Bankruptcy

Presidents Who Have Filed Bankruptcy

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If you’re feeling burdened by debt and you think that you’re alone, think again.  Some of history’s most well known people; celebrities, politicians and other world leaders have found themselves facing financial hardships. Even several Presidents have found themselves in serious financial trouble.  Below I’ll list several U.S. Presidents who have filed bankruptcy either before or after they left office.

Thomas Jefferson

Thomas Jefferson was a brilliant lawyer, a gifted writer and a wealthy landowner but Jefferson wasn’t the best at managing his finances. His main occupation was that of a farmer.  Due to this he suffered the ups and downs that often go with the unpredictable nature of agriculture. He also used his considerable wealth to lend out money and the payments made against those loans were often unreliable. He also inherited debt from his father-in-law and from a friend who did not pay off a debt that Jefferson had co-signed. Jefferson also had problems with his spending.  Jefferson’s love of luxury led to expensive spending habits as well and he died with more than $100,000 in debt (roughly 2-3 million dollars in today). However, unlike today, he didn’t have the option to file bankruptcy except during a brief window from 1800 to 1803, which he did utilize. Thomas Jefferson died broke and unable to pass along any assets to his heirs and was even unable to free his slaves at his death as they were considered property and were auctioned to settle his debts but Jefferson wasn’t the last of the Presidents who have filed bankruptcy.

Abraham Lincoln

Abraham Lincoln, one of our greatest presidents, found himself in the soup financially after the failure of a business venture. Lincoln even found himself having to assume more than half of the debt from this failed venture when his partner in the business died shortly after the business shut its doors. Lincoln, out of a sense of duty, assumed the debt and struggled for some time with it. Lincoln lost all of his assets and he spent several years trying to pay off the debts. Despite all this hardship, Lincoln was undaunted and didn’t allow the stigma of bankruptcy  to follow him for years on end. Just a mere 8 years later, Lincoln was elected to Congress and in 1860 became President of the United States. Lincoln had trouble with his finances for the rest of his life largely due to his wife’s extravagant spending habits which she carried over even after his death in 1865.  Lincoln was one of the first Presidents who have filed bankruptcy

Ulysses S. Grant

Grant was a Civil War hero who many credit with saving the Union, right along with Abraham Lincoln. As good as Grant was on the battlefield, he was an awful businessman. Grant, with his judgement often clouded by his alcoholism, made a series of bad investments. Grant invested heavily in Grant & Ward, a Wall-Street investment company set up by his son and his son’s friend Ferdinand Ward. Ward stole and embezzled the funds Grant invested, eventually going to jail for it. This didn’t change the fact that the President was still on the hook for hundreds of thousands of dollars of debt after Grant & Ward failed and he went bankrupt. Ulysses Grant worked nearly until his dying day writing his memoirs and only way he was able to repay any of his creditors was through selling his Civil War memoirs which were published posthumously.

William McKinley

William McKinley was a lawyer like Thomas Jefferson and like Jefferson, McKinley cosigned on a debt for a friend.  When this friend decided to bankrupt on the debt, McKinley was forced to take over the debt as a co-signer. All of this occurred shortly after his election as Governor and he was forced to declare bankruptcy while serving as the Governor of Ohio.  Bankruptcy wasn’t all bad for McKinley. Less than three years later, he was elected President of the United States.

Donald J. Trump

Donald Trump is a businessman who inherited the business his sons now manage called the Trump Organization in the 1970s when his father retired from the business.  While Trump did see a great deal of success as a real estate investor, perhaps his biggest failure was as the owner of several Atlantic City Casinos during the late 1980s and early 1990s.  Trump’s casino, the Trump Taj Mahal, found itself 3 billion dollars in debt with Trump personally guaranteeing nearly 1 billion dollars worth of the debt personally.  Trump was forced to sell off several pieces of personal property including a yacht and an investment in an airline to satisfy the debts and even then he was forced to make payments on the debt for several years after due to debts that weren’t discharged in the bankruptcy. While Donald Trump is the most recent of the Presidents who have filed bankruptcy, I’m sure he won’t be the last. 

