On the priority issue: Many priority debts are also nondischargeable, and child support is in this category. The designation of a debt as priority affects disbursement of any assets in the estate, which (as you note) is irrelevant in no-asset cases. So the priority change will, as you note, have no effect on the majority of cases.
I don’t understand the argument being made by the National Women’s Law Center. Unless I’ve missed something critical, this bill would give huge preference to support obligations in the bankruptcy process, far more than they currently have. The legislation, as I read it, does not “bar against using bankruptcy to erase certain credit card debts” but simply precludes using Chapter 7 to discharge debts which the debtor can reasonably pay. The only way I can see this bill as increasing the likelihood that “single mothers and children [will] compete with big banks” is if debtor noncustodial parents are dissuaded from filing altogether. Once they’re in the system, the Code as this bill would amend it is clearly crafted to strongly preference timely and complete payment of support obligations.
Because the bankruptcy it effects most is “7NA” (Chtr 7, no asset). Now, under the current law, if some schnook declares 7NA, all his CC debts are discharged, but NOT his Child support. That is “undischargeable”. So he is left free & clear, out of debt- EXCEPT those Child support bills, which he now has plenty of money to pay. In the new “help out the poor starving banks” bill, he will go to Chtr 13, and thus he will pay the CC companies, as well as Child support, and thus he has less money to do the 2nd. get it?
They have “baffled you with bullshit”.
Spooge: I am going to give you some profesional advice, here. Assuming you are a 'no asset" filer (and that does not mean you actually have no assets, just none that are expendable & can be easily liquidated, so your furniture, normal car, retirement fund, etc, don’t count), then- take that next $700, and go hire a fair & cheap bankruptcy attorney. See, for some 7 years after you file bankruptcy, your credit is bad. But, the same thing occurs when you get one of those debt management services, and the bad credit goes on for 7 years after you make your last payment. Thus- bankruptcy= 7years bad credit. Counseling= 12 years bad credit. They give you no benefit for having paid them off, in fact, sometimes it is worse!
Many of those 'counseling" services are funded by… the banks. 8 years from now you may be in a much better financial position, and want to buy a house or somthing- and you either won’t be able to, or will pay thru the nose, as your credit sucks.
And, if this law gets passed, and things get worse for you, you won’t be able to do it then. Besides, if you figure it out, they actually have probably got their principal back by now, anyway.
So, free advice from a professional, who is unbiased.
That’s very tempting Daniel, and belive me, I’ve considered it. I spoke to an attorney before I decided on counseling (which is funded by credit card co’s) and was told I was ‘marginal’. Meaning I made enough money that a Trustee mightdeny me.
But as a friend told me, I owe the money. If I can pay it back, I will. However, if I suddenly find myself unemployed…
You’re ignoring one detail: the Chapter 13 plan has to give priority to the child support obligations. The amendment specifically states that a Chapter 13 plan may not require less than full payment of domestic support obligations unless the debtor’s entire disposable income is going to domestic support obligations for the entire five year period of the plan (in which case creditors get nothing at all). So I don’t see how creditors and child support are going to be in competition, since the creditors get nothing until child support is paid in full.
Or do you envision that trustees and bankruptcy judges will just ignore this provision of the law? (Note that if they do, state child support enforcement agencies, as well as child support obligors, have standing to appeal.)
Daniel’s advice to spooje may be meritorious in California, which has incredibly generous exemption rules (I’ve seen cases where people have exempted well over $100,000 in property in California), but in states with less generous rules, it might not work so well. Daniel’s assertion that “your furniture, normal car, retirement fund, etc, don’t count” is simply false in most states. In Indiana, your normal car is NOT exempt as a matter of course and is counted against the $4,000 ($7,500 for a married couple filing jointly) in personal property you’re allowed to exempt. Neither is your furniture. Neither are your “work tools” (another popular exemption in California).
So be very wary of accepting bankruptcy advice from anyone who is not an attorney licensed in your state. State law determines exemptability, and advice from someone in another state is more likely than not going to be based on the wrong law.
Kelly, you are right, But Spooje DOES live here in CA. To any others: My professional advice, when you are going to one of those "debt couseling services’, to also visit a cheap but good bankruptcy attorney, and get his/her advice also. A consultation is often free. Then do what the attorney says.
Spooje: sure- you owe the money. But, you owe 26K, and you have to pay 42K. They have no moral claim on that extra 20K.
besides, they also made on every purchase, etc. And, if your consience bothers you, I suggest the following- Take that 700/mo you would have paid, and save half, and give the other half to a good cause. Yes, 350/mo to a good charity. and the other hald saved. Now, at the end of 5 years, some good folks are going to be helped out to the turn of some 20K, and you will have enough in the bank for a down payment on a house, or to pay cash for an OK new car, or, if you put it in a 401K, etc, a nice nest egg in case Social security goes bust.
No, that is not what it says. It is written is odd legalese, tho. Yes, you are correct- the Judge may not require less than full payment of child support. Note that word “require”. The judge can simply let the ebtor & the debtees hack out a plan, and allow so much %to each. Also, if the guy really can’t afford those payments, which is not uncommon, then the ex gets shorted anyway. The natl womans Law center has apparently extensively researched the proposed Code, and found that it give exes who need child support short shrift. They have the entire text to work with, and are experts at decoding this crap. Even tho they are biased, the bias is toward getting women their child support, so they would look for that, 1st. If their experts say it does so, and I also can see how it does, then perhaps you have to just take the word of the experts.
Spoke, I’m not sure where you’re coming from on this whole thread. If a person takes out a debt, then he is legally and, IMHO, morally, obligated to repay said debt, at the terms agreed upon when incurring the debt. It seems you think otherwise. Please explain.
Well, I am not spoke, but as he has not replied yet, I will.
The US Constitution, and Title 11, USC, allows you, in unusual circumstances, to legally NOT repay those debts. Whether or not YOU feel it is morally correct, that is your decision. But let us take some wage-earner. He incurs creditcard debt. The Banks make money off every transaction he makes. He pays that debt, every month. However, due to that same bank finacing a merger, he is laid off. As he is 50ish, he can get no new work, except at half his old pay. If he tries to pay the credit cards, he will have nothing left for groceries & rent for his home & kids. The Law allows him to declare bankruptcy, and then he can feed his kids on his new wage. Is this the right moral choice for him? Well, I think so. But maybe you do not. However, we are debating the Law, and not the morality. Talking about “morality” and credit card companies is a nullity anyway.