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Benjamin Patrick Payne

Benjamin Payne’s Answers

118 total

  • Personal guarantee on business lease contract ?

    I am the only income source in our family and my husband owns a restaurant. The business is going bad for many years and they want to close the business but the lease contract doesn't expire till Oct 2016. My husband and his partner have personal ...

    Benjamin’s Answer

    The technical answer is "no" you personally are not liable for the debt your husband guaranteed. However, Wisconsin is a marital property state, which generally speaking means that all of your property is available to pay a claim incurred by your husband. That means the party owed money on that restaurant lease could sue your husband and take a judgment against him, but isn't entitled to a money judgment against you. That said, if the leasing company gets a judgment against your husband for the unpaid balance due under the lease, the leasing company could still garnish 20% of your wages because your wages are marital property. Because you are not personally liable on the debt guaranteed by your husband, if your husband files a bankruptcy case, or if you get legally separated or divorced, the leasing company would be prohibited from attempting to collect the debt from your property.

    Typically, when a restaurant fails, there are credit card debts that were run up in an effort to keep the business afloat and often sales and employee withholding taxes owed by the company on which the owners of the company can also be held liable. In addition to the lease, some of the restaurant suppliers may also have guaranties of their accounts from your husband. It is not uncommon for the owners of a restaurant to sign an application for a credit account with a food supplier without realizing or remembering that it included a personal guarantee of the owner.

    In short, it may be that when you and your husband consider the big picture, a bankruptcy case may be the only way to clear the slate and avoid wage and bank account garnishments for years to come. You're doing the right thing at this point, though; ask lots of questions and get good answers. Then you'll be ready to make the right decision.

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  • Did not reaffirm car loan in ch7 and now car is shot.. Can i "give it back" without reprocussions

    i took out a car loan last year on and 2003 SUV. I've always paid on time. I filed bankruptcy, ch 7 in April and did not reaffirm the loan. I have however continued to make payments on time and owe about $6k yet. Today to my horror the transmissio...

    Benjamin’s Answer

    The only thing I'd add to the other responses is that the loan company may refuse to take possession of the SUV (and probably will under the circumstances), leaving you with the problem of what to do with the vehicle. If it sits on the street it could accumulate parking fines for which you will be responsible and the loan company won't likely foot the bill to have the car towed to a junk yard. If you take the car the junk yard, the junk yard probably won't take the car (and won't give you the salvage value of the car) unless the loan company releases it's lien on the title. There is a way to demand the loan company release the lien on the vehicle in such situations, but you'd need the assistance of an attorney to accomplish that because it essentially involves threatening to sue the loan company for a violation of the discharge injunction unless they release their lien.

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  • Do I Need a bankruptcy attorney.

    I purchased 1/10 interest of 25 acres from my brother. their are 4 owners of Land, and he filed bankruptcy 18 months after sale. The trustee Lawyer is filing against me to reverse the sale and force the sale of the 25 acres. Can they forc...

    Benjamin’s Answer

    The trustee can't do anything to that property without convincing the judge he's entitled to reverse the sale of 1/10th of the 25 acres to you (and presumably to other family members). If the trustee believes your brother sold you 1/10th of 25 acres for less than what a stranger would have paid your brother for that land, then it's possible that the trustee could have the sale to you (and maybe similar sales to others) reversed. Yes, you'll need an attorney to attempt to negotiate with the trustee and to defend you in the lawsuit the trustee has filed against you. You've only got 30 days from the date you were reserved with that summons and complaint to file an answer or the trustee can obtain a 'default judgment' against you without a fight. Call a good bankruptcy lawyer quickly.

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  • I can't pay my Parent Plus loan. Can they make me sell my property? Can they take what little savings I have in my accounts?

    I Can't pay my Parent Plus loan and I'm near retirement, can they take my home and any savings I might have to live on? I know they can garnish my wages (not working) and take any tax refunds I might get. How much of my Social Security check wou...