 

Even great people find themselves overwhelmed by debt. Whether that’s due to failed businesses, a job loss, medical emergencies or illness, or just bad luck. Bankruptcy is a resource that can help you get back on your feet and give you a fresh start if you, like these Presidents, find yourself in over your head. Call us today to learn what your options are!

Timing Bankruptcy: How Often Can I file?

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Timing Bankruptcy is very important and can have an impact on when and what types of cases you can file. The first thing you must realize is that there isn’t a set number of times a person can file for bankruptcy in their life, if you’re eligible to file, you can do it.  Just because you CAN file 5 or more times in your life, doesn’t mean you can actually get what is called a discharge of your debts. A discharge is the complete and total wipe out of your debt that comes upon completing a bankruptcy.

The biggest thing you must consider if you have to file for bankruptcy more than once in you life is timing bankruptcy correctly. If you completed a previous bankruptcy, whether it was a 7 or a 13, you have to wait a certain amount of time before you can receive a discharge in another bankruptcy. There are a number of factors that determine when and if you can file another bankruptcy and receive a discharge:

  • Which type of bankruptcy you file previously
  • When you filed the bankruptcy (ie. what date)
  • Whether your bankruptcy was completed (discharged), dismissed (voluntarily or involuntarily) or dismissed with prejudice (you can’t file bankruptcy again for a set period of time because of something you might have done.)

There are restrictions on timing bankruptcy as well.  When or whether you are eligible to discharge your debt again depends on whether you filed a 7 or a 13, when you filed that case, whether you received a discharge in that case and what kind of bankruptcy you want to file now.

  • If you file a Chapter 7 and want to file another Chapter 7: If you have filed a Chapter 7 Bankruptcy and received a discharge, you must wait 8 years to the day of the date you last filed for Chapter 7 Bankruptcy.  In other words, if you filed a Chapter 7 on May 1, 2010, you wouldn’t be eligible for another Chapter 7 until May 1, 2018.
  • If you file a Chapter 13 and want to file another Chapter 13: If you complete a Chapter 13 case and your debts are discharged you must wait 2 years from the date that your previous Chapter 13 was filed in order to file for and receive a discharge in a new Chapter 13.  This usually isn’t an issue though because it takes a minimum of 36 months to complete a Chapter 13 Plan. Generally speaking, you can file for a new Chapter 13 case pretty much immediately after your first Chapter 13 is closed.
  • If you file a Chapter 7 and want to file a Chapter 13: If you filed a Chapter 7 Bankruptcy and received a discharge, you can file a Chapter 13 case and be eligible for a discharge if the case is filed at least 4 years after the date you first filed your Chapter 7. One important thing to keep in mind is the fact that if you file a Chapter 13 after you complete a Chapter 7 and are discharged, you can still use a Chapter 13 to get caught up on debts that are of a high priority like mortgage deficiencies or missed auto loan payments even if you aren’t eligible for a discharge.
  • If you file a Chapter 13 and want to file a Chapter 7: If you completed your Chapter 13 case and received a discharge, you must wait 6 years from the date your Chapter 13 was filed before you may obtain a discharge in a Chapter 7 case.  There is an exception to this rule though. If your previous Chapter 13 was a 100% case, meaning that you paid your unsecured creditors back in full you may be eligible for a discharge in a Chapter 7.

The only way to know for sure which type of Bankruptcy you are eligible for and if timing bankruptcy correctly is in your interest is to speak with a competent and compassionate Newnan Georgia bankruptcy attorney. Our attorneys at Harmon & Gorove can offer you a completely free consultation in a judgement free and comfortable environment. We can review your current financial status and tell you exactly what would work best for your situation.  Whether it is a Chapter 7 Bankruptcy, Chapter 13 Bankruptcy or no bankruptcy at all.  We always look out of the best interest of our clients.  If you think Bankruptcy can help get your finances back on track, contact our office to schedule a free consultation today.

