Income Tax Debt and Chapter 7 Bankruptcy Relief

A common question arises in many of my recent debt relief consultations: How will my income tax debt affect my attempts to completely wipe out my debt, both overall and as to the tax debt itself?

Taxes and Bypassing The Means Test

The first hurdle to proceed in filing under Chapter 7 is the “means test”, which is a formula designed to limit people with higher incomes from seeking Chapter 7 bankruptcy relief. The means test formula uses your last six (6) months’ household income, IRS Data and National Standards to calculate your monthly “disposable income.” While people with debt issues find themselves living paycheck-to-paycheck and regularly borrowing from Peter to pay Paul, many of these same people are often bewildered by the fact that the means test results in, at least on paper, a positive disposable income from which creditors can be paid.

An exception to the requirement of passing the means test to qualify for Chapter 7 relief is if your debts are not primarily “consumer” in nature. Consumer debt is defined as debt incurred for primarily personal, family or household purposes. Good news for people who have incurred substantial income tax debt over the years: most courts consider taxes to be non-consumer debt, even though such debt is almost always incurred for personal, family or household purposes. But who are we to complain about this characterization; bottom line is if your taxes represent more than fifty percent (50%) of your overall debt, you do not have to take the means test to file under Chapter 7.

Discharging Income Tax Debt

Whether your income tax debt is the majority of your debt or not, there are limitations on what income taxes can be discharged/wiped out. Generally, you can discharge/wipe out income tax debt in Chapter 7 bankruptcy only if all of the following conditions are met:

 

  1. The debt is at least three (3) years old. To eliminate an income tax debt, the tax return must have been originally due at least three (3) years before you filed for bankruptcy relief.
  2. You filed a tax return. You must have filed a tax return for the debt you wish to discharge at least two (2) years before filing for bankruptcy. In most courts if you failed to file a return and the IRS filed a substitute return on your behalf, you have not filed a “return” and cannot discharge the income tax.
  3. You did not commit fraud or willful evasion. If you filed a fraudulent tax return or otherwise willfully attempted to evade paying taxes, such as using a false Social Security number on your tax return, your income tax liability cannot be wiped out.
  4. You pass the “240-day rule.” Your income tax debt must have been assessed by the tax agency at least 240 days before you file your bankruptcy petition, or must not have been assessed yet. Note:       This time limit may be extended if the IRS suspended collection activity because of an offer in compromise or a previous bankruptcy filing.

 Final Note – Slight Twist (Tax Liens)

 Even if you are able to wipe out your income taxes under Chapter 7, you may still end up paying at least a portion of your tax liability. While you will no longer have a personal obligation to pay such taxes, bankruptcy relief will not wipe out prior recorded tax liens against your real estate. The lien will remain on the property and you’ll have to pay off the tax lien in order to sell the property.

Overwhelmed by substantial debt or have any questions about the above topic? The Law Offices of Ian S. Topf, APC offer free consultation in a variety of issues, ranging from bankruptcy, family law/divorce, and estate planning to criminal/DUI matters and landlord/tenant disputes.

International Travel and Child Custody – What You Should Know

Sometimes it seems that issues around child custody are needlessly complicated and difficult to understand. So when a parent who shares custody of a child wishes to travel internationally, he or she should be aware of the additional legal ramifications of taking that child out of the U.S.

In one respect, things are fairly straightforward, at least for residents of California. This state has no statutory prohibitions for international travel with a child, unlike state laws affecting a parent’s decision or desire to relocate with a child out of his or her county of residence to another part of California (or another state). However, other variables, such as travel restrictions in a court order, may impact travel plans.

To understand how child custody may affect international travel, let’s look at situations (1) where there are no court orders and (2) where a child custody order is in place.

No court orders

If your child doesn’t already have a passport, federal law requires both parents to sign the passport application. To complete this process, both parents can appear in person to present the application or one parent can give the other parent a document of signed consent to indicate their agreement.

In cases where one parent objects to the other parent traveling out of the country with their child, obtaining a passport may prove difficult. Sometimes this may legal proceedings to establish each party’s rights—that is, to file a petition for custody orders.

Another reason why it is important to have the other parent’s consent (or court orders establishing specific rights) is that various government agencies in the country you wish to visit may require a letter of consent signed by the other parent. This can also apply to customs and/or airline officials who ask to see a signed letter of consent before taking the child’s boarding pass.

