TULSA OKLAHOMA BANKRUPTCY ATTORNEY » FAQs

Will Filing Bankruptcy Have A Negative Effect On My Military Security Clearance?

Dan Nunley — Thu, 07 Jul 2011 21:33:13 +0000

I’ve represented a number of military personnel in bankruptcy and none of them have told me that the act of filing bankruptcy negatively affected his or her security clearance.

While that’s no guarantee that a security clearance never will be negatively affected by filing bankruptcy, my experience shows that it’s generally unlikely.

Here’s what the Air Force Academy’s web site has to say about this issue:

“The status of your security clearance can be affected, but it is not automatic. The outcome depends on the circumstances that led up to the bankruptcy and a number of other factors, such as your job performance and relationship with your chain of command. The security section will weigh whether the bankruptcy was caused primarily by an unexpected event, such as medical bills following a serious accident, or by financial irresponsibility. The security section may also consider the recommendations and comments of your chain of command and co-workers. This is an issue that can be argued both ways, so as a practical matter your security clearance probably should not be a significant factor in making your decision about whether to file bankruptcy. The amount of your unpaid debts, by itself, may jeopardize your clearance, even if you don’t file bankruptcy. In that sense, not filing for bankruptcy may make you more of a security risk due to the size of your outstanding debts. By the same token, using a government-approved means of dealing with your debts may actually be viewed as an indication of financial responsibility. Eliminating your debts through bankruptcy may make you less of a security risk. There is no hard and fast answer here, with one exception: it never hurts to have a good reputation with your co-workers and your chain of command.”

My personal opinion is that a member of the military who is up to his eyeballs in debt is more likely to be a genuine security risk than one who has resolved his financial difficulties through the legal process of bankruptcy. A service member who is drowning in debt is likely to be experiencing high levels of stress that could make him vulnerable to compromise whereas the service member who has filed bankruptcy and received a fresh start is no longer battling the stress associated with serious debt problems.

Will Filing Bankruptcy Hurt My Immigration Status?

Dan Nunley — Thu, 21 Apr 2011 12:47:07 +0000

As I recently wrote, you don’t have to be a U.S. citizen to file bankruptcy in the United States.

Just like many U.S. citizens, there are many non-citizens living legally in the United States who are drowning in debt and contemplating filing bankruptcy. One big difference between the two groups is that many of the non-citizens worry that filing bankruptcy could hurt their immigration status.

The good news for non-citizens is that filing a bankruptcy generally will not affect immigration status or citizenship applications. Immigration papers do not ask if you have every filed bankruptcy and bankruptcy documents do not ask about your citizenship or immigration status.

The things that may negatively impact immigration status are criminal activity and other evidence of negative moral character.

It’s not a crime to file bankruptcy. In fact, filing bankruptcy is a perfectly legal and common way to deal with serious debt problems.

And while in times past the act of filing bankruptcy may have been considered an act of questionable moral character by some, with over one million consumer bankruptcy cases being filed on an annual basis these days, bankruptcy has become a common, accepted practice.

Certain criminal activity will mandate a non-citizen’s deportation. And crimes evidencing moral turpitude such as issuing fraudulent checks, fraudulent credit card use, or providing fraudulent information to the federal government (such as by filing inaccurate bankruptcy documents) could negatively impact a non-citizen’s immigration status.

Therefore, it is extremely important to be absolutely truthful when completing and filing bankruptcy documents.

If you’re an honest, non-citizen who has serious debt problems, bankruptcy may be a good option for you. Bankruptcy can open the door to a better financial situation and a brighter future. Bankruptcy can help you get out of debt so that you can become a productive member of society who is less likely to look to the government for financial assistance. The United States government understands this and therefore bankruptcy can actually work to benefit a non-citizen who is seeking to become a U.S. citizen.

If you’re struggling with debt problems and would like to know more about how bankruptcy may be able to help you, contact me today to schedule a FREE initial consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. Or simply pick up the phone and call me at 918-615-8260. I’ll answer all of your questions and give you straight answers on the pros and cons of bankruptcy as related to your specific situation.

Can I continue to give tithes and offerings to my church if I file bankruptcy?

Dan Nunley — Wed, 16 Feb 2011 20:40:32 +0000

Recently I was counseling a married couple regarding bankruptcy and they asked me if they would still be able to continue giving to their church if they file bankruptcy.

The simple answer is yes.

For people of faith in America, the giving of tithes and offerings represents a significant part of the free exercise of religion, which is guaranteed to all Americans under the First Amendment. Current bankruptcy law protects both debtors’ rights to donate and religious charities’ rights to keep donated money.

