Are You Eligible for a Chapter 7 Bankruptcy?

How does the bankruptcy court determine if you are eligible for a Chapter 7 Bankruptcy? The court uses the “means test,” which determines if your income is low enough to qualify.

Chapter7Bankruptcy3The means test uses a formula designed to keep filers with higher incomes who can repay some of their debts (and through a Chapter 13 Bankruptcy) from filing a Chapter 7 Bankruptcy. But even with some income, you may still qualify.

How does the means test work? It subtracts specific monthly expenses from your current monthly income (using your average income over the previous six months before filing). Your attorney will also know about and subtract items like high mortgage payments, car payments, past taxes and other expenses.

The income you have left after subtracting out any debt is your disposable income. The higher your disposable income, the less likely you’ll be able to file a Chapter 7 bankruptcy.

Remember, only bankruptcy filers with primarily consumer debts, not business debts, need to take the means test.

Means test eligibility is based on your income compared to the median income for a household of your size, in the county you live in, within New York State. If your income falls below the median, you qualify for a Chapter 7.

If you have questions, please contact me. My fees for a Chapter 7 Bankruptcy are among the lowest you’ll find at $999.

Mark C. Gugino
Attorney at Law

Recent Documentation Changes for Home Mortgage Applicants

The Truth in Lending Act is a American federal law that encourages the knowledgeable use of credit by consumers through disclosures about any terms and costs that are associated with borrowing that credit.

RESPARESPA, or the Real Estate Settlement Procedures Act, requires that lenders provide simple and complete amounts of information at certain points in the loan process to help potential homeowners make informed decisions.

On October 1, 2015, new regulations took effect that consolidate four previously required forms into the following two:

1) Loan Estimate: This single form replaces the Truth in Lending Disclosure and Loan Estimate forms. Buyers must receive the loan estimate form three (3) days after their loan application

2) Closing Disclosure: This single form replaces the Truth in Lending Disclosure as well as the HUD-1 Settlement Statement. Lenders must provide this document to mortgage clients three (3) business days before closing.

Every creditor or mortgage lender must provide these new consolidated forms every time they receive an application from a consumer for a closed-end transaction – one that must be paid in full including interest and other fees, and that is secured by real property on or after October 1, 2015.

The RESPA TILA changes will not apply to HELOC and reverse mortgages. It also does not apply to those loans made by someone like a contractor to a homeowner for services like weatherization, for example, if the contractor makes five or fewer mortgages per year.

Realtors are also subject to new rules and regulations as to what they can and can’t do, but should go to their own National Association website or for more information.

Mark C. Gugino
Attorney at Law

Use a Health Care Proxy to Plan in Advance for Illness or Injury

Why? It is possible because of your illness or injury you may be unable to speak to a doctor or your relatives with questions about your care. You can plan in advance to assist whomever may speak on your behald about the medical treatment you receive if you become unable to decide for yourself.

A Health Care Proxy will convey what your wishes are and are followed and your health care decisions stay in the hands of people you trust and not the evil stepson.

New York State law grants you “rights” concerning your medical treatment. You have the right to accept or reject medical treatment including life-prolonging procedures such as intravenous and tube feeding and mechanical respiration.

New York institutions like hospitals and nursing homes are required to inform you before you are admitted as to whether or not they will be able to honor your right to accept or reject treatment or if you are already admitted they are required to transfer you to a facility that will.

If you have not done a Health Care Proxy and have lost the ability to make those decisions as to your medical treatment then someone close to you may make those decisions but as to who that person is, it is unknown and can be contested and a court determination might be necessary.

In 2010, the New York Senate passed the Family Health Care Decision Act which does allow family members or others who are close to you to make decisions regarding your medical treatment in accordance with your wishes but if unknown, your best interests.

In addition, under the state’s “Do Not Resuscitate” law a family member or another who is close to you may be granted the right to decide about what extraordinary medical treatment you will receive to restart your heart or your lungs if the heart stops or your breathing.

The Health Care Proxy will solve this problem and if you still need help or advice please contact my office.

Mark C. Gugino
Attorney at Law

Understanding Child Support

Under the Family Court Act which is Article 4, “the parents of a child under the age of 21 are chargeable with the support of such child and if possessed of sufficient means or able to earn such means, the parents shall be required to pay for child support which is a fair and reasonable sum the support magistrate shall determine.” If a parent quits a job to avoid paying child support that parent can still be charged with what % he or she could earn (imputed).

The child support percentage to be paid is 17% of the combined parental income for one child, 25% of the combined parental income for two children, 39% of the combined parental income for three children, 31% of the combined parental income for four children and no less than 35% of the combined income for 5 or more children.

What is income? Combined parental income is the sum of the income of both parents. Income is gross total income for the individual parent from the Federal Return. Then you must add investment income reduced by the cost associated with making this income. Next comes income from worker’s compensation, disability benefits, unemployment, social security benefits, veterans benefits, pensions and retirement benefits, fellowships and stipends and annuity payments.

At the discretion of the court, the court may attribute or impute income from these other sources:

  1. Non­income producing assets
  2. Meals, lodging or other perquisites from employment in a business which are for personal use
  3. Fringe benefits
  4. Money, goods or services provided by a relative

For the self-employed parent these items can be brought back into your income including:

  1. Depreciation than the calculated straight line depreciation
  2. Entertainment and travel allowances deducted from business income to the extent they reduce personal expenses

What can be subtracted from Parental Income?

  1. Unreimbursed employee business expenses (uniforms)
  2. Alimony or Maintenance actually paid to a spouse not a party to the instant case pursuant to a court order or a validly executed written agreement
  3. Alimony or maintenance actually paid to a spouse that is a party to the instant action pursual to a court order or a validly written agreement provided the agreement provides for a specific adjustment upon termination of alimony or support
  4. Child support actually paid pursuant to another court order
  5. Public Assistance
  6. SSI
  7. New York City Taxes actually paid
  8. FICA taxes actually paid

In addition, where health insurance is available, the cost of the custodial parents pro rata share can be deducted from the basic support obligation. Where the basic amount of the child support obligation would reduce the non­custodial’s parent’s income below the poverty income guidelines the basic support obligation would be $25.

The court can though find that non­custodial parents share is unjust or inappropriate based on the financial resources of either parent or the child; the physical and emotional health of the child and his/her special needs and aptitudes; the standard of living the child would have enjoyed had the marriage or household not have been dissolved; the tax consequences to the parties; the non-monetary contributions that the parents will make towards the care and well being of the child; the educational needs of the parent; and the determination that the gross income of one parent is substantially less than the other parent’s gross income.

Also, always write a check for the support you pay and never pay support in cash. Still have questions? Please just give me a call.