A custody order in place

Some child custody orders may include provisions that prohibit or at least limit the extent of international travel with the child (this can apply to domestic travel restrictions as well). Even if there are no specific restrictions, it is a good rule of thumb to make every effort to get the consent of the other parent before making travel arrangements and to ensure that, unless the other parent is in total agreement, such travel does not conflict with either the other parent’s time with the child or with the child’s school attendance.
Even when a custody order is silent on the issue of travel with the child, you may still have to “jump through hoops” regarding, as stated above, passports, letters of consent, and so on. Again, my advice is to always obtain permission for your travel plans, in writing wherever possible.

Nightmare scenarios

What happens should you choose to disregard the other parent’s wishes and travel out of the country with your child without the consent of the other parent? Here are possible nightmarish consequences to consider:

• The other parent can file a police report with local law enforcement, charging you with parental kidnapping.

• The other parent can appeal to the U.S. Department of State and set proceedings in motion that charge you with federal parental child abduction.

• If a custody order exists, the court can deem your actions “contemptible,” laying the groundwork for additional penalties and fines on your part, as well as grounds for a change of custody.

Again, if you must travel to Mexico or elsewhere outside of the U.S. with a child, do everything in your power to get the other parent to consent. Once the other parent has consented, you can travel with the child worrying of facing the above-indicated civil and criminal penalties.

If for some reason you’re unable to obtain consent and still need to travel with your child, promptly consult a family law attorney to explore your other legal options.

Unclear as to your rights under a child custody order? The Law Offices of Ian S. Topf, APC offer free consultation in a variety of issues, ranging from family law, estate planning, bankruptcy, and DUIs and landlord/tenant disputes.

What To Do When A Family Court Order (Child Support, Visitation, Debt Responsibility, etc.) is Ignored?

Clients often ask me what they can do when an ex-spouse or former domestic partner violates or ignores a Family Court order regarding child support, visitation rights, restraining orders, etc. If such a violation occurs, they ask, shouldn’t the offending party be subject to a contempt of court action?

In California, most contempt of court actions relating to Family Court orders are considered criminal proceedings. When such an action is brought in Family Court, the person charged with contempt has the same rights as anyone facing criminal prosecution. This includes the right to an attorney, the right to a formal reading of the charges against them, and the right to testify and cross-examine witnesses. As for prosecuting such an action, there is generally higher burden of proof involved where the accused can be found guilty only if the admissible evidence provides their guilt beyond a reasonable doubt.

If found guilty, the Defendant faces possible jail time, community service, and/or having to pay a substantial fine.

There are exceptions to what can be brought as a contempt action. For example, when the court orders one party to pay a debt obligation to a third party (such as a credit card company), a former spouse/partner cannot seek contempt for failure to pay. California, like most states, do not allow criminal charges for failure to pay consumer debts.

With all of the above in mind, many people who believe they have been wronged as a result of their ex-spouse/partner’s violation(s) of court order(s) think it’s a no-brainer to file contempt charges and throw the “dead-beat” in jail, especially if the other side fails to pay court-ordered support.  However, I offer a word of caution: often incarceration leads to additional, future issues.  A person responsible for paying support may have trouble paying support when he/she is not working due to being in jail and the conviction/jail sentence may cause that person to lose his/her job permanently.

If you still desire to pursue contempt charges against a spouse or partner, you will need to make sure your pleadings specifically set out your claims.  Here are a couple of tips:

Burden of Proof. To establish contempt of a Family Court order, you have to show (1) you have a valid court order, (2) the other party has actual knowledge of that court order, and (3) the other party willfully violated that court order.

A valid court order 

Contempt can only be brought when there is a violation of a valid court order.  Any agreement between parties that’s hasn’t been accepted by the Court as its order is not enforceable by contempt. If you assert to the Court that the other party “promised” by email or text to make pay you child support or allow visitation with your child but no court order has been issued, your contempt action will likely be turned away.

Knowledge of the court order 

The person you wish to have charged with contempt must be shown to have knowledge of the existing Family Court order. This requirement is usually met if the Court entered orders after a hearing attended by both parties.  However, if you proceeded with obtaining orders by default—i.e., a situation where the other party didn’t participate in the original court proceeding where the support obligation was ordered —you must prove that person actually received (and has knowledge of) the court order.

