The Miranda warning has become a familiar concept by anyone who has watched television over the past 40 years. “You have the right to remain silent . . . “ Once you become a suspect, the police must give you this warning before continuing with questioning. If you ask for a lawyer, they must stop the interrogation. In fact, if the police try to question the suspect at a later date, and he then waives Miranda, the U.S. Supreme Court case of Edwards v. Arizona creates a presumption that the waiver was involuntary, and any subsequent statements can be suppressed. This law is in place to prevent the police from bullying someone into waiving his rights. We’ve all seen this on cop shows: the suspect invokes Miranda, and the police release him because they “do not have enough to hold him.” Then the investigation reveals new evidence that implicates this suspect, and they bring him in again. The suspect then cracks, waives his rights, and talks. The question becomes, does this presumption ever end? Can an invocation of Miranda ever “expire” through a waiver?
The answer is: it depends. On February 24, the US Supreme Court ruled in the case of Maryland v. Shatzer, that a Miranda invocation has an expiration date. In their opinion, a break of at least 14 days provides a sufficient time period for the police to wait before attempting to re-question a suspect who has previously asserted his right to remain silent under Miranda. If Miranda rights are given and waived, that waiver will be good and any incriminating statements made will be admissible. However, the 14-day waiting period is based on the facts that the suspect will be at liberty, or at least not in police custody, during that period. This even applies to a prisoner who is in general population during that time. This is an important fact to bear in mind. Just because you asked for a lawyer once, doesn’t mean you do not have to “renew” it at a subsequent interrogation. Be sure to speak up and be pro-active. Say to the officers at the very first question: “I continue to stand on my rights under Miranda, and I want a lawyer.”
Many people don’t realize this when they apply for the account, but credit cards with retail outlets like Best Buy and furniture stores like Raymour and Flanagan grant a lien (just like on a house or a car) to the bank on anything you purchase with it. This might not make a difference to you, unless you are filing for bankruptcy; then it can make a big difference in whether you can wipe out the debt.
Under the bankruptcy code, a debtor with a secured debt must declare in the petition his or her intentions regarding the collateral: i.e. is he going to surrender it to the creditor, pay of the balance owed, or reaffirm the debt with monthly payments? The first two are self-explanatory, but the third can come back to haunt you. In a reaffirmation, you agree in writing that the bankruptcy will not discharge (wipe out) your personal obligation to pay the debt to the secured creditor and that you will make regular payments on the debt over a certain period of time. If you make all the payments, great; but if you do not, the creditor has the right to repossess the collateral and hold you responsible for any shortfall on the balance due after sale. With a car loan, this is very straightforward; with a lien held by outfits like Best Buy, it is more complicated.
Under New Jersey Law, a lien can only be perfected if there is a writing in which the borrower/debtor agrees to the lien (this is usually in the card agreement or application form) and the collateral is sufficiently described so as to be readily identifiable. Under the bankruptcy code, the creditor is only secured as to the value of the collateral at the time the bankruptcy is filed, not the original purchase price. In almost all circumstances, this means that not all of the balance due is secured. If the collateral has no value, the creditor is not secured at all.
Tax time always engenders a blizzard of TV ads about various tax preparation companies offering to do your return and all the different services they offer. While it is often a good idea to have a professional do it, not all of the services they offer are ones you should use. The Refund Anticipation Loan (or “RAL”) is one of them.
People in financial difficulty, or those who just can’t wait to buy that big flat screen TV, are often in a big hurry for money. This is especially true at this time of year, when these TV ads hawk how quickly you can get it. However patience, in addition to being a virtue, is a sound financial practice as well. The IRS has 45 days from the date you file your return to process it and issue a refund check. After that, they must pay interest. Usually, the refund is paid in one to two weeks. You can even check up on your refund status to see when you will get it. The earlier you file your return, the earlier you can get your money. Is getting that money so critical that you will take less than you are owed (remember, it is a loan, so the tax preparer gets its cut when the refund comes in) because you can’t wait up to a month and a half? Here is an excellent video from consumeraffairs.com that summarizes the pitfalls of these loans.
Some companies, like H & R Block, offer to put it on a debit card, what they call the Emerald Card. This is another bad idea for reasons more fully discussed in an excellent post over at the Bankruptcy Law Network. The bottom line is: Be patient and “just say no” to the Refund Anticipation Loan; you will be better off in the long run.
One of the requirements put into the bankruptcy code in 2005 was something called “means testing.” It was meant as a way to force upper income debtors into chapter 13 repayment plans. In a nutshell, it involves taking your total gross income for the six months prior to your bankruptcy filing, doubling it, and then comparing that to the median annual income for your state for your family size. If your income exceeds this threshold, then a further analysis is done to see whether you have sufficient money left over to pay to creditors over time, after deducting some standard and non-standard living expenses. This median income is taken from census data, then adjusted annually for inflation. Well, we are due for an adjustment this year as of March 15, 2010.
The problem is, for New Jersey, the amounts are going downfrom their current numbers and not up. This could result in a debtor being above the median on the 15th, and below the median on the 14th. Just take a look at the changes:
Household of 1: $60,026 to $59,812
Household of 2: $72,000 to $71,744
Household of 3: $86,070 to $85,764
Household of 4: $103,261 to $102,894
To most people, this would be minor; but for some that are on the borderline, it can be the difference between a simple case and a more involved one. Also, if you are over the median now and were thinking you could wait until the numbers adjust up, think again. In any event, if you are preparing to file a bankruptcy in New Jersey, you should consult with your attorney on how these changes may affect your case.
There is no question that bankruptcy should always be a last resort; you should try everything you can (outside raiding an IRA or pension) before filing. Many people do a debt consolidation through a home equity loan; others are able to make deals with their creditors for either a payment plan or a discounted lump sum payment. It is this last option that I want to talk about, as it does have its pitfalls.
Many times, credit card companies will agree to compromise the balance, if it is paid off in one lump sum. The problem comes in when they knock more than $600 off the bill. In those cases, the banks are required to file a Form 1099C with the IRS declaring that discount as income. That’s right, you may well have to pay taxes on the money you don’t have to pay the bank! The IRS has a very informative publication on this. Like any rule, however, there are exceptions. In this case, there are three:
You are insolvent as the time the debt is written off. This is defined by the IRS.
You file bankruptcy before the debt is written off and the 1099C is issued.
You are a homeowner of residential real estate, where there was a sale or foreclosure that did not result in payment in full of the mortgage liens, and the debt was written off during 2007 to 2012. This one comes to you courtesy of the Mortgage Forgiveness Act of 2007. The IRS’s website has examples to help you determine if you can qualify for this exception.
In essence, if you file bankruptcy prior to the issuance of the 1099C, or the forgiveness arose out of the sale of your residence between 2007 and 2012, there is no tax liability.
I advise my clients that if they are looking to make deals with all their creditors for a certain percentage of the overall debt, they should do so with the advice of an accountant to determine the tax implications of the deal. If the total amount of money necessary to pay off the debt plus the taxes still makes financial sense to you, then go ahead. At least the 1099C will not come as a surprise, and you will have the money ready to pay the IRS when you file your return. If it is not, then bankruptcy may well be a better option, and you should consult with an attorney.
The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.
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