If You Need to File Bankruptcy, Don’t Wait

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If you are in financial trouble and you see no other way out, do not wait, speak to an attorney and if they recommend it, file bankruptcy immediately. The longer you put off the inevitable the more it will cost you. It will likely cost more in attorneys fees due to the increasing complexity of your case.  It will also cost you in terms of your credit score.  Yes, filing bankruptcy will have a negative impact on your credit, but it is just one factor in how they determine your overall creditworthiness. The longer you wait the lower you score will go, period. In some situations, it may be advisable to delay filing for a period of time. Most of the time though, once you know you need to file bankruptcy, don’t wait.

Matters of Importance

If you have been sent foreclosure paperwork and you have exhausted your other options, you are out of options and you must file to stave off the foreclosure. The same rings true with evictions, lawsuits, repossessions, and garnishments. Once you get the notice filing bankruptcy is the your last and best option. Filing bankruptcy immediately will mitigate the adverse actions of your creditors.

All of the aforementioned situations are matters of extreme importance. Competent bankruptcy lawyers will give you a breakdown of the bankruptcy timeline, including all the inflexible deadlines that must be met before and after you file. Your attorney is an expert in bankruptcy law; when they tell you that time is of the essence it is imperative to get them what they need so they may take action on your behalf as soon as possible.

Matters of Timing

In certain cases, it may benefit you if you wait to file until a certain date, your attorney would discuss this with you and explain why it is advantageous. An example of such a time would be, if your foreclosure is scheduled at a distant enough date, it may be financially savvy to delay your filing to include the coming months in your Chapter 13 plan.

In other instances, if you have taken on a large amount of debt recently or know that you will need to incur some debt in the coming weeks or months, it may be better to delay your filing until you can include those debts as well. You might also have recently made a significant transfer of property, which would affect the timeline of you filing for bankruptcy.

These situations are all less common issues. In the overwhelming majority of Chapter 7 bankruptcy cases, the sooner you file, the better.

If you’ve run out of options, don’t delay, file bankruptcy.

The faster your case gets filed the faster your credit will be able to heal. I simply can’t tell you how important credit can be in your life in today’s world. The sooner your debts are discharged, the sooner you can get back to focusing on the things in your life that actually matter. If you know bankruptcy is your only option, don’t procrastinate. Start the process immediately by calling the knowledgeable attorneys at Harmon and Gorove. They can start the process for you immediately.

Protecting Assets in Bankruptcy

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Many people believe that bankruptcy is a sign of hitting rock bottom but they would be wrong.  Bankruptcy is a tool in the law that can be used to actually protect assets and wealth from creditors.  Many famous and wealthy people have filed and survived bankruptcy with many emerging from bankruptcy and building an even greater net worth than they had prior to filing. While you may not be a celebrity or even extremely wealthy, bankruptcy bankruptcy can be a useful financial tool to help you get back on track. Yes, being financially depleted and bankruptcy often go hand in hand but It doesn’t have to be that way.  In other words, you don’t have to wait till you’re broke in order to file bankruptcy. In fact, it would probably be a better financial decision to file before you hit rock bottom.

Don’t wipe out your savings to stave off bankruptcy

Nearly 60 percent of Americans have saved less than one thousand dollars for an emergency. It is a side effect of the rising cost of living and the stagnation of wages in this country. If you’re one of the lucky people who actually do have a savingings, it would be highly advisable to file for bankruptcy before you wipe that savings out. In many cases a good bankruptcy lawyer will be able to find a way to protect most or all of your savings, especially savings you have in retirement accounts.  Any payments you make to creditors that would otherwise be discharged in a Chapter 7 are effectively just a donation to that creditor. Beyond that, even if you wanted to pay your creditor, any payments made to a specific creditor within a certain period of time of a bankruptcy filing can also be “clawed back” by a bankruptcy trustee which negates what you were doing to begin with.

DO NOT use your retirement funds

Your retirement account is a nest egg that you and/or your spouse has been building for decades. There are extremely few circumstances where it would be advisable for you to use your retirement account to pay down short term debts.  Virtually every retirement account in use today can be exempted from the bankruptcy which means you get to retain the value of that account for its intended purpose, your retirement.  Generally speaking, it makes much more financial sense to file bankruptcy to liquidate your retirement savings.