Debtors taking the Means Test to determine whether or not they qualify to file Chapter 7 bankruptcy can allocate as much of their income to charity as desired as long as the charitable giving is in line with past practices and not merely a strategy to pass the means test. Similarly, Chapter 13 debtors can use charitable contributions to reduce their disposable monthly income which will in turn reduce their monthly Chapter 13 plan payment.

However, not long ago, the situation was very different. Tithes and offerings and other charitable donations were usually not viewed as reasonable expenses for a person filing bankruptcy. Likewise, churches and other charitable organizations were sometimes sued by bankruptcy trustees and forced by bankruptcy courts to turn over gifts given them by individuals who later filed bankruptcy.

Thankfully, in 1998, Congress acted to protect the free exercise of religion from encroachment by bankruptcy courts and bankruptcy trustees when it passed the Religious Liberty and Charitable Donation Protection Act. This law was designed specifically to protect the giving of tithes and offerings in the context of bankruptcy.

The 1998 law clarified that tithes and offerings up to 15% of debtors’ income in the year before bankruptcy are not recoverable by a bankruptcy trustee. Additionally, gifts of more than 15% may be exempt if debtors can show that the gifts are consistent with their history of giving. For example, if you have given 20% of your income to your church every year for the past five years, your church would be able to keep the entire 20%.

However, Oklahoma bankruptcy courts as well as other bankruptcy courts across the United States would not allow a Chapter 13 debtor to include charitable giving in their monthly budgets unless the debtors were repaying 100% to their unsecured creditors. So Congress stepped in once again in 2006 and passed the Religious Liberty and Charitable Donation Clarification Act. This law clarified that Americans filing Chapter 13 bankruptcy have the right to include charitable donations as a reasonable expense in their monthly budgets as long as there is no deliberate attempt to avoid creditors.

One thing to be aware of regarding charitable giving is that it greatly helps if a person filing bankruptcy can prove his giving through canceled checks or by requesting a charitable giving statement from the church or other charitable organization. It also helps if the debtor can show that he has a long-term track record of charitable giving as opposed to just starting his giving on the eve of filing bankruptcy.

Can I File Bankruptcy On Just Some Of My Debts?

Dan Nunley — Thu, 20 Jan 2011 21:35:55 +0000

Just about every week I get a call from someone wanting to file bankruptcy on just a few of his debts. He tells me that only a few of his bills are causing him problems and he’d like to get rid of those particular debts and keep paying on the bills on which he’s current.

I have to tell this person that when filing bankruptcy, it’s all or nothing. He can’t pick and choose to include some debts and to leave out others.

Sometimes a person is reluctant to list a debt, such as a debt owed a doctor with whom the debtor wants to continue doing business. I advise my clients who have this concern that while they have to list the debt in their bankruptcy, they can continue to make payments to the doctor so that they can continue to see the doctor if that’s what they would like to do.

A person filing bankruptcy will sign bankruptcy documents under the penalty of perjury that say that the debtor has listed or scheduled all of his debts. To sign bankruptcy documents saying you have disclosed each and every debt owed yet not have done that would be committing the crime of perjury.

Furthermore, when a person who has filed bankruptcy goes to be examined under oath by his bankruptcy trustee, one of the questions the trustee will ask is “did you list all of your debts in your bankruptcy paperwork?” Again, to answer yes when in fact all debts weren’t listed would be committing perjury.

A person who files bankruptcy and commits perjury in the process has committed a federal crime. That person should expect at a minimum to have his bankruptcy case dismissed without receiving a discharge of debts. Beyond that, there is the real possibility of also being fined or even imprisoned.

The best thing to do when filing bankruptcy is to follow the advice of your bankruptcy attorney and disclose, disclose, disclose.

Will I lose my income tax refund if I file Chapter 7 bankruptcy in Oklahoma?

Dan Nunley — Mon, 25 Jan 2010 11:00:31 +0000

As April 15 draws closer, I am getting quite a few phone calls and emails from people who are considering filing Chapter 7 bankruptcy but are worried that they may lose their income tax refund if they do.

Most of these people are depending on their income tax refund for necessary living expenses or are planning to use it to catch up on mortgage payments or car payments. Some are even wanting to use their income tax refund to pay their bankruptcy attorney’s fees and filing fees.

The answer to this question depends on the specific facts of your situation and where you file your case. The exemption laws that are available to protect an income tax refund vary dramatically from state to state.

Like everything else in bankruptcy, it is very important that you be completely open and honest with your bankruptcy lawyer about your income tax refund. I ask every client of mine whether or not they have filed their tax return and whether or not they have already received or are expecting an income tax refund.

In Oklahoma, if you file your bankruptcy case AFTER you get your income tax refund, and you spent your refund on exempt property, then your worries are over. It’s not an issue.

It would be all right to spend the tax refund on things such as food, clothing, household goods, home and vehicle repairs, catching up on your house payments, and contributing to retirement accounts.