    Benjamin’s Answer

    The student loan account is treated similarly to any other debt you owe to a medical service provider, credit card company, or utility company, with respect to what the student loan creditor can do to compel payment on the account once it goes into default, with one major exception - the student loan creditor can intercept your federal tax refunds and some of your social security payments and apply them to your student loan balance. Other common creditors can't do that.

    All the student loan creditor can do prior to suing you on the account is demand payment (letters and calls), report the late or missed payments to the credit bureaus (ongoing damage to your credit score), and intercept your federal tax refunds or other federal benefits (interception of social security is limited as the previous poster indicated). After taking judgment against you, the student loan creditor can to all the things the holder of a judgment against you can do, including garnishing your bank account (but the first $10,000 of the account can be protected from their garnishment with the assistance of an attorney), and they can "docket" their judgment against your home and any other real estate you own. Once docketed, a judgment becomes a lien on your home and would need to be paid in full in any sale or refinance of the property. If there are no mortgages on your home currently, you should consider speaking with a good asset protection/bankruptcy attorney about your options for protecting the home in the event of a worst case scenario.

    The joint account with your parents presents a risk as well. If a creditor takes a judgment against you, that creditor could garnish all of the funds in the joint account even if you argue that they're not yours. You should work with an asset protection/bankruptcy attorney to get you off that account and assist you in obtaining a financial power of attorney for one of your parents instead if that's what you were trying to accomplish with the joint account.

    On the 401(k) issue, as the beneficiary of your husband's 401(k), you likely have the option of continuing the 401(k) in your own name if he predeceases you. You should ask your plan administrator (ex. Fidelity, Vanguard, etc...) whether that's the case. If it is, the 401(k) funds will remain protected in the 401(k) account if he predeceases you and will be out of the reach of the student loan creditor, even if the student loan creditor has obtained a judgment against you prior to that point. If it is not an option to continue the 401(k) plan after your husband's death, then you'll need to speak to a good asset protection/bankruptcy lawyer about your options for protecting your assets through the use of something called a "spendthrift trust."

    As for the life insurance from your husband's life insurance policy, as long as you reside in Wisconsin, all funds payable to you under a life insurance policy insuring your husband are protected by Wisconsin law (subject to a rare exception) from your creditors, including judgment creditors, meaning the student loan creditor can't get at it. You'd need to set those funds aside in a separate bank account into which no other funds are ever deposited so that you can always easily prove that all of the funds in that account came from your husband's life insurance policy, in case any one tries to garnish that account.

    Will the small regular payments "satisfy" the student loan creditor? Maybe. It's an old trick to keep an account out of collection by making small but regular payments; it's an old trick because it still usually works. If it gets

    The US Dept. of Education has some good information on your options for various student loan repayment plans and on what happens (generally) once a student loan goes into default. You can access that information at

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  • 2nd Mortgage reaffirmed, 1st never requested, any advice?

    My husband and I filed chapter 7 in July 2009, and it was discharged. After being advised by our lawyer, we agreed to go ahead and reaffirm both our first and second mortgage, even though we were WAY under water. He told us that it would help up...

    Benjamin’s Answer

    I wouldn't have recommended you reaffirm the second mortgage if it was "way underwater." I can't tell from your post, though, whether Wells Fargo sent a reaffirmation agreement to your attorney during your Chapter 7 case. It was common in 2009 that 1st mortgage holders didn't offer reaffirmation agreements because they hadn't yet realized that they need the debt to be reaffirmed in order to later modify or refinance it. It's possible that they never offered a reaffirmation agreement to your attorney and it's nearly impossible to get a mortgage holder to sign a reaffirmation agreement they didn't prepare themselves, so your attorney couldn't really have prepared one and sent it to them to sign.

    At this point, your best bet is to look into filing a chapter 13. If the house is worth less than the balance you owe on the 1st mortgage (for starters, just use the real estate tax bill "estimated fair market value" as the value of the house), then you'd have the option of filing a chapter 13 for the purpose of requesting that the court "void" your second mortgage, meaning you could eliminate it while paying little to nothing on it through your chapter 13 case, and you could apply for the mortgage mediation program available in chapter 13 in this part of Wisconsin for the purpose of attempting mortgage modification. You can accomplish a drop in your interest rate or other changes that help you save money on your mortgage payments in the modification process without needing to refinance.

