Understanding Equitable Distribution

Unlike California, Pennsylvania is not a community property state, which means that just because you were married to the person doesn’t mean you automatically get half.  Rather, Pennsylvania courts use a process of equitable distribution to divide up a couple’s marital property.  But what exactly does that mean?  What it means is that the courts try to come up with a property settlement that is “fair” to the parties taking into consideration a number of factors.  Some factors that the courts will consider include: length of the marriage, age, health, amount and sources of income, employability and needs of each party, contributions by one party to the education, training or increased earning power of the other party, each party’s contribution to or dissipation of the marital property, including the contribution of a party as homemaker, sources of income of both parties, standard of living of the parties established during the marriage, and whether the party will be serving as the custodian of any dependent, minor children.  One of the things the court will not consider is the marital misconduct of the other spouse.  There are times when this will be a factor to consider, but when dividing up the marital property, it is not.

But knowing how the courts decide to divide up the property is only half of the equation.  You also need to know what property, the court will be looking to divide.  The courts divide up all of the marital property.  What is considered marital property?   Marital property includes all property that was acquired during the marriage, regardless of whose name it is.  Gifts from one spouse to another are marital property if they were purchased with marital funds; however, gifts and inheritances that a spouse receives during the marriage from a third-party belong to that spouse.  Although, there can be a loophole here if non-martial funds (i.e. money received from inheritance) become mixed with marital funds (say in a joint checking account).  Rather than try to sort it out, the court could rule that all funds in that account are marital property.  Pensions and business interests that were developed by one spouse are considered marital property if they were acquired during the marriage.  Additionally, increased value in a business owned prior to the marriage would be considered marital property.

Although you now know the how and what of equitable distribution, dividing up the marital property can still cause a great amount of tension between divorcing parties.  If you find that you and your spouse are unable to come to an arrangement on your own, please contact the Law Office of Suzanne Szymoniak.  We can help insure you obtain the property settlement that you deserve.

The Cost of an Education

If you are like me, you probably have a decent amount of student loans that are now due or will be coming due shortly.  When I was growing up, I remember hearing about how I needed to get a good education if I wanted to get a well-paying job and make a decent living.  Coming from a lower-middle class family (and that’s probably being generous), I knew that the only way I could get that education and go on to live the American dream was to finance my education.  What I probably didn’t consider was how much that education was going to ultimately cost me.  Granted, I believe my education is valuable to an extent, but will it be worth the $130,000 I had to take out in student loans and will be paying on with interest over the next 25-30 years?  Only time will tell.  But what if it’s not?  That’s the question, I believe potential college students need to carefully consider before deciding to further their education.

Student loan lenders (unlike most other lenders short of government agencies) are given great protection by our government (don’t believe me see this article where a court determined that paying back loans were not an undue hardship for a blind diabetic who was making $811 a month in social security); therefore, if all that education fails to deliver on that promise of a bright future, there is little if anything you can do about it.  Let’s look at a comparison.  Five years ago you bought a $200,000 house.  Now, thanks to the decline in the housing market, that house is worth significantly less than what you currently owe on it.  For one reason or another, you are unable to make your current monthly payments, and you default on the loan.  Now late fees and attorney’s fees are adding on and that balance is getting larger by the minute.  Sounds like a pretty bad scenario, and it is, but the government offers the everyday Joe a way out of this mess.  Ultimately, if you end up with more house than you can afford, then you can allow the lender to foreclose on the property and file for bankruptcy to wipe out any deficiency that may remain after the sale of the property.  But what assistance is there if you get “more” education than you can afford?  In short, there isn’t any.  Unlike the liability on your home, car, credit cards, and medical bills, the liability on your student loans cannot be discharged in bankruptcy.  Not only that, but let’s say something unforeseeable happens, you become disabled, and can no longer work.  You are collecting disability which is probably significantly less than what you are used to living on.  You would probably expect sympathy and understanding.  What do you get?  You get your student loan lenders attaching your social security check and taking up to 15% of what little money you do have.  This is a remedy that is not afforded to any other lender.  So what makes student loans so special?  Can it really be that your education is more valuable than your house or car or health?  It seems illogical that we would not receive any protection against huge student loan bills particularly when you consider the fact that you got the education to make a better life for yourself and that education can’t even provide you with a job to cover the minimum payment on the money you borrowed to get it.

Now comes the small light at the end of the tunnel.  There are programs out there aimed to assist people with paying back their student loans.  One such program is the Income Based Repayment (IBR) option which determines the amount of your payment based off of your income.  IBR is intended to help you maintain a reasonable standard of living while allowing you to pay off your loans at an affordable rate.  The best part about the program; if you do not manage to pay off your loans in a 25 (I believe they may have reduced this to 20 for new grads) year period, then they are forgiven.  Additionally, in some extreme circumstances an argument can be made for an undue hardship discharge in bankruptcy that would allow your student loans to be discharged with the rest of your debt.  If you are having a difficult time meeting your student loan obligations, contact the Law Office of Suzanne Szymoniak today to discuss your potential options.

