Filing a Bankruptcy Wisely When it Comes to Debts and Income

In this episode, we sit down with Bankruptcy Attorney, Darin Wisehart, to discuss the best time to file a bankruptcy when it comes to your debts and income. In this interview, Darin discusses strategies for the following circumstances:

•    You anticipate having new debts or if you have certain debts you want to pay
•    Your creditors are threatening to file a lawsuit
•    You have a judgement, wage garnishment filed against you.
•    You have a child or spousal support enforcement case pending
•    Your income is high and going down, or if it is low and going up.

If you would like to speak with one of our attorneys, please call our office at (503) 227-0200, or visit our website at https://www.pacificcascadelegal.com.

Disclaimer: Nothing in this communication is intended to provide legal advice nor does it constitute a client-attorney relationship, therefore you should not interpret the contents as such.

Transcript

Intro:
Welcome to Modern Family Matters, a podcast devoted to exploring family law topics that matter most to you. Covering a wide range of legal, personal, and family law matters, with expert analysis from skilled attorneys and professional guests, we hope that our podcast provides answers, clarity, and guidance towards a better tomorrow for you and your family. Here's your host, Steve Altishin.

Steve Altishin  
Welcome, everyone. I'm Steve Altishin, Director of Client Partnerships at Pacific Cascade legal. And today we have our bankruptcy attorney, Darin Wisehart, to talk about the timing of filing your bankruptcy when it comes to your debts and income issues. Darin, how you doing today?

Darin Wisehart  
I'm great. I'm great. Thanks for having me on today.

Steve Altishin  
Oh, I'm happy to have you here. We've been on several times, you've talked about several things there. But today, rather than talking about what bankruptcy is and how it works, let's talk a little bit about the when. Specifically maybe the timing of when you might want to file a bankruptcy. So maybe we'll start with some things such as, What if you anticipate having new debts, such as you know, unnecessary surgery, and if they're different sevens and thirteens, and kind of talk about that a little bit. 

Darin Wisehart  
So the beginning part of that is that bankruptcy is a slice in time. And when bankruptcy attorneys talk about filing a bankruptcy, we talk about the filing date, and the time of file. And because of that, we want to make sure we know what debts we have before we file and the second we push the button. Any debts that we have after we file for the most part aren't going to be included. And so that's why when we talk about any any debts like this any on COVID ongoing debts or debts that are going to be incurred in the next week or month. We want to make sure we think about when we're going to push the button because you only get to do it really once. And chapter seven are a little bit different than chapter Thirteen's. So when we talk about our timing, when you're in a Chapter Seven, for the most part, you're jumping in the river and you're in the river, you don't get a chance to say, hey, I want to get out of the river. Now, because I've got another debt that came up after you don't really get to do that as well. And of course, you can talk to your attorney. You know, if that does happen there, there are a couple of creative ways you can deal with it. But for the most part, you want to make sure that you're planning to have your debts be incurred before you file your case. Because once you filed, you don't want to think about, hey, let's let's have another data, let's deal with that other debt in another way you want everything in that bankruptcy.

Steve Altishin  
Without getting too much into the weeds on a chapter 13, is it relatively the same--although we do tend to get in the weeds--it's a three to five year process. And if a debt comes up in after six months, can that somehow be added? 

Darin Wisehart  
Yeah, chapter 13 is a different beast. So it's it gives you the opportunity to always dismiss your case, if you choose to do so. And that's that's a very, very powerful write for a person. Because if you file and you think, hey, we might have something come up, but maybe we don't, we don't know for sure that sometimes a chapter 13 is a decent idea to keep the bankruptcy moving. So have it file and have the progress of that be made. And then if you do have something that pops up six, seven months, a year, after you filed your case, then you can voluntarily dismiss your case, and then bring a new case after that to bolt everything in. And it's obviously you know, when I talk to clients about this, it's not something you want to do. Because when you get into bankruptcy, you want the clock to be ticking, you want to make progress, and you want to see the light at the end of the tunnel. But sometimes you have things that you just don't know, you don't know, if you're gonna happen, you know, you, you want to be able to plan for all the different opportunities. The way I always describe it is you want to leave as many doors open as you can. And with chapter seven, you're going through one door and that's it. That's that's your door. And with a chapter 13 You can leave a couple of doors open and take a look at possibly dismissing if you happen to need to the next year. Sometimes we do that in the purposes of chapter 13. If somebody has an oncoming garnishment or maybe a foreclosure, we need to file the case. And you know every case is different. So we always talk about how to deal with these different debts, you know, the different things that we're trying to juggle, as we're looking at, you know, whatever case we're dealing with.

Steve Altishin  
What if there are certain debts that you actually want to pay other personal or business? Is there a timing issue with paying those debts? 