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  • Can a lender put a lien to a new house that i own to cover a mortgage that wasnt reaffirmed after bankruptsy that was forclosed?

    i bankrupted 4 years ago, and am 40k below value in my home due to makrket conditions. the bank refused to reaffirm after the bankruptsy 2x. my equity dropped 80k in 2 years now they want me to do a mod loan, but take me to the cleaners. I am look...

    Benjamin’s Answer

    I agree with attorney Harness that the lender that currently holds a mortgage on your house cannot obtain a lien against a new home if you were to acquire one. The second prong of your questions presents a potential problem, however. You will likely not be eligible for federally guaranteed home loans on the new home if you have had a foreclosure action filed against you in the past three years. Additionally, if you stop paying the mortgage on your current house, the lender may report your payments as delinquent, which would also likely result in being denied on home loan applications. Because you did not reaffirm your mortgage note, the mortgage lender should not be reporting your payment history to the credit bureaus. Obtain a copy of a tri-merged credit report to determine whether your mortgage lender is presently reporting your mortgage payments. If it is not, then stopping your mortgage payments won't have a negative affect on your credit score or on credit reporting of missing payments. At some point during the new mortgage loan process, however, you will likely need to disclose the loan owed on the house and the fact that you own that house, which may lead to questions about whether you are current with the payments on that loan and could affect whether you get approved for the new mortgage loan.

    I suggest you get some references and pick a good mortgage loan broker to assist you in preparing to apply for a new mortgage loan. Explain your situation and the mortgage broker will have suggestions that will make it more likely that you'll be approved for a new home loan. Until you have a well composed plan, however, I suggest you continue to make your mortgage payments to avoid inadvertently making a decision that you can't undo later when you know more about your options.

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  • Foreclosure during/after Ch 7: Should we keep home. ins? Should we be worried about past due taxes? Should we do a DiL?

    We could no longer afford our home, stopped making payments during HAMP negotiations in April '12, and moved out in Aug, '12. My wife and I separated during this time and now had two apartments, less income and more bills. We filed Chapter 7 on ...

    Benjamin’s Answer

    With respect to the homeowner's insurance, unless you reaffirmed your home mortgage note(s) in your bankruptcy case, your liability to the mortgage company is limited to the mortgage holder's right to foreclose the property and recover the value of whatever it's worth. You aren't under a legal obligation at this point to insure the replacement value of the property and, as a practical matter, the mortgage holder's interest in the property is probably insured by an umbrella insurance policy that covers properties the mortgage holder has in foreclosure anyway. You should still insure the property for "liability," however, which is insurance that covers personal injuries incurred on the property. In the unlikely event that a personal injury is incurred on the property going forward, it's worth the nominal cost of maintaining liability insurance on the property to protect yourself from that kind of problem.

    Technically, you are personally liable for payment of the real estate taxes, but real estate taxes are a first lien on the real estate and are typically paid by the mortgage holder or (3rd party purchaser at sheriff sale) at the end of the foreclosure action. Caution: it is not unheard of that a mortgage holder abandons the foreclosure action at some point during the process, including at the very end, which would leave you as the legal owner of the property and would leave you on the hook for the outstanding real estate taxes. No easy answer on that one. If money grew on trees, you'd pay the real estate taxes until the foreclosure action results in a sale to either the mortgage holder or a 3rd party bidder; if you don't have a money tree, you need to make a tough decision about what level of risk your comfortable with and you'd need to monitor the foreclosure action regularly to ensure the action proceeds to and results in a sheriff sale to either the mortgage holder or a 3rd party bidder.