But you could spend your tax refund in such a way as to create a problem.

For example, if you used the tax refund to repay a relative money you owed them, or to pay off one of your credit cards, that’s considered a “preferential transfer” where one creditor was treated more favorable than the others. And when that happens, the Chapter 7 trustee can force your relative or the credit card company turn over that money.

However, if you file your bankruptcy case BEFORE you get your income tax refund, you must disclose the tax refund in your bankruptcy documents as an asset.

And in Oklahoma, except for any portion of the tax refund that is attributable to the earned income credit, the tax refund is a non-exempt asset which means that it can be taken by the Chapter 7 trustee to be paid to your unsecured creditors.

Whether or not the Chapter 7 trustee will take an income tax refund usually depends on two things: 1) how large the refund is, and 2) what percentage of your unsecured debts would be paid by the refund. If the total amount is small and the percentage paid back would be insignificant, the trustee is likely to abandon the tax refund and allow you to keep it.

If you filed a joint tax return with your spouse, but only one of you filed bankruptcy, your tax refund will be prorated according to the ratios of you and your spouse’s incomes and the trustee would only be able to take the refund belong to the spouse who has filed bankruptcy.

If you file your bankruptcy after January 1, but before you received your refund, the Chapter 7 trustee can take your share of the entire refund.

If you file your bankruptcy petition before January 1, the Chapter 7 trustee may take a pro-rata portion of the refund attributable to the months before you filed your bankruptcy case.

For example, if you file bankruptcy on September 30, nine months of the year (January – September) is considered pre-petition (before the bankruptcy case is filed) and three months of the year (October – December) is considered post-petition (after the bankruptcy case is filed). In this example, the Trustee can take 75% of your refund, while you get to keep the other 25%.

Lastly, future tax refunds beyond the year in which you file your bankruptcy petition are not subject to being taken by the Chapter 7 trustee.

If you are considering filing bankruptcy but are worried about losing your income tax refund, contact me today to schedule a FREE initial consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. Or just pick up the phone and give me a call at 918-615-8260. I’ll answer all of your questions in plain English so that you’ll have the information you need to make the decisions that will help you the most.

When will my bankruptcy be removed from my credit report?

Dan Nunley — Tue, 19 Jan 2010 16:21:23 +0000

There’s a lot of confusion concerning exactly how long a bankruptcy filing can legally stay on a person’s credit report.

Ask that question and you’re sure to get quite a few different answers. Some will say ten years. Others will say ten years for a Chapter 7 and seven years for a Chapter 13.

The law is actually very clear on this particular issue. The Fair Credit Reporting Act (“FCRA”) directs credit reporting agencies to remove bankruptcy case information from all consumer reports ten years after the date of entry of the “order for relief.” See 15 USC 1681c(a)(1).

The FCRA doesn’t distinguish between Chapter 7 and Chapter 13. However, many credit counselors cite an “unofficial policy” of the three largest credit reporting bureaus (Equifax, Experian, and TransUnion) to remove chapter 13 filing information from your credit report after seven years.

There’s also confusion over when the FCRA’s ten year time period begins. Some say the information must be removed ten years after the date of the discharge. However, the United States Bankruptcy Code states that the order for relief date is the date the bankruptcy petition was filed, so the ten year period must is measured from the bankruptcy filing date, not the discharge date. See 11 USC 301.

Therefore, information about your bankruptcy must be removed from your credit report no later than ten years after the date you filed bankruptcy. For example, if you filed bankruptcy on January 1, 2010, the bankruptcy must be removed from your credit report no later than December 31, 2019.

What happens if I forget to list a creditor in my bankruptcy?

Dan Nunley — Mon, 18 Jan 2010 11:00:52 +0000

Recently I’ve had several clients call and tell me that they just realized that they had forgotten to include a creditor in their bankruptcy.

This doesn’t happen often as I spend a lot of time reminding my clients that they must be extremely thorough in making sure that they have listed each and every one of their creditors. And we take steps to ensure that we’re not forgetting any creditors such as obtaining the client’s credit reports.

But occasionally even the most organized client forgets a creditor. Then what do you do?

Well, it depends on where you filed your bankruptcy case and what kind of bankruptcy case you filed.

If your case is a no-asset Chapter 7 bankruptcy, meaning that none of your property will be taken and liquidated and the proceeds paid to your unsecured creditors, some bankruptcy courts require you to amend your bankruptcy schedules and give notice to the added creditor in order to have the debt officially discharged. If your case has already been discharged and closed, then you would have to file a Motion to Reopen you case and then amend your bankruptcy schedules and give notice to the added creditor. And be aware that there are court costs associated with filing amended schedules ($26.00) and motions to reopen cases ($260.00).

