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muck_a_luckSo, I was going over a summary of the new bankruptcy rules this morning, and I see what all the yelling has been about. Before I embarrass the Boss, please remember that I am not an attorney and that I am just commenting on my reading of one item. So if I've got something ass backwards here, don't blame anybody but me. And remember, paralegals cannot give legal advice! :p
Firstly, almost nobody who is employed is going to be able to file Chapter 7.
Also, your eligibility for Chapter 7 will be based upon your average income over the past 6 months, so if you decide to file after only one month's unemployment, you will still have the average income of the previous 6 months to deal with. Possibly $0 income now, but practically your full previous salary will be used as your "income." Well, that is going to suck.
In addition, if you have even $100 left per month in excess of your "expenses" you will be required to come up with a payment plan - I think this means anybody with even $100 excess dollars of income will have to file Chapter 13. In any case, it sounds like "expenses" do not include things like the purchase of food - though I think this article must be screwed up because I can't imagine that's the case.
The big thing that bugs me, though, is what they are doing to the valuation of personal property.
My understanding of how Chapter 7 currently works is that your stuff is valued based on what the Trustee could sell it for to get cash for your creditors. The value of your stuff is a certain kind of wealth. Hypothetically, a Trustee can take your stuff - your old X-Box, your 2-year-old computer, your junky couch, your clothes, your CD collection, your old paperbacks, your TV, your car, etc. and sell it to the highest bidder and get some money to give to CitiBank. The states have laws that protect certain types of stuff - like you can protect your clothes, your wedding rings, your stove, a vehicle of a certain value, and so on. But there are limits to what you can protect and eventually, you might have to sell your favorite fur coat or your beautiful gems and gold necklace to pay of your creditors. *rolls eyes* But that is realisitic. If you've gotten furs and beautiful gold necklaces that have value, you should have to give that value back. The current system reflects what your stuff is worth.
The new system reflects "replacement value." What would it cost to replace your stuff. Wow. That's a big difference. Now you will still be able to protect your stuff, but now you have to value your stuff at it's certified replacement value. That make you instantly much more "wealthy."
It creates a fiction about your wealth. What it would cost to replace your stuff is a lot more that what you could actually get for your stuff at a yard sale. The law has created a fiction about the amount of wealth people will have available to them to pay of creditors. If you can't auction your stuff off to the highest bidder and get replacement value, what is the point of pretending that your crap is actually an "asset" that makes you vulnerable to creditors?
I feel like I didn't express that well, but I wish the law would just be honest. Say you will always have to pay 20% of your unsecured debt no matter what - something like that, rather than pretend that people have assets that they do not. Why premise the rules on a falsehood?
I am very disgruntled.
Firstly, almost nobody who is employed is going to be able to file Chapter 7.
Also, your eligibility for Chapter 7 will be based upon your average income over the past 6 months, so if you decide to file after only one month's unemployment, you will still have the average income of the previous 6 months to deal with. Possibly $0 income now, but practically your full previous salary will be used as your "income." Well, that is going to suck.
In addition, if you have even $100 left per month in excess of your "expenses" you will be required to come up with a payment plan - I think this means anybody with even $100 excess dollars of income will have to file Chapter 13. In any case, it sounds like "expenses" do not include things like the purchase of food - though I think this article must be screwed up because I can't imagine that's the case.
The big thing that bugs me, though, is what they are doing to the valuation of personal property.
My understanding of how Chapter 7 currently works is that your stuff is valued based on what the Trustee could sell it for to get cash for your creditors. The value of your stuff is a certain kind of wealth. Hypothetically, a Trustee can take your stuff - your old X-Box, your 2-year-old computer, your junky couch, your clothes, your CD collection, your old paperbacks, your TV, your car, etc. and sell it to the highest bidder and get some money to give to CitiBank. The states have laws that protect certain types of stuff - like you can protect your clothes, your wedding rings, your stove, a vehicle of a certain value, and so on. But there are limits to what you can protect and eventually, you might have to sell your favorite fur coat or your beautiful gems and gold necklace to pay of your creditors. *rolls eyes* But that is realisitic. If you've gotten furs and beautiful gold necklaces that have value, you should have to give that value back. The current system reflects what your stuff is worth.
The new system reflects "replacement value." What would it cost to replace your stuff. Wow. That's a big difference. Now you will still be able to protect your stuff, but now you have to value your stuff at it's certified replacement value. That make you instantly much more "wealthy."
It creates a fiction about your wealth. What it would cost to replace your stuff is a lot more that what you could actually get for your stuff at a yard sale. The law has created a fiction about the amount of wealth people will have available to them to pay of creditors. If you can't auction your stuff off to the highest bidder and get replacement value, what is the point of pretending that your crap is actually an "asset" that makes you vulnerable to creditors?