Steps to Guarantee Your Divorce is Final

Divorce can be a long and tiresome process.  Usually, individuals going through a divorce anxiously await the day that the Divorce Decree is handed down because they feel that their depressing saga has finally ended and they can now get on with their lives.  What they don’t realize is that often times the Divorce Decree is not the final step.

There may be many other important matters that need to be addressed after your divorce is finalized or you run the risk that the terms of the Postnuptial Agreement will be negated.  For instance, if you fail to remove the ex-spouse as a beneficiary of employer issued life insurance, he/she may collect despite provisions in the Postnuptial Agreement which provide that the ex-spouse should have no interest in life insurance proceeds or other property of the spouse at death.  Consequently, after a divorce, both parties should not only carefully review all beneficiary designations in life insurance policies, but they should also review their Wills, Powers of Attorney, Healthcare Directives and Living Wills and make any necessary changes.  Additionally, it is important to make revisions to retirement plans, IRA’s and joint accounts to avoid unintended consequences as well as expensive litigation.

As a final precaution, you also need to insure that the former spouse has no ability to charge obligations on any credit cards, lines of credit or other instruments which may result in your financial liability. Not doing so can result in costly litigation or even force you into bankruptcy in order to get out from under your ex-spouse’s debt.

So, when you think it’s finally over and you’ve got that hard earned divorce decree; think again, and be sure to look carefully at the details to be sure that all ties between you and your ex-spouse have been severed.

Mortgage vs. Note

You may not realize it, but when you obtain a mortgage, you are actually signing two different legal documents.  The first document, the mortgage, gives the lender a security interest in the property that you are purchasing/refinancing.  It is this document which gives the lender the ability to foreclose on your property in the event of a default.  The second document, called the note, makes you personally liable for the debt.  It is the note that gives the lender the power to come after you personally for any outstanding balance in the event that the foreclosure and sale of the property does not payoff the outstanding balance on the mortgage (a common occurence in today’s real estate market where most properties are significantly underwater).  If you are behind on house payments and contemplating bankruptcy, it is important to note that the mortgage is not dischargeable.  If you are hoping to keep your house, you will have to cure any default and continue to make regular payments.  If you do not, the lender has the right to petition the court to be removed from the bankruptcy and to proceed with a foreclosure/sale.  But let’s say you decide you do not want to keep the property.  You want to walk away and get a fresh start.  Here is where it is important to recognize the difference between the two legal documents; while your mortgage cannot be discharged in bankruptcy, your note (i.e. personal obligation for the debt) is.  That means that by filing bankruptcy, you limit the lender’s rememdy to the sale of the property.  The lender gets whatever the property is worth up to the amount remaining on the mortgage, and you get to walk away with no remaing obligation to the lender.  For more information on how bankruptcy can affect you as a homeowner, contact the Law Office of Suzanne Szymoniak today.

Utilities in Bankruptcy

Often times, individuals contemplating bankruptcy may have fallen behind on their gas, electric or other utility payments.  One of the benefits of bankruptcy is that filing can keep the company from discontinuing your service; however, there is one drawback that people do not immediately consider.  Upon the filing of your case, your utility company must close your current account with them as they are no longer permitted to collect on that account due to the bankruptcy stay.  They must then open you a new account in order to continue providing you with service.  The good news is that any balance owed on the old account will be discharged with the rest of your unsecured debt.  The bad news, however, is that in order for the utility company to open you the new account, they will require that you pay a security deposit.  This is often times an added expense that individuals do not account for when they are preparing to file for bankruptcy.  One company that consistently uses this method of closing your old account, opening a new one, and charging a security deposit is Duquesne Light, but don’t be surprised if you receive similar notices from your other utility companies upon the filing of your case.  In short, when you are trying to determine the cost of your bankruptcy case, don’t forget to account for some additional expenses caused by the need to pay these security deposits to maintain your utility services.  For more information on costs associated with bankruptcy, contact the Law Office of Suzanne Szymoniak today.

Illegal Collection Attempts

Despite what creditors might think, they are not allowed to do whatever they want to collect on their debts. There is not only a State Statute which limits how creditors can collect, but also a Federal Statute that is meant to protect individuals from illegal collection attempts. One example of what creditors are not permitted to do can be found in this article. But your creditor doesn’t necessarily have to be engaged in fraud to be in violation of the law. Some additional actions which could be a violation include: contacting the debtor at unusual times, calling the debtor’s place of business, continuing to contact the debtor after the debtor has indicated in writing that they refuse to pay or wish for the creditor to discontinue contacting them, threatening violence or harm to the physical person, reputation or property of any person, using obscene or profane language, or threatening to take action that cannot legally be taken or that is not intended to be taken. If you think that your creditor may be engaged in illegal collection attempts, contact the Law Office of Suzanne Szymoniak today. If your creditor is violating the law, they could end up paying you.