Willful violation of the court order 

The person being charged with contempt must be shown to willingly defy the Family Court order. In a situation where that person is in jail or otherwise incapacitated (and therefore unable to earn money to make payments), a contempt action probably won’t result in the desired outcome.

Be Specific. In my experience, many contempt actions get tossed out of court because the description of the violation is too vague or ambiguous.

For example, charging someone with contempt because he “always fails to make regular monthly child support payments” generally won’t hold up as a valid count of contempt. However, being specific—“In January 2015, my ex-husband was supposed to pay $1,000 in child support and he didn’t make the payment”—is a much better charge.

In general, always be prepared to provide your attorney with specific details about your matter.

Contempt of Family Court order actions do have their place in enforcement of orders, but usually are a last-ditch effort.  Fortunately, there are other means by which to enforce a court order to pay child support, to ensure a parenting plan is adhered to by the other party, and to try to make sure each party takes responsibilities for their respective obligations under court orders. If you are banging your head against the wall because the other side refuses to cooperate with court orders, seek the advice of an experienced attorney to explore your options and take the appropriate steps to get the relief you desire.

Are you in need of legal counseling or have any questions about the above topic? The Law Offices of Ian S. Topf offer a free consultation in a variety of issues, ranging from family law/divorce, bankruptcy, and estate planning to criminal/DUI matters and landlord/tenant disputes.

Think You Can’t Afford to File for Bankruptcy?

According to a new study by the Federal Reserve Bank of New York, changes originally enacted in 2005 to the Bankruptcy Abuse Prevention and Consumer Protection Act have made it substantially more difficult for “financially struggling people” to file for bankruptcy relief.

While it’s true that changes like these have made it tougher for people to seek bankruptcy protection in general, I don’t believe the additional hurdles put into place present a significantly greater financial hardship than before these changes were made. Remember, as stated in a couple of my prior blogs, there may be several different options to explore if you’re in need of debt relief.

The three common debt relief choices are:

Ignore the debt. Typically under California law, there’s a four-year statute of limitations for debts (except those made with an oral contract, for which the statute of limitations is two years). While I generally do not advise clients to go this route, especially if your debt(s) were incurred recently, you may just simply ignore your debt and hope the statute runs. In my experience, though, creditors are a pretty unforgiving bunch. Eventually you may get sued, which will eventually lead to having your wages garnished, liens attached to your property, and/or bank accounts/other property seized and forfeited to your creditor(s). Also, interest, penalties, and other fees for non-payment will keep accruing on your debts, worsening the situation.

Negotiate to settle the debt. In general, creditors are willing to reduce the overall balance owed on a debt, if they know they are going to get paid, especially if (1) you’ve missed at least a few payments and (2) you are willing to pay off the settled amount promptly (either lump-sum or over only a couple of months). The bad news is the government has made it a bit harder to negotiate with creditors. There is now a mandatory requirement that, with certain exceptions, creditors issue a 1099 Form for any balance forgiven in a settlement when the settlement amount equates to a more-than-$600 reduction from the balance you actually owe, You will then have to declare that 1099 amount on your taxes as if it were income (and pay taxes on said amount). Say, for example, you owe $2,000 and you negotiate a lump-sum settlement of $1,200, you will receive a 1099 for $800 to be added to your gross income for the year when tax time comes around.

File for bankruptcy relief. If neither of the first two options work, you will probably find yourself in bankruptcy court. In my opinion, in general, the greatest change that impacts one’s ability to file for bankruptcy relief has been the increase in allowable attorney fees in bankruptcy cases. For example, here in San Diego, California, bankruptcy attorneys can now initial fees of up to $3,600.00 for a Chapter 13 consumer bankruptcy filing, up from $1,700.00 in 2012. These fees usually do not include certain administrative costs and other miscellaneous fees for actions that may take place during the course of the bankruptcy case.

Where does this leave people in need of relief?

In general, if push came to shove, most people can come up with the requisite monies needed to hire a bankruptcy attorney to assist them in getting rid of a far more substantial amount of debt. For those who aren’t able to do so, there will always be attorneys (including myself) who usually don’t charge the allowable “standard” attorney’s fee.

There’s also the option of representing yourself in matters of bankruptcy relief, though of course, you’re held to the same standards and requirements as an attorney representing you in such an action. In my experience, those charged with monitoring your bankruptcy case (court websites, court clerks, the U.S. Trustees’ office) can be both understanding and helpful in providing information that may assist you with proceeding on your own.