Darin Wisehart  
Yeah, and this is where you get into the weeds really quickly. So you know, the the skinny of it is, if you're looking at paying some let me bankruptcy as a whole wants to treat everything the same in the different categories, okay, so they don't want you to say, in the same category, say you have a credit card debt, and this is a common one, you have a credit card debt for Chase, and and then you also owe mom some money as well. And, uh, you get people that will come to me and they will say, you know, I want to make sure I pay mom, but I don't want to pay Chase will the code, the bankruptcy code isn't they don't like that they don't want that idea. Because they're in the same category, they're supposed to be treated the same way. And so if you're looking at those deaths, you need to make sure you're ready to deal with them that way. But at the same time, sometimes you can be creative with how you do that, within the rules to make sure that you're, you know, you're you're planning it correctly and getting as many of your goals accomplished as possible. But the way I always talk about it is you want to be sure that you're ready to deal with the debts in the same way. You know, I like these guys, I don't like those guys, not really the way you want to start approaching your bankruptcy.

Steve Altishin  
Got it. What if an action has been filed against you? You've got, you've filed something, does that sort of change the clock or how does that work?

Darin Wisehart  
Always chages the clock. And that's that's because you want to throw that that juggling ball up and you want to make sure that it stays in the air. Because you don't want to you don't want to get a judgment. Sometimes every once in a while you say you know, it doesn't matter, it won't make any difference if they get a judgment or not. But you really don't want them to get a judgment for a lot of times because you once they get a judgment in most states, and Oregon is where I'll talk about predominantly here. But in most states or all states, once they get a judgment that gives them the legal right to go garnish wages or to take money out of a bank account. And that's that's the normal way that they do that. They can't really do that, until they have the judgment signed. And so when you get the judgment in the mail, you want to keep that clock going. So that you know, okay, they they're not quite to the point where they get to garnish, or they get to get a judgment. And that's one of those things you want to balance when you're talking about how, how do we time our bankruptcy? How do we make sure that we get filed with the most goals achieved, and one of those goals for a lot of clients is to not have a garnishment hit. Because the common statement is you know that garnishment hits me and I can't pay my normal bills. If I'm being garnished 25% of my wages or you know, some different number depending on what state you're in. That's, it's very important. And it's something that you'll talk with your attorney, they'll mark it on the front page, the big star next to it so that they can keep that date, the date that a potential judgment could hit. They keep that on their radar, and then balance that with the other aspects of your case that may also need a star next to it and you know, to figure out what the timing on your filing should be.

Steve Altishin  
What about something like your taxes? I know, again, taxes are even meatier than that. But aren't there times where you can, if you've got a tax debt, when you file may become important?

Darin Wisehart  
Yeah, yeah, definitely. And here's the thing that I always say with taxes is you want to make sure that you've got an attorney that knows what they're doing with taxes, because taxes have the four big bright line rules that that pretty much every attorney will know in the bankruptcy field. And then you've got another 50 little rules that come into play, that are always around that, you just you're trying to kind of figure out where where an individual will be for timing. A lot of times with timing, we want to make sure we're filing to include taxes into a chapter 13 Because it helps you to repay the taxes that need to be paid. And then it also helps you to discharge the taxes that are maybe dischargeable. So that's the chapter 13 is pretty valuable for that. And sometimes we file a Chapter Seven to just discharge the taxes. And then you know, if the person needs to worry about taxes that are non dischargeable, they do that after, but the timing on when you get filed is gigantic because the dates on certain tax rules are very defined, and they're very, you know, you can't miss those. If you miss them by a day, then you may have a debt that's not dischargeable or you may have a debt that doesn't have to be paid or does have to be paid in your case. And it couldn't change the complete dialogue. You know, we we want to make sure that we have an idea with what those dates are. And a lot of that is knowing the information but part of that is just getting in and getting with an attorney that knows how to put that into, you know into black and white so you can see what the plan will be for your case.

Steve Altishin  
I think you hit it on the head when you said you better get into an attorney. Because it sounds like this is the the ultimate version of the devil is in the details and missing a detail even though you think you know about bankruptcy and you bought the book and you did all that stuff, that book isn't nearly thick enough to, you know, include everything.

Darin Wisehart  
Yeah, no doubt in taxes it's it gets quite it's it's quick in the weeds even for bankruptcy attorneys, we can sit you can have 10 bankruptcy attorneys in the same room, and six of them will have a different understanding of what they need to do when it comes to a certain complex tax case. So you want to be sure that, that you've got a plan. And, uh, you know, for a lot of clients, you want to be sure that you're flexible enough to be ready for what, what procedures and what specific path you need to take. Because, you know, a lot of tax cases, there are different ways that you can deal with the tax debt, depending on the timing of filing, and depending on what you have to pay and what you can't pay what's non dischargeable, so what's not going to go away, and what is dischargeable and a lot of times with taxes, you know, individuals that have tax debt in the past, you're gonna take your lumps, you're gonna, you're gonna pay the price a little bit, but you have to be ready for that. And my job is always to try to put you in the best spot I can. And sometimes I can do a very good job. And sometimes I just don't have the workable product to be able to, you know, to make magic.

