Articles Posted in Bankruptcy

Yes. Being convicted of a crime or facing criminal charges does not prevent you from filing bankruptcy. Questions surrounding your arrest record or criminal record are not asked as a part of a routine bankruptcy filing. Now, if you were filing bankruptcy to try to wipe out a fine or court ordered restitution, the records pertaining to these debts would come into play. Bankruptcy does not allow court fines and/or criminal restitution to be cancelled (wiped out).
However, you could file a chapter 13 bankruptcy which would allow you to pay any fines and/or restitution payments you have stretched out over a 60 month period. This could help you afford to make the required payments if you were struggling financially to make them as originally set by the court that convicted you.
Another way that bankruptcy could still be of benefit would be to wipe out your other unsecured debt (credit cards, medical bills, etc) to free up money to go toward paying court fines or court ordered restitution.

Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.

Yes. If you are thinking about not keeping your rental property any more, you are by no means alone in that thought. There are over 11 million people who are upside down on the value of their property compared to amount owed – whether it is the home they live in or the house(s) they have as rental property, the affect is the same.
To make things worse, when you have tenants that cannot pay due to various economical challenges they are as well facing, you as the property owner must still find the resources to pay the monthly note. It is hard enough being a landlord and trying to eek out a living from your investment property during good economical times. So trying to do so under current economic conditions is unbearable for most. Empty rental property and/or tenants who are struggling to pay put in jeopardy your own financial security and possibly your own home. You are allowed to surrender the property back to your mortgage company through filing bankruptcy and will no longer have to pay for the property. If you own investment properties and issues stemming from this property is threatening to pull you under, you should consult with a bankruptcy attorney as quickly as possible to know and understand your options and lay out a strategy that will work for your specific situation. Don’t wait until bankruptcy is your only option and the situation is so bad that you are facing the loss of your own home.

Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.

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Possibly. But there are reasons you may not have to pay tax created from filing bankruptcy. Let me explain.
Self-employed workers receive a 1099 for their wages instead of a W-2 form that you get if you are employed by a company, etc. But there is a type of 1099 form that, regardless if you are self-employed or employed by someone else, you may receive from one of the creditors within your bankruptcy. This is form is called a 1099C.
A 1099C form is utilized by a creditor when a portion or all of a debt is wiped out or forgiven. The creditor is required to report this debt to the IRS if the amount is greater than $600.00. The IRS then deems the cancelled or forgiven debt as income which then must be reported on your tax return as additional income.
Your creditor should mail a copy of the 1099C form to you when they file the 1099C form with the IRS. If you did not receive a copy, you of course would not know to report this income. The IRS will send you a notice explaining that you did not include all income on your tax return per a creditor(s) filing a 1099C form. Now you owe penalties and interest on the amount of taxes owed stemming from the 1099C form.
But wait, there are several reasons why you might not have to pay taxes on the forgiven or canceled debt.
IRS Publication 4681 lists some of the exceptions that would exclude you of the penalties, interest, and taxes stemming from a 1099C.
• The debt stemmed from the foreclosure of a residence
• The debt was discharged through a bankruptcy • The debt was a result of the modification of a home loan under the Homeowners Affordable Modification Program (HAMP)
• The debt was a qualified farm debt • The debt would have been a deductible payment
• The debt was forgiven as a gift to you or as a bequest in a will If one or more of the above exceptions applies to your debt, you should list it on IRS Form 982 and file this form with your tax return in order to prevent owing taxes from this activity.
Bottom line, be sure that your tax preparer knows that you filed bankruptcy. Have your tax preparer attach IRS Form 982 to your tax return. Your tax preparer should check the box in Part 1 that states “Discharge of indebtedness in a title 11 case”. Title 11 properly identifies bankruptcy in reference to the debt (it is not referring to the type of bankruptcy you filed such as a Chapter 7, Chapter 13, etc). A copy of your bankruptcy discharge should be attached to the IRS Form 982.
If you receive the 1099C after you have already filed your tax return, then you will need to file an amended return. Do not ignore or disregard these forms. It is in your best interest to deal with this situation now rather than letting it sit and penalties, interest, etc build.

Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.