Tricks Used by Creditors to Find Your Assets

When a creditor obtains a judgment against you, they have several avenues available to them to get payment on that judgment.  One such avenue is to attach your bank accounts.  Ever wonder how the creditor finds out where you keep your money?  One trick commonly used by creditors to find your assets is to send you a check for some nominal amount of money.  Sure the check is real, and when you cash it, you will receive that $4.00 in overpaid funds, but the creditor will receive something much better.  They will receive the information on your banking institution and bank account which will then allow them to go after the funds in that account.  The moral of the story….Be careful when you receive free money in the mail, particularly when it comes from someone you owe money to.  Most likely, that unexpected good fortune will ultimately turn out to be a windfall for your creditor.  For assistance with creditor judgments, contact the Law Office of Suzanne Szymoniak today.

Thinking About Filing Bankruptcy? Make Sure Your Taxes are Filed.

Unfiled taxes can cause various problems with your bankruptcy case.  First, they can result in the dismissal of your case should the trustee so decide.  Additionally, although there have been changes in the bankruptcy law protecting taxes, some taxes can still be discharged in your bankruptcy if they meet a particular standard.  First, they must be income taxes which came due three or more years ago.  Second, the returns must have been filed at least two years prior to the filing of your bankruptcy.  Finally, the most recent tax assessment must be at least 240 days old.  If these standards can be met, and you did not engage in fraud or tax evasion, then the tax can be discharged; however, unfiled taxes can never be discharged.  Therefore, it is in your best interest to make sure that all taxes are filed prior to the filing of your case to avoid the potential dismissal of your case and to make sure that all debts that can be discharged in your case are discharged.  For more information on the effect of bankruptcy on tax debts, visit the Law Office of Suzanne Szymoniak.

Free Pre-Filing Bankruptcy Counseling

Thinking about filing for bankruptcy or know someone who is?  Under federal law, you are required to obtain credit counseling from a qualified non-profit agency before filing.  Most of the agencies offering this service charge some nominal fee for their services, but with attorney’s fees and filing fees, bankruptcy can be a costly endeavor, and any chance to save money can be very helpful.  The below link will take you to a site currently offering their pre-bankruptcy credit counseling for FREE!!!  For more information on filing for bankruptcy, visit the Law Office of Suzanne Szymoniak.

http://www.consumerbankruptcycounseling.info/

Are You Judgment Proof?

My credit card company has received a judgment against me.  Now what?  Well, now the creditor has to find a way to execute that judgment i.e. collect on it.  The creditor can attempt to do this in a couple of different ways.

First, they can attach a lien against any real property you own, such as your home.   This does not mean that you will be thrown out of your home.  The lien will act as a cloud on your title that must be cleared before you can sell your home i.e. if and when you sell your home, the creditor will receive the value of the judgment with interest from the sale proceeds.

What if you don’t own a home?  The creditor can locate the money you have in your bank accounts and seize them.  If the creditor finds any money you have that is not exempt from seizure (in PA there is a general exemption of $300), he will use his judgment to garnish your bank account.  A garnishment is essentially a way to freeze money in a bank or financial account and have the funds paid directly to the creditor by your bank.

Another technique that creditors try to use is wage garnishment.  This is where the creditor requests that your employer pay them directly out of your paycheck a specified amount until the judgment is satisfied; however, any threat of wage garnishment by a
creditor in Pennsylvania is illegal.  Wage garnishment can only occur in very limited circumstances, such as: to pay off a judgment which relates to a divorce, support, a residential lease, federal and state taxes, union dues and health care insurance premiums.

Finally, creditors may try to execute and levy against your personal property including your vehicle.  This process is where the creditor uses legal process to enforce the judgment by seizure and subsequent sale of the personal property owned by you. This involves having a Deputy Sheriff place a levy on your personal property, making it available for a public auction; however, this option is costly and time consuming for the creditor and often times will not result in enough money from the sale to cover the judgment.  This is particularly true in the case of a vehicle that already has a balance owed on it to another creditor.  The
original creditor will have priority over the judgment creditor so unless there is enough value in the vehicle to cover the original creditor’s outstanding balance and the judgment, it will not be worth the creditor’s time or money to have the vehicle repossessed and sold.

In conclusion, creditors have a variety of ways of trying to collect on their judgments; however, enforcing and recovering on a civil judgment is not an easy task.  First the creditor has to find your assets, if there are any worth finding, and then jump through
the administrative hoops to seize that property.  Ultimately, between 80-85% of all legal judgments remain uncollected after 5 or more years; which can be good news for you since court judgments have a life span and must be effectively enforced before the expiration of the judgment.

So what should you do if you determine that you do have property that you need to protect?  The creditor may be willing to set up a voluntary repayment plan with you, allowing you to pay the debt at an affordable rate.  If you decide to negotiate a repayment plan
with the creditor, obtain a written agreement from the creditor stating that they will not attempt to execute on the judgment as long as you make the payments required under the agreement.  Another option, particularly if you have more than one creditor with a judgment against you, may be to file for bankruptcy protection.  If you file for bankruptcy, the creditor will have to discontinue their
attempts to execute on the judgment.