In one of the federal bankruptcy districts in which I practice, Judge Dana L. Rasure held in In re Cerrudo, 214 B.R. 500 (Bankr. N.D. Okl. 1997) that an unlisted debt that would otherwise be dischargeable is discharged without further action by the debtor if the case was a Chapter 7 in which no assets were distributed. In the Cerrudo case, Judge Rasure denied the debtor’s Motion to Reopen finding that unscheduled debts are not excepted from discharge by virtue of 11 USC Section 523(a)(3) unless the debt would be non-dischargeable under one of the intentional tort exceptions contained in Section 523(a)(2), (4), or (6) and that pursuant to Section 727(b), an unscheduled debt in a no-asset chapter 7 case is discharged unless the debt could have been found to be non-dischargeable under the intentional tort exceptions if the creditor had been given an opportunity to timely seek such relief.

The above rules apply only in a no-asset Chapter 7 bankruptcy. If your case is a Chapter 13 case or a Chapter 7 case where assets were liquidated and made available to unsecured creditors, then a creditor who was left out was harmed by not being included in the case and therefore not being able to receive funds that were available to unsecured creditors. And therefore, that unlisted debt would survive the bankruptcy and the debtor would still be liable for the money owed that particular creditor.

If you realize that you have forgotten to list a creditor in your bankruptcy, contact your bankruptcy attorney as soon as possible for advice regarding your specific situation.

Which type of bankruptcy should I file – Chapter 7 or Chapter 13?

Dan Nunley — Mon, 09 Nov 2009 10:00:30 +0000

This BAPCPA Man cartoon is posted by the Oklahoma Bankruptcy Lawyer Blog with the express permission of the creators of BAPCPA Man:

For more information on the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy, read these previous blogs posts that I’ve written:

If you’re considering filing bankruptcy but aren’t sure which type of bankruptcy would be best for your specific situation, contact me today to schedule a FREE initial telephone consultation. Just fill out the Contact Dan form on the far right side of the page and click the Submit button and I’ll get back with you as quickly as I can. Or just give me a call at 918-615-8260. I’ll answer all of your questions in plain English so that you can make a wise decision regarding which type of bankruptcy would be the most help to you.

How can I stop a debt collector from contacting me?

Dan Nunley — Fri, 16 Oct 2009 10:00:35 +0000

If you’re behind in paying your bills, a debt collector is probably calling you.

If a debt collector contacts you about a past-due bill, you may want to talk to them at least once to see if you can resolve the matter.

Then if you decide that you don’t want the debt collector to contact you again, tell them – in writing – to stop contacting you.

Write the debt collector a letter in which you advise that they are no longer to contact you regarding the debt. Make a copy of your letter. Send the original by certified mail, and pay for a “return receipt” so you’ll be able to document when the collector received your letter.

Sending such a letter to a debt collector you owe money to does not get rid of the debt, but it should stop the contact.

Once the debt collector receives your letter, they may not contact you again, except in two instances:

to tell you there will be no further contact, or
to tell you that they or the creditor intend to take a specific action, like filing a lawsuit. The creditor or the debt collector still can sue you to collect the debt.

If an attorney is representing you about the debt, the debt collector must contact the attorney, rather than you.

If you don’t have an attorney, a debt collector may contact other people – but only to find out your address, your home phone number, and where you work. Debt collectors usually are prohibited from contacting third parties more than once. Other than to obtain this location information about you, a debt collector generally is not permitted to discuss your debt with anyone other than you or your attorney.

If you’re stressed out because debt collectors are filling your mailbox with collection letters and are calling you non-stop from morning ’til evening, fill out the “Contact Dan” form on the right side of this page and tell me about your situation. Or just pick up the phone and give me a call. I’ll be happy to listen to you explain your financial situation to me, and then I’ll share with you how filing bankruptcy would affect your specific situation. If you’re like most of the good people I work with, filing bankruptcy will stop the debt collectors, greatly reduce your stress and restore your peace-of-mind.

Can a debt collector call me at work?

Dan Nunley — Wed, 14 Oct 2009 10:00:09 +0000

Yes. However, if the caller is a third-party debt collector attempting to collect a debt owed to another individual or company, then the Fair Debt Collection Practices Act (FDCPA) applies and the bill collector must stop calling once you tell him/her that your employer does not allow you to receive collection calls at work.

If the caller is trying collect it’s own overdue account, then the FDCPA does not apply.

If debt collectors are driving you crazy and you’re wondering how bankruptcy may be able to help, I’d be happy to answer your questions. Just fill out the Contact Dan form on the right side of this page, click on the Submit button, and I’ll get back with you as soon as I can. Or just pick up the phone and give me a call at 918-615-8260. I look forward to hearing from you.