    A DIL would held end the foreclosure action, your insurance issue, and your liability on the real estate taxes faster. Contact the foreclosing plaintiff and ask if they'll take a DIL. If there's a second mortgage or if you've had any judgments or tax liens/warrants taken against you prior to the filing of that lis pendens, the mortgage holder will likely tell you they won't do a DIL because they need that foreclosure action to "foreclose off" those other liens. If there are no other liens on the property than the mortgage that's being foreclosed, the mortgage holder would likely be interested in a DIL. You'd contact the plaintiff's attorney in the foreclosure action to present the DIL option. Ideally, you'd coordinate the DIL with the assistance of an attorney, but it's not uncommon for homeowners to coordinate the DIL transaction without an attorney.

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  • Is now a good time to file bankruptcy?

    I became severely ill 4 years ago and had no insurance. 6 months ago it was determined that I had to start dialysis. I have racked up nearly $150,000 in medical debt with about $50,000 in collections right now. I am now covered under Medicare f...

    Benjamin’s Answer

    Good work keeping your head above water throughout your medical ordeal and for being proactive about your financial future. Your focus is on the right issue: timing. It's not a matter of whether you will file a bankruptcy case, but when. You should time the filing of your bankruptcy case so that you can have a high level of expectation that you will not incur any more uninsured medical or other expenses that you can't afford to repay.

    It sounds to me like your financial life may be a bit unpredictable until you can get a new kidney and return to work. For that reason, you might want to consider putting off filing a bankruptcy case for the for now.

    Although you owe debts that will likely go to collection over the next few years, all such creditors can do is take a judgment against you, then look for property they can take to apply to that judgment. In Wisconsin, much of your property is protected from the reach of your creditors by "exemptions" you are permitted to claim to protect your property. For example, disability benefits are exempt from garnishment under Wis. Stats, § 815.18(j). Also, up to $5,000 held in bank accounts is exempt from garnishmnet under Wis. Stats. § 815.18(k). It is likely that you are what we refer to in this line of work as "judgment proof," meaning no one who takes a judgment against you can actually take anything you own. If that's the case, you should strongly consider holding off on filing a bankruptcy case until you have a very ligh level of confidence that your financial future is predictable and stable. I don't think you're there now.

    Call Dan Freund if you want a consultation from a good bankruptcy attorney in your area.

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  • I am considering Chapter 7 Bankruptcy. I have a large civil judgment that I can not pay and I need a fresh start.

    I filed for Chapter 7 about 7 years ago and I read I need to wait 8 years. Is this correct? Also, is it from the filed date or the date that is on the paper work? There is an almost 6 month difference. This judgment was for a loan to start a...

    Benjamin’s Answer

    I agree with attorney Nixon, who I know to be a good bankrutpcy lawyer. It is important that you choose a bankruptcy lawyer with experience litigating adversary proceedings, which is the technical term for a lawsuit brough by a creditor in your bankruptcy case to try to have that creditor's claim excepted from the bankruptcy discharge. Simply having such an attorney as your bankruptcy attorney will make it far less likely that your problem creditor will cause you problems in your bankruptcy case. It's like having a big bodyguard - people are less likely to start something with you. In your area, I'd call attorney Paul Swanson.

    With respect to the credit cards

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  • I am about to file Chapter 7 bankruptcy but have 1 credit card that is automatically deducted from my checking acct. each month.

    How do I ensure that they won't continue to withdraw from my account since they have access to it? Do I need to close that account entirely?

    Benjamin’s Answer

    Contact your bank and follow their procedure for discontinuing the automatic payment. It's your checking account and automatic payments only come out of it with your consent, which you gave when you initially authorized automatic payments. That consent can be withdrawn simply by following your bank's procedure for discontinuing automatic payments.

    Even if you didn't cancel the automatic payment prior to filing your bankruptcy case, upon receipt of notice of your bankruptcy filing, the credit card company would be under an obligation to terminate the automatic payments and to return any funds they received after your bankruptcy case was filed. Better to discontinue the automatic payments first.

    Incidentally, if the automatic payments you've been making amount to more than $600 over the 90 days prior to the date your bankruptcy case is filed, you need to disclose that in your statement of financial affairs and the trustee may recover those funds for redistribution to your creditors (called a "preference").

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