Don’t sell off your assets

The majority of Harmon and Gorove’s clients are able to keep most or all of their assets. Harmon and Gorove’s attorneys work hard to protect your assets from the trustee and creditors. Selling your assets to pay off creditors isn’t something that you have to do in most cases.  The attorneys at Harmon and Gorove work hard to make sure that your assets stay your assets. Protecting your assets in bankruptcy does require a good deal of expertise and planning, especially if you have a good deal of assets. If you have a significant number of liquid assets or rarer assets like a cash value life insurance policy or a pending lawsuit in which you could recover money, talk to a lawyer as soon as possible. Timelines are important in bankruptcy and anything you do to delay could cause you to lose irreplaceable assets. You should always be upfront with your lawyer about what assets you have, knowing beforehand is imperative to your ability to retain your assets.

Don’t ever give up

Bankruptcy provides many people with a clean slate.  Scrambling to sell off your assets or using up your savings isn’t using your money wisely, it’s panicking and making decisions that can change your life for the worse. Most people can see the need for a bankruptcy on the horizon. The warning signs are usually there long before people hit rock bottom. If you’re facing debts that seem insurmountable you should consider speaking with an experienced bankruptcy attorney before you get to the end of your rope. The staff of Harmon and Gorove are highly trained in exemption planning and asset protection.

Don’t wait

When your Bankruptcy is concluded, you will want to have as many tools to restart your financial life as possible. Keeping your retirement account, cash savings, homes and automobiles will provide you a new and fresh means of getting ahead after a bankruptcy. If you wipe out your assets before you file bankruptcy, the fresh start that bankruptcy provides won’t be as effective and won’t give you the advantages you need to get ahead.  Contact the attorneys at Harmon and Gorove today to see how we can help you get rid of your debts and get you started down a new path to financial success.

Chapter 7 or 13: Which Bankruptcy is Right for Me

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For people who are considering filing for bankruptcy protection the advice of a competent attorney can help them decide which type of bankruptcy is right for them. There are significant differences between a Chapters 7 and 13 bankruptcies and only the expert advice of an attorney trained in bankruptcy can help you decide which route to follow.  

Generally, a Chapter 7 bankruptcyis known as a fresh start or straight bankruptcy. Chapter 7s allow for the discharge of unsecured debts like credit cards, utility bills, medical bills, personal loans or other debts that aren’t being guaranteed by secured collateral. In Georgia, most Chapter 7s last between four and six months and most debt will be eliminated. The only types of debt that can’t be discharged are student loans, some criminal penalties, child support arrearages, recent tax debts, Alimony, and other types of non-dischargeable debts that can be discussed with your attorney.

Chapter 13s are a debt reorganization plan which will last at a minimum 36 months to a maximum of 60 months. Each month, the debtor makes a payment to the Chapter 13 trustee that consists of all of your disposable income left over after paying reasonable living expenses each month. The Chapter 13 Trustee uses this money to pay your creditors and your attorney according to a plan which is filed with the bankruptcy court.

What can go wrong with a Chapter 7

The difference between a Chapter 7 Bankruptcy which provides near immediate relief, and Chapter 13 plan, which  lasts 3 to 5 years is a significant difference. When you come in to speak to one of our attorneys, you are relying on their significant experience to help guide you towards the best outcome for yourself and your family. There are significant ramifications for filing the wrong type of bankruptcy. One of the first major problems is filing a Chapter 7 bankruptcy when you’re not eligible.

There are income guidelines that vary from district to district and state to state which ultimately decide whether you can file a Chapter 7. In the bankruptcy reforms laid out by congress in 2005, they created a means test. The means test is a mathematical formula used to determine whether someone is able repay a portion of their debt over time. This complicated figure is based upon income, the size of your family, and certain IRS guidelines for everyday necessities such as housing, food, clothing, grooming, transportation and other odds and ends. There’s also the a second part in the test. This determines whether you have the available income per month to repay your creditors. If you fail either these tests, then you will be forced to convert to a Chapter 13 or your case will be dismissed.