A word of caution: There are individuals and businesses out there offering bankruptcy preparation services for “reduced fees.” Across the U.S., bankruptcy courts have had issues with such services, since they generally offer document preparation services with minimal instructions on how to file. The end-product is often incomplete and there’s usually no follow-up after the bankruptcy petition is filed. While not all such bankruptcy preparers operate this way, I urge you to carefully explore your options before choosing such a service.

In conclusion, while it is true that desperate times call for desperate measures, there are several non-drastic opportunities out there for debt relief, contrary to what the public is being led to believe by recent studies and news articles. So if you find yourself in a personal financial crisis, don’t just curl up into a ball and hope your problems will magically disappear; reach out to a skilled debt relief professional and explore your options.

Are you in need of legal counseling for bankruptcy or debt issues or have any questions regarding the above? The Law Offices of Ian S. Topf offer free consultation in a variety of issues, ranging from bankruptcy, family law and estate planning to traffic violations and landlord/tenant disputes.

Do-It-Yourself Legal Service Websites

In a recent blog post, I discussed the pros and cons of choosing to represent yourself in court actions, rather than hiring an attorney to handle your matter. In such legal areas as civil litigation, family law, bankruptcy, small claims, traffic court, etc., there are times when you can act effectively on your own behalf and save the expenses involved in getting a lawyer to take your case.

For better or worse, there’s an abundance of resources on the Internet to assist you in minor, do-it-yourself (DIY) legal matters. But before making use of such sites, it’s best to be aware of potential pitfalls. As with most things in life, “You get what you pay for” should be your guiding mantra.

Legal in all 50 states?

Remember, anyone can post anything online, often with very few repercussions. For example, looking up definitions for legal terms or attempting to find answers to legal questions on Wikipedia is very risky. Relying on information you find there and on other general information websites could land you in a great deal of trouble.

Probably the riskiest DIY practice is using legal forms obtained online. While there are some legitimate websites (those created and maintained by experienced attorneys), various sites are out there that offer “easy-to-use” forms and assure the public that “no attorney assistance is required.” Some also claim their forms are “legal in all 50 states!”—without also noting that individual states often have other legal requirements which are not included in the DIY form.  Further, some legal matters may involve legal forms which are very similar to other legal forms, but for a sentence, a phrase or even just a word.  While the slightest difference in terminology or other formality may not seem important, it may end up being so significant that it (1) costs you (or another intended beneficiary) substantial amounts of money or (2) otherwise does not achieve your desired outcome, leaving you with a document worth about as much as the paper it is printed on.

A case of DIY gone bad

Here’s an example of where use of an online form can create legal difficulties down the road, a situation that has presented itself to me on more than a few occasions. John, who has been married for several years, presented me with a pre-nuptial agreement he’d completed several years ago with his then-fiancé. The pre-nup was downloaded from what he thought was a perfectly respectable legal document website, touting “practically iron-clad pre-nuptial agreements” which can be completed and signed anti fungal “without the need of expensive attorneys.”

Upon reviewing the document, I found numerous issues, including a lack of inventory or other specific identification of each party’s separate property. The legal form simply stated that “all assets brought into the marriage shall remain separate property”—ambiguous wording that wouldn’t adequately protect an individual from a claim of community property interest concerning assets he brought to the marriage without additional documentation (e.g. tracing documents showing that the property was not only brought into the marriage but that, among other things, no community contributions had been made to that property). Further, John and his spouse believed they had included and properly agreed to a “spousal support waiver,” when, in fact, California law requires that the person whose receipt of spousal support is limited or waived had independent counsel before entering into the agreement.

I regretfully informed John that his pre-nup was practically worthless and that now, years later, he has very limited options with regard to getting what he wants.

What you should do

If you decide to go the DIY route and use a legal form you find online, I strongly advise that you consult with an attorney before proceeding with such a form. Many lawyers, myself included, offer to review documents and provide advice on same for a reduced fee, less than if that attorney prepared the document(s) themselves. This way, you get valuable peace of mind with respect to your legal affairs, rather than buyer’s remorse down the road.

Also, some websites offer an option for “reduced-price attorney advice” services. While this can be very beneficial, make sure that the person you talk to is an actual lawyer, licensed to practice in the state where the legal issue arises. It’s easy to verify such a license by checking with that state’s Bar Association, such as the attorney directory located on the State Bar of California website.