I feel like I didn't express that well, but I wish the law would just be honest. Say you will always have to pay 20% of your unsecured debt no matter what - something like that, rather than pretend that people have assets that they do not. Why premise the rules on a falsehood?
I am very disgruntled.
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no subject
Date: 2005-10-05 03:20 pm (UTC)no subject
Date: 2005-10-05 03:30 pm (UTC)Because the credit card industries have the best lobbyists.
Notice how the laws are all leaning to "protect" the powerful moneymakers from the desparate poor, and we are not seeing action on usury, predatory lending, etc. In addition there's weakening of labor laws and resistance to raising the federal minimum wage. The government is creating a giant Hoover to suck every last dime from the poor and middle classes, while the rich gorge themselves like gluttons. It's a freaking horror show.
no subject
Date: 2005-10-05 04:31 pm (UTC)You are lovely, but please remember that I operate on the super sekrit identuhtee CK, in my online manifestations! :)
I wonder if your Dad's even going to bother with bankruptcy anymore, with some of the new requirements. It's gonna be a whole new world for us...
no subject
Date: 2005-10-05 05:28 pm (UTC)and yeah, it seems like doing bankruptcy now is just one big sticky situation... uggh. well, good luck in the office and such! I'm thinking winter break, if I don't go anywhere, you'll find me in the office helping you, making some Christmas present cash ;)
♥
no subject
Date: 2005-10-05 05:31 pm (UTC)Would love to have you back at Christmas. You should be sure to be in on the day of the office party, too! Will remind your Dad. :)
no subject
Date: 2005-10-06 01:17 am (UTC)This may not be so bad when it comes to electronic items. While the replacement value of my books would be high if I had to buy new, the replacement value of my 5yr. laptop is probably nil. Would I have to price it out against a brand new laptop?
I am confused.
no subject
Date: 2005-10-06 05:35 pm (UTC)The rich get richer...
Hurricane repercussions
Date: 2005-10-08 12:22 pm (UTC)How is that credit counseling going to work?
"When making your financial plans, we think you did not put enough emphasis on the possiblity of your entire community being destroyed by a hurricane. As you plan moving forward, please also include contingency planning for earthquakes, tornados and volcanic activity..."
My experience with small business budgeting
Date: 2005-10-08 12:30 pm (UTC)Though weirdly, now that I sit in the chair that does the payroll taxes, I find the complexities of raising the minimum wage much more real.
I know what we take in. I know what we pay ourselves. I know how much the government hits us for in payroll taxes, and I know that the only way my boss could employ more people would be to pay me less. I make a good, but not fabulous salary. My salary, in this area, would not sustain a middle class lifestyle for a family of three, though in combination with my Husband's salary, it means we can live a very nice middle class lifestyle. But he is absolutely maxing out his budget, and he hasn't given himself a raise or me a serious bonus in years. This is not a case of employer profit grabbing. This is a case of the reality of the money flow.
If he were *forced* to pay me more, he might actually have to lay me off. Because there would not be cash to pay either the new payroll amounts OR to pay the taxes.
So I look down the economic ladder to businesses that use people who make minimum wage and I wonder what their margins are? They are used to the playing field as it is. They employ a certain number of people. Because of my perspective in my job, I am more worried about the impact of a federally mandated pay increase than I would have been before.
Not to say that there aren't plenty of businesses making massive cash on the backs of the minimum wage earner. It's just that I know that there must also be plenty of businesses like the one where I work where the balance is delicate and changes forced from the outside could be a very bad thing.
Replacement vaue
Date: 2005-10-08 12:35 pm (UTC)Still, someone will have to attest to the values, and the attorney would be held responsible if it were not correct. And what about replacement value of things that might have increased in value? Could be complicated.
Re: Replacement vaue
Date: 2005-10-08 03:39 pm (UTC)I see the problem with collector's items. The difference between the resale value and replacement value for my comics if I were to do either locally is pretty high. However, by the time I was unemployed long enough to file for bankruptcy, I would have sold off anything of value long ago.
Oh! That brings to mind another question. Once a replacement value is set, if I were sell that item for a higher amount, would the difference go towards my debt or could I pocket the difference? That might fall into the realm of stupid questions.
Also, who pays for the certification?
Re: Hurricane repercussions
Date: 2005-10-08 04:18 pm (UTC)Re: My experience with small business budgeting
Date: 2005-10-09 06:34 am (UTC)Take $5/15, multiply it by 40 hours and subtract taxes. Then think of how much the cost of housing has gone up since 1997, when $5.15 was instituted. A teenager working fast food and living at home -- fine. A single mom trying to get by? Not so good.