Steve Altishin  
But yeah, it makes total sense. We're talking about debts. And let's for a second talk about kind of the opposite, because I would imagine that a person's income, especially if it's a flexible kind of an income, can also impact when you want to actually file your bankruptcy. And you know, for instance, what if you're, right now, making a boatload of money, but you're either going to retire or you're quitting your job or something like that. Your income is gonna go down. And yeah, does that affect when you want to file?

Darin Wisehart  
It definitely does, definitely does. And with that, you always have to talk about what are the other reasons of wanting to file or needing to file, maybe you have a garnishment coming, or you have certain things that are going to come in, you want to be sure that that you're balancing those things against the the income because when you have a lot of income, a lot of times, you know, you're not going to qualify for a chapter seven, which means you're the doors are there's less doors open for you to take a look at options. And sometimes after you've retired that chapter seven might be a decent idea. Even though maybe sometimes you don't even need to file after you retire, maybe your income is exempt or your you know, your judgment proof, which is what term they use. If you just have Social Security coming in or something like that. I mean, there's a lot of things that go into play. The big question is, why do we need to file right now if you're making a lot of money, and you know, maybe you see retirement in the next six months or something. 

Steve Altishin  
What about the flip side. And always for me, the blueberries are always on the other side. When your income is love, you're not making much money but you got a new job, maybe someone's dying and you're getting an inheritance, but somehow your incomes gonna go up. Does that also influence when you want to file?

Darin Wisehart  
It definitely does. And most attorneys will say talk to the attorney quick. If you're if you see that as a potential because you might be able to maximize the opportunity to get through the process, get that press start and then get on with life. And with inheritances, you know, a lot of people will we'll get into the complexity of the inheritance and and start discussing, you know whether the the trustee will be able to grab that. So of course that's that's a sticky issue too. And you want to be sure that you talk that through with your attorney because inheritances anytime before or after, you know around that bankruptcy filing, sometimes they get clawed by the trustee and taken. And we want to make sure that we can predict that as best we can. You can't always predict the inheritance. But that's that comes in. If you do see more income too, you know, you want to be sure that you chat earlier rather than later. Because maybe you can qualify for that chapter seven, and just get the thing done and get that debt and your past and then maybe when you got a job and you're gonna get back on your feet. Now it'll help you get back on your feet better without having to worry about being garnished. And maybe you didn't you wouldn't have qualified for that case. If you would have waited six months or a year or, you know, maybe there's a lot of possibilities in there. But getting getting someone you want to work with as soon as you can is always a good way to go. And sometimes you even open you open a case to just get trucking on it so that you can have an attorney get their hands dirty a little bit and figure out what you have and In that way, they can say, well, the timing is for you to file, right this very second, we need to get your file. Or maybe we wait six months or a year, depending on what your income is going to look like. It just gives you more options. Yeah.

Steve Altishin  
Again, it just emphasizes that bankruptcy is not just about the cold blob, but about a lot of important strategies that go around with it. And that's, again, what you're here for. This is not just to tell you, Oh, this means this, but, you know, what's the best way to do it? 

Darin Wisehart  
Yeah. I always liken it to flying the plane, you know, you're trying to do the best you can, you're gonna deal with bumps, but you're trying to put yourself in the best position you can, and you want to get to that destination. 

Steve Altishin  
Yeah. I love that one, and I wouldn't fly the plane. So conclusion, we are out of time. But thank you so much, Darin, for sitting down and talking with us today about the timing of filing a bankruptcy when it comes to your personal debts and your income. Really informative. I don't think a lot of people think about this a lot when they're exploring a bankruptcy. So I'm really happy we were able to talk about it today. Thank you. 

Darin Wisehart  
No problem. Thanks for having me. 

Steve Altishin  
Oh, any time. And thank you, everyone for joining us today. Stay safe, stay happy and be well.

Outro:
This has been Modern Family Matters, a legal podcast focusing on providing real answers and direction for individuals and families. Our podcast is sponsored by Pacific Cascade Legal, serving families in Oregon and Washington. If you are in need of legal counsel or have additional questions about a family law matter important to you, please visit our websites at pacificcascadelegal.com or pacificcascadefamilylaw.com. You can also call our headquarters at (503) 227-0200 to schedule a case evaluation with one of our seasoned attorneys. Modern Family Matters, advocating for your better tomorrow and offering legal solutions important to the modern family.