A final note:  the more complex your legal case is, the more you need to recognize your limitations. Rather than choosing the supposedly easier and cheaper DIY option—which could end up being neither cheap or easy in the long run—look into retaining the services of an experienced attorney.

Are you in need of legal counseling, document review, or have any questions about the above topic? The Law Offices of Ian S. Topf, APC offer a free consultation in a variety of issues, ranging from family law/divorce, bankruptcy, and estate planning to criminal/DUI matters and landlord/tenant disputes.

When should you legally represent yourself?

For many people facing a legal issue, the first thought that generally comes to mind is how much will this cost in attorney’s fees? The good news is that there are numerous types of cases in California where being represented by an attorney is not a necessity.

As a general rule, you may not need to be represented by an attorney when:

  • Your case is clear-cut and there’s no opposing side (as in a request to change your name).
  • You and all other parties involved agree about everything (such as an uncontested guardianship of a child).
  • You’re confident that you are fully aware of your legal options and can make informed choices about your case on your own.
  • You have the time and willingness to learn the law and the relevant rules and procedures appliable to your case.

A person’s Constitutional right to be represented by an attorney only comes up in a very few types of cases (e.g. criminal). In all other legal situations—civil litigation, family law, bankruptcy, small claims, traffic court, etc.—you do not have an absolute right to legal representation. In these circumstances, a person wishing to have an attorney advise and/or represent them must seek out legal assistance on their own.

If you’re thinking of representing yourself, keep these considerations in mind:

How Complex is Your Case. You may not need an attorney for an uncontested divorce. However, if difficult issues are involved – such as being allowed to move out of state with children of your marriage, spousal support, extensive property divisions—it’s best to at least get some legal advice, if not active legal representation.

Your Ability to Handle a Legal Matter. Be honest about your personal strengths and weaknesses. Some cases require extensive appearances before a judge, which can be an intimidating experience. Someone who’s shy or fearful of speaking in public might be best served by having an attorney speak for them.

You Have Trouble Expressing Yourself Succinctly. An attorney can help you avoid rambling and focus instead of the key points of your case.

You’re Held to the Same Standards as a Practicing Attorney. Whether or not you’ve skin care passed the bar, when you’re in court, you’re held to the same standards as a full-fledged attorney. If you don’t feel competent in mastering those standards, you may need an attorney.

You Lack Time to Handle Legal Matters on Your Own. People who work full-time or have a family to care for aren’t necessarily able to devote the time required to handle a legal matter on their own. Keep in mind that it’s not uncommon to spend hours to a full day at the courthouse simply to get a legal form successfully filed.

Fortunately, there are many great resources available to assist people who wish to represent themselves. In California, each court offers online and in-person self-help centers for certain legal matters such as family law, small claims and sometimes even probate.

Some courts offer facilitator offices to assist in the “grunt work” needed to resolve your legal issue. It’s important to note what facilitators can’t do. In divorces, for example, a facilitator can’t offer advice on whether you’re seeking all that you’re entitled to nor on the methods you need to utilize to discover things to which you may be entitled – which means there’s a real possibility you can leave critical issues unresolved.

While facilitators and self-help centers are very useful, it’s always a good idea to get expert legal advice. Attorneys, after all, are paid to zealously represent their clients and get the best possible resolution in court. Some attorneys, including myself, offer reasonable rates and even discounted services with respect to some types of legal matters.

In conclusion, before striking out on your own, speak to an attorney who is knowledgeable in your case’s area of law so you can make an informed decision on whether or not your attempt to save money will cost you more in the end.

Are you in need of legal counseling or have any questions about the above topic? The Law Offices of Ian S. Topf, APC offer a free consultation in a variety of issues, ranging from family law/divorce, bankruptcy, and estate planning to criminal/DUI matters and landlord/tenant disputes.

 

 

2015 Resolution: Take Care of Your Legal Needs

On behalf of all of us at the Law Offices of Ian S. Topf, APC, best wishes for a happy, healthy and prosperous 2015!

It’s not too late to make a New Year’s resolution that will benefit you and your family throughout the new year. This is a great time to take care of some essential legal planning responsibilities – and you’ll feel much better when you do.

