, the child support award will not be based on the wealth of one or both parents. New York law states that in high income cases where parental income exceeds $130,000, as in this case, an award of child support should be based on the child’s actual needs and the amount required for the child to live an appropriate lifestyle. In Brim v. Combs, the Appellate Division held the Family Court erred in basing a child support award in part on the amount of support the father, Sean “Puffy” Combs, was paying for another child from a different woman, and not on evidence of the child’s expenses, resources and needs. The court used the custodial parent’s testimony and net worth statement as evidence of the child’s actual needs.

Apparently, the majority of the $46,000 a month in child support would cover a 24-hour nanny and personal drivers for the child. In this case, a 24-hour nanny for a child whose mother has a career like Evangelista’s may be viewed as reasonable by a court. And while the request of personal drivers for a child may appear excessive and unreasonable to most, a judge may think they are necessary for the child’s lifestyle.

Pinault is the husband of Oscar-nominated actress, producer and director Salma Hayek. Could Evangelista seek contribution to the child support payment from Pinault’s wife? In New York, the courts generally will not look to the spouse of the non-custodial parent for child support unless the parent is hiding assets, makes claims of indebtedness or becomes voluntarily unemployed or underemployed to evade child support payments.

Since child support payments, under New York law, are retroactive to the date of the support application, Pinault will be obligated to pay from the application’s filing date. New York law is clear: child support awards should be based on a child’s actual needs. Will the Family Court order Pinault to pay $46,000 a month in child support to Evangelista? We’ll have to wait and see.

August 4, 2011

Divorcing – Important Financial Steps

Posted in Divorce tagged at 2:28 pm by demetriagraves

When working with clients who are considering divorce, many people say that, they don’t know where to start and of course, embarking on a divorce is a major step in one’s life and shouldn’t be taken lightly. Often, clients I work with are concerned about protecting their assets and the financial implications of a divorce. So I thought I’d cover some important financial steps that should be considered as vital preparation steps when deciding to move forward with a divorce.
1. Take inventory of all financial documents and records. It’s critical that you immediately gather all your financial records, including bank account information, mortgage statements, credit card bills, wills, trusts, etc. Make copies, and then find a secure place to keep them. Don’t keep these records in your home. Take copies to a trusted friend/family member, or use a safe deposit box that your spouse can’t access.
2. Begin securing funds for legal and other professional fees. If your spouse controls all access to the family funds, this can make it difficult (if not impossible) for you to have the resources necessary to get the legal help you may need. Unfortunately, choking off the money supply is a common tactic, one that often forces one spouse to sign a divorce settlement agreement that is totally lopsided in the other spouse’s favor. Avoid this kind of financial squeeze. Be proactive. Make sure you have funds that are secure and available only to you.
3. Open new accounts in your name. Don’t use the bank where you have your joint accounts. Go to a different bank, and open a new checking and savings account in your name. Your divorce attorney may instruct you to withdraw up to half of your joint funds (state law will dictate what you can and cannot do), and you’ll need to deposit those funds in your new accounts. Open a new credit card account in your name, too. Proceed with caution, but do proceed –moving forward as a single person will require that you establish good credit and solid financial footing.
4. Get a copy of your credit report. And, consider monitoring it, too. By keeping an eye on your credit report, you’ll know if your spouse is running up charges on any joint credit cards, or if they’re dissipating marital assets in some other way. Plus, you’ll also be able to keep tabs on your all-important credit score.
5. Open a post office box. Once you have hired a divorce attorney and have opened new accounts in your name, etc., you’ll be receiving mail that you will want to keep confidential.  Open a post office box, and give yourself peace-of-mind knowing that your mail is being delivered to a secure, locked box that only you can access.
6. Change your will, medical directives/living will, etc. Most states won’ t allow you to completely disinherit your spouse until after the divorce is final. But, you can take steps to prevent them from making medical decisions on your behalf or inheriting all of your assets should you die before the divorce agreement is signed. Remember, you’ll also want to change beneficiaries on life insurance policies, IRAs, etc.
At first, divorce can seem overwhelming. But, completing these six steps will go a long way to help you feel more in control and better equipped to make thoughtful, reasoned decisions. You want to emerge from divorce in the best shape possible, with your assets protected and a sound long-term financial plan in place. If you are considering divorce and would like some more advice on what’s involved and how best to move forward, I offer a free initial consultation where you can get all your questions answered.

Bankruptcy – When You Can’t Raise Your Debt Ceiling

Posted in Bankruptcy tagged at 2:23 pm by demetriagraves

It is an interesting comparison to watch what has been going on Washington with raising the debt ceiling and comparing that to one’s own debt issues. The government has bills to pay, no money, and so it can get its credit line increased to be able to make ends meet. Unfortunately, that’s not an option for the average person. When there’s bills to pay and no money, credit cards work for a while, but eventually the credit card must be paid. And as you may have experienced, asking the credit card company to raise your debt ceiling often results in the opposite – a reduction in your credit line.

When your debt ceiling is maxed out and you can no longer deal with the debt issues, bankruptcy can be an option. Bankruptcy is very effective at dealing with credit card debt, medical bills, car loans, and even helping you deal with your mortgage.

It seems like bankruptcy was invented for handling credit card debt. If your main financial problem is large amounts of unpaid credit card debt a Chapter 7 bankruptcy filing will generally eliminate it completely. There is no payment plan and the credit card company will not be able to pursue you for this debt down the road.
Like credit card debt, medical bills are eliminated through a Chapter 7 bankruptcy filing. Those that have gone through serious medical issues often have large amounts of debt – even those with health insurance. This is an area where I see people go through the most conflict as to whether to file bankruptcy or not. It is often easy to file bankruptcy on the credit card companies due to their constant collection calls, but with medical bills the services received were usually very helpful and needed. There does come a time when reality sets in that despite your appreciation for what was done to help you in your time of need, the bills are simply too large and there is no realistic way for you to pay them. At that point bankruptcy is a good option as they will be completely eliminated.
If you are being sued the bankruptcy filing will eliminate the lawsuit and discharge the debt that you are being sued on. This will help you avoid having a judgment entered against you and eliminate possible garnishment of your wages.

Sometimes it is a bad car loan that pushes people into bankruptcy. Or more often a bad car loan that has already been repossessed and now the bank is coming after you for the balance. If you still have your car and can continue to make the monthly payment you can keep your car in a Chapter 7 bankruptcy case. Also, in a Chapter 7 you may be able to reduce the amount you pay on your car through a process called redemption. Redeeming your vehicle means that you pay your bank the value of your car, not what you actually owe on it (assuming you owe more than the car is worth). For instance, if you owe $15,000 on your car, but it is only worth $7,000, in a Chapter 7 bankruptcy you could redeem your car by paying the $7,000 to the bank and the remaining balance would be discharged. You have to pay it all at once, and usually people have to get new financing to do this.
Debt wouldn’t be such a big problem if every time we needed to loan more money we could simply raise our credit limits. But that is not how the world works for the average person. We can’t raise our personal debt ceilings. If you are dealing with the stress of debt, give me a call. I offer a free 30 minute telephone bankruptcy consultation. Where you can get your questions answered and learn what your options are. Having information on what is available will help you in regaining control over your financial life and help you sleep at night.