What Can Go Wrong in a Chapter 13

There are also some issues that come up in filing a Chapter 13 Bankruptcy. If your income is too low to provide the necessary funding for a Chapter 13 plan your case will likely never be confirmed and you’ll be back to square one. Often people trying to save property such as a house or a car propose Chapter 13 plans that are completely beyond the scope of their ability to fund.

Knowledge is Key

A good attorney who is an experienced bankruptcy practitioner can advise you on when a Chapter 7 or a Chapter 13 is unfeasible. There are some attorneys out there who will try to push you into one type of bankruptcy or another for reasons ranging from the ability to make more money off your case to just trying to make the client happy.  The attorneys at Harmon and Gorove will ALWAYS advise you on the best course to take regardless of what our fees will be and we will do our best to explain to you why a case may or may not work out.

There are many variables that go into deciding whether a Chapter 7 or Chapter 13 is appropriate for you and your financial goals. This isn’t a simple issue that can be taken lightly. Attorneys must have the expertise and experience to know the intricacies of Chapter 7 and Chapter 13 bankruptcies. It is a massive disservice to clients to file under the inappropriate section of the bankruptcy code. Doing so is going to lead to a terrible result for the client that could end up causing the client significant financial loss. This is where the expertise of a competent attorney is invaluable. You should always be cautious about using an attorney who doesn’t have significant experience in both Chapter 7 and Chapter 13 bankruptcies. The attorneys at Harmon and Gorove have filed more than 6,000 successful bankruptcy cases and provide expert advice on how you can best secure your financial future. Contact us today for a free consultation with our caring and competent staff.

2nd Mortgage Lien Stripping in Bankruptcy.

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A 2nd mortgage or home equity line of credit (HELOC) can be a very tricky situation when it comes time to file bankruptcy.  Unfortunately, due to the housing collapse and the Great Recession of 2007, many people in this country have multiple mortgages or other types of loans attached to their homes, often a high rates of interest.  Despite what people may think, 2nd mortgages and HELOCs CAN be stripped and removed through the 2nd Mortgage Lien Stripping process in a bankruptcy if you have the right circumstances.   

Here’s how they’re treated by the bankruptcy court

A HELOC in Chapter 13 bankruptcy:

Chapter 13 bankruptcies require debtors to make payments to the holder of their primary mortgage holder as well as a Chapter 13 Trustee.  The Trustee’s job is to distribute these payments among the creditors who hold priority status. In a Chapter 13, your HELOC debt may ultimately be discharged as the lender will have likely gotten a percentage of the payments you made into your case through the trustee’s office.  

A HELOC in Chapter 7 bankruptcy:

In a Chapter 7 Bankruptcy, you can cancel the debt on your home equity line of credit.  The only problem with this is the fact that you can’t cancel the lien that the creditor has on the house.  As a matter of fact, the HELOC lender could possibly still foreclose on your house after the bankruptcy has concluded.  While it would only benefit them if there was equity in the house, there’s still technically no way to stop them from doing this.  The best way to avoid a foreclosure after a Chapter 7 has concluded is to sign a reaffirmation agreement with your HELOC lender during the bankruptcy.

Second mortgages in Chapter 13:

2nd Mortgage Lien Stripping is possible when a second mortgage isn’t secured by a home’s value and can potentially be eliminated in a Chapter 13.  Homes that are underwater may have second and third mortgages that aren’t secured by the value of the property anymore due to the fact that the amount of the loans total more than the current value of the property.  One thing to remember though is that discharging a second or third mortgage will have no effect on what you owe on your first mortgage and you will still have to pay that mortgage in full.

If you find yourself facing the reality of foreclosure due to a second or third mortgage on your home and you think that 2nd mortgage lien stripping may be right for you, come see one of our experienced attorneys at Harmon and Gorove today.  Our attorneys have decades of experience handling cases like this and they can advise you if you will benefit from this valuable tool under the bankruptcy code.