Estate planning

Many people mistakenly think of an estate plan as something that matters only when they die, but there’s really much more to it than that. With a thorough and carefully prepared plan in place, your loved ones won’t have to experience the additional stress of wondering about your final wishes (health, financial, etc.) should you become physically incapacitated and unable to share those wishes during a highly emotional time.

If you already have an existing estate plan, the new year offers a perfect opportunity to review the plan so it reflects any changes that took place during 2014. Such changes might have included:

  • Got divorced or remarried
  • Blessed with the birth or adoption of an additional child in the family
  • Need to remove or replace an agent or beneficiary who passed away
  • New wishes for how you want to have your medical needs addressed

It’s also important to note that, depending on when you first created your estate plan, California law may have changed in ways that invalidate some provisions (or at least affected them so they’re no longer practical). In my legal practice, for example, I’ve come across very old estate plans that haven’t been modified to accommodate requirements under HIPAA (Health Insurance Portability and Accountability Act) and/or the California Probate Code. Without being updated, such plans could run into serious legal problems at a later date; the same problems you have sought to avoid by creating your estate plan in the first place.

In summary, now’s a good time to check with an experienced lawyer to make sure your estate plan is still legally valid and will sleeping aids carry out your wishes, and, if you do not have an estate plan in place, get to it!

Debt relief

Are you one of the many, many Americans who spent too much money during the holidays and find yourself starting the new year in considerable debt? Rather than wallow in this predicament, take advantage of free consultation offered by many debt relief attorneys (including myself)!

We can help you design pro-active ways to resolve your debt and gain control of your financial situation, so you can actually move forward in 2015 without this enormous weight on your shoulders. Don’t wait for debt collectors to start coming after you!

Take action

This brings me to what I think should be everyone’s most important New Year’s resolution: Stop procrastinating! It’s understandable that people put off their legal planning—after all, approaching a lawyer about estate planning or debt relief or any other legal matter seems like a severely negative thing, and most of us naturally drag our feet on these issues, sometimes until it is too late. But think how much better you’ll feel after you address and resolve these matters directly.
For families and individuals who have enrolled in legal insurance plans, I suggest you take a closer look at what these plans have to offer. Many plans provide full-service benefits for legal matters like estate planning and debt relief. They’re also very helpful for general legal advice on a wide range of legal matters.

Remember—you don’t have to wait until you’re facing a lawsuit (or initiating one) to get in touch with an attorney. We can help you cope with many of life’s challenges and free you up for other important goals in the coming year.

Are you in need of legal counseling or have any questions about the above topics? The Law Offices of Ian S. Topf, APC offer a free consultation in a variety of issues, ranging from family law/divorce, bankruptcy, and estate planning to criminal/DUI matters and landlord/tenant disputes.

The Legal Obligations after a Family Member Dies

In recent weeks, it’s been my sad misfortune to lose two close relatives in my family. After the initial shock of the loss of each beloved family member, I have been swamped with questions from other family members and friends about what to do (in terms of legal obligations) when a loss like this occurs.

My response? It’s always a good idea to reach out to an attorney to get helpful advice on the right actions to take.

As we all know, the death of a loved one is an extremely stressful experience, charged with a variety of emotions. But if you’re in some way responsible for what this person has left behind, you must be able to promptly take a step back and figure out—Where do we go from here?

While it’s not always clear who should take charge in these situations, the “default person” is usually a deceased person’s spouse or another close family member. This can be altered if an estate plan designates some other individual.

Here are some essential things that need to happen:

Make arrangements to obtain your loved one’s death certificate. Numerous governmental and financial entities will likely require proof of death. That’s why I suggest obtaining multiple (at least 6-8) certified copies of the death certificate. Hospital staff or funeral home representatives can assist in getting these documents.

Determine if the deceased left behind a will and/or trust. These documents will help guide you through the legal process required to properly handle the deceased person’s estate. In California, a proper living trust will generally allow you accomplish this without court involvement, whereas if there is only a will or if the deceased failed to leave behind any estate planning documents, you may have to open probate, a court procedure for obtaining orders related to the administration of the estate.

Locate advanced mans health healthcare directive. Did the deceased person have an advanced healthcare directive or any other document identifying his or her wishes regarding organ donation and burial instructions? This can help determine what to do with their remains.

In the event of a death, other small but important tasks include:

  •  Notifying the deceased’s employer, Social Security Administration, any government agency benefits programs (such as Veterans Affairs)
  • Contacting creditors (a person’s debt is still enforceable after his or her death)
  • Locating insurance policies, claims forms, etc.
  • Caring for a pet
  • Collecting mail
  • Cancelling newspaper and magazine subscriptions
  • Disposing of clothing and personal items

As you can see, your death can create a great deal of work for those you leave behind. A proper estate plan will definitely relieve your loved ones of what can be an overwhelming burden to wrap up your affairs. In addition to the proper documents (e.g. trust, will, power of attorney, advance healthcare directive, etc.), I also advise people to create two lists to help their survivors know what to do following their death:

Contact list. This includes a set of addresses (with all pertinent contact information) for those people named in any of the documents as well as anyone who should be contacted and notified of your death.

Informal inventory. With a comprehensive listing of all of your assets, survivors can avoid an emotionally-draining and time-consuming “scavenger hunt” through your possessions. The inventory tells them what they need to know about your estate.

This is a broad description of what should take place after a loved one’s death, but it is by no means comprehensive. If you’ve recently suffered a loss and feel bewildered by all the obligations thrust upon you, contact an attorney as soon as possible. This attorney can help you navigate the emotional journey that lies ahead.

How Does Foreclosure Work?

In today’s economy, many people find themselves underwater with regard to their monthly expenses. When their total monthly debts amount to more than the money they’ve got coming in—and, as is usually the case, the monthly mortgage payment represents their larges expense—people sometimes opt to neglect this big debt and pay off their smaller, more manageable debts instead.

In my opinion, this is the wrong action to take. Mortgage lenders (such as banks) generally prefer partial payment to no payment at all. If they feel an effort is being made to meet the mortgage obligation, they’re less likely to initiate the dreaded foreclosure proceedings, and may even reach out to the homeowner with possible loan modification options.

Foreclosure is the process wherein a mortgage lender attempts to take possession of real property (house, condominium). When you sign your mortgage paperwork, you give your lender the ability to proceed with a foreclosure action when you fail to make your required mortgage payment. As with all contracts, it is important to read all documents you sign to ensure clarity and understanding. I recommend that every homeowner reading this article go back and read your mortgage paperwork, specifically your Deed of Trust, to educate yourself on the actual rights and responsibilities of both you and your lender.

Most mortgage agreements grant the mortgage lender the right of acceleration of the loan after one or more missed payments, causing the loan to be completely due and payable upon the lender’s demand. The mortgage lender will mail the homeowner a “Notice of Default” and record a copy of the Notice with the County Recorder. This Notice gives the homeowner a period of time (90 days in California) to exercise their “right of redemption”, i.e. the right to catch up on any or all missed or partial payments and make themselves current.

If the homeowner is unable to become current on their loan, the lender may opt to proceed one of two ways:

  1. Pursue a judicial foreclosure (rarely done in California) by initiating a foreclosure action with the local Court; or
  2. Pursue a non-judicial foreclosure, where the property is placed in the hands of a foreclosure trustee and eventually sold at a Trustee’s Sale.

All of this is typically spelled out in your mortgage paperwork, which is why, again, I encourage people to review their mortgage documents very carefully.

Soul-search time

The foreclosure process generally takes a good deal of time, anywhere from four to six months or more after a notice of default is served.

At this point, it’s time to do a soul-searching, reality check to determine whether or not you truly believe you can keep the property. Is what caused you to miss your mortgage payment(s) the result of a temporary hardship that can be quickly remedied or part of a larger, more critical situation where you’ll continue have problems making allergy payments no matter what you do?

If you’ve missed payments because you were temporarily out of work but are once again resuming employment, aggressive negotiations with the mortgage lender may ease the situation and avoid foreclosure. Mortgage lenders generally don’t want to go through with foreclosure if they don’t have to and have some assurances that future mortgage payments will be made. They’ll typically respond favorably to a plan that results in making payments current and agree to halt the foreclosure process.

Actions a borrower can take

Many lenders offer loan modification programs and I encourage people facing the possibility of a future foreclosure to look into them sooner than later. That’s the good news. But it’s important to note that such programs may not necessarily solve the issues that caused problems with mortgage payment in the first place. A mortgage lender’s idea of a modification may only apply to a reduction in the overall interest rate or adding missed payments to the back end of your loan —with no actual reduction in your required monthly payment — and there’s no guarantee that this will alter your ability to comply with the terms of the mortgage in the future.

Also, please take note that a mortgage lender’s foreclosure department is not required to delay the foreclosure process while the loan modification process is pending. These are usually two separate departments and they typically do not communicate with each other automatically. (It’s usually the homeowner who needs to make sure that both departments are aware of the situation to avoid a foreclosure during attempts of loan modification).

If a person feels they can’t keep up with house payments, there may be actions to take to avoid having a foreclosure on your credit report. These actions include proceeding with selling your property, even if it is in a short sale due to little to no equity in the property. While a short sale is still a negative mark on your credit, it usually is much better than having a foreclosure on your record.

Another last-ditch effort is looking into your bankruptcy relief options. In a Chapter 13 bankruptcy action, the Court will allow you to make up your arrears so long as you are able to make your current monthly payments as well. Pursuing Chapter 13 bankruptcy relief with a good-faith plan (whereby you make up the missed payments) will not only help to stop the foreclosure process, but should also help you regain control of your household finances to keep the mortgage lender from further pursuit of foreclosure.

Foreclosure is a complicated legal process that can take a homeowner on a roller-coaster of confusion and extreme emotions. If you find yourself facing foreclosure, seek legal advice or assistance. A skilled attorney can offer the best guidance for finding the solution that works best for you.

Want to Bad-Mouth Your Ex-Spouse? Bite Your Tongue!

Divorce triggers a lot of strong feelings, so it’s natural for each side to have negative emotions and the desire to express them. But as a family law attorney with extensive experience in this area, I strongly urge my clients not to express those feelings in the home setting.

Kids are “sponges”

As a parent myself, I know first-hand that children are “sponges,” taking in everything they hear and see, and easily influenced by the people around them—especially their parents. If one spouse demeans the other, the result is almost always a negative one. It can bias a child against a parent or, if the child has strong, loving feelings about the criticized parent, can end up generating negative feelings about the spouse doing the bad-mouthing.

As any experience family law practitioner would attest, the general legal consequences of such negativity can be severe, including but not limited to a seemingly never-ending barrage of arguments and verbal attacks, extensive expensive and time-consuming litigation for modification of child custody, intervention by a child welfare agency due to accusations of abuse and neglect, and a very possible loss of various parental rights.

In other words, bad-mouthing is a no-win proposition all around.

Non-disparagement clause

Most child custody orders now include a non-disparagement clause, wherein both parents are admonished that neither parent is to make negative statements about the other parent in the presence of children. This provision usually includes a requirement that each spouse must also do everything possible to avoid letting other people (family members, significant others, etc.) say negative things about the other parent in front of the children.

Violating the non-disparagement clause can affect an individual’s custody rights. The offending party may be required to attend a co-parenting class or, in extreme cases where one parent simply can’t keep his or her mouth shut, the Court can limit that parent’s visitation rights (e.g. supervised visitation) to attempt to insulate the children from such negativity being said about the other parent.

What can you do in a bad-mouthing situation?

If you feel that your children are being affected by unwelcome comments, there are steps you can take to address the problem.

  • Discuss the situation with the other parent in a non-retaliatory, non-confrontational manner. This could be as informal as sitting down with your ex-spouse and reminding them that the Court has ordered both parties not to bring up any legal matters, parenting problems or other issues you have with the other parent in front of the kids. Then you can work together on developing a strategy for dealing with issues as they arise between you.

 

  • If you’re worried that such a discussion will fall on deaf ears, then address the issue in a letter or email to the other parent. In this way, you have documentation of attempts to address the problem informally, trying to amicably resolve the issue without extensive litigation, in the event you must bring it to the Court’s attention in the form of a request to modify custody.

 

  • If the problem still persists, consider filing an action requesting parenting classes or changes to the terms of the parenting plan.

 

When parents divorce and go their separate ways, one of the main goals of the Court is to minimize disruption in children’s lives. This should be each parent’s goal, as well. For this reason, it’s best for each party in a divorce proceeding – even if they can’t stand each other – to bite their tongues and keep their opinions to themselves when around their kids.

Are you in need of legal counseling or have any questions about the above topic? The Law Offices of Ian S. Topf offer a free consultation in a variety of issues, ranging from family law/divorce, bankruptcy, and estate planning to criminal/DUI matters and landlord/tenant disputes.