Again and again I meet people who have loans or other debts through their bank but they do not want to file these debts as a part of their bankruptcy case. “I have banked with them for years,” they say. Then they explain to me that they are great friends with the bank and how the bank is just like a member of the family.
What they don’t understand is that banks spend millions in advertising to make you believe they are your friend and extended member of the family. But the reality is that your bank sees you as a business transaction. One that they intend to profit from. It doesn’t matter that you made every payment on time in the past or that you’ve paid off previous loans. This is a business relationship. The bank is in business to make money. They will stop providing you credit the minute you look like a credit risk. It’s not personal. They are looking after their best interests as you should be looking after yours.
You don’t believe me? Ask the bank for a loan when times are tough. Sure, the employees that you’ve known for years at the bank will be nice and act as if they want to help but will more than likely put off the “no” decision on their “corporate office” or some other mysterious decision maker in order to keep up appearances that they are your friend – not the bad guy denying your loan. They want to be your best friend when times are good – why not? Where’s the risk in that? But they won’t be when you really need them to be. It’s just business and nothing more.
Nobody wants to file bankruptcy. But if it is necessary, it should be a business decision and nothing more. Bankruptcy is a financial tool used by individuals and by businesses. It’s about financial recovery and protecting yourself, your family, and your property. Once you are again financially stable, you’ll be amazed at how willing creditors will be to do business with you again.

Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.

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Are you a homeowner in the middle of the modification process with your mortgage company and you just got a notice of foreclosure? Have you been told over and over the modification was still being reviewed? Have you been told the modification was approved? But all of a sudden you find a notice in the newspaper listing your home with a foreclosure sale date set at the courthouse. This is called “dual tracking”. Mortgage companies review loans for modification and try to foreclosure at the same time. They don’t stop the foreclosure process when a mortgage is considered for a modification. If you are in the modification process with your mortgage company, never assume that it will be approved or that they won’t foreclose. The procedure for foreclosing in Mississippi is fast and you can’t trust anything the mortgage company tells you over the phone. If you find out your home is in foreclosure, contact our office immediately. We can file a Chapter 13 bankruptcy to stop the foreclosure sale and you can still be eligible for a modification. You do not want to be evicted and fighting to get your home back after the foreclosure. Better to be on the safe side and stop the foreclosure before it happens.

Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.

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A chapter 13 bankruptcy can possibly lower the monthly payments you are making on secured debts such as your car, motorcycle, furniture notes, etc. There are two possible ways for these notes to be lowered.

The first is simply by stretching out the amount you owe by the length of the chapter 13 plan which can be up to 60 months. For example, say you owe $10,000 on your car and your monthly payment is currently $535.00. If you pay through the chapter 13 plan, your payments would lower to approx $166.67.

The second way that your notes could possibly be lower depends upon how long you have had the secured debt. For items such as furniture, appliances, etc – if you purchased more than 1 yr prior to filing chapter 13 you can “cram down” and pay off the items based on their current value. Vehicles must be purchased more than 2.5 yrs prior to filing a chapter 13 to be “crammed down” to value. So for example – using the same car in example above that you owe $10,000 on, let’s say the value of the vehicle is only $7,000 and you have had it for more than 2.5 yrs. You would pay this debt off based on it’s value of $7,000 through the chapter 13 plan of 60 months – making the monthly note around $116.67.
Vehicles that are in the name of the person filing chapter 13 but are driven by another family member or used solely for business can be “crammed down” regardless of when they were purchased.

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If your vehicle was repossessed, you can get the property back by filing a chapter 13 bankruptcy. The chapter 13 bankruptcy must be filed before the creditor sells or disposes of the collateral. How quickly the creditor sells your repossessed vehicle varies depending on the lender and state law stipulations.

The bankruptcy instantly puts an automatic stay of protection into effect. This stay prohibits the lender from selling or disposing of your car. You can then recover your vehicle and pay it off through the chapter 13 plan which allows you to stretch out the payments over a 3-5 yr period. You may also be able to “cram down” your overall debt to value.

Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.

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I’m sure you’ve seen this topic all over the news regarding how bad student loan debt is and how the debt level for new college grads has climbed. The total debt is now over 1 trillion dollars – yes – TRILLION – as in: $1,000,000,000,000.00+!

There is a lot of debate over how to fix this issue – and I’ll leave that to the politicians – but I what I do know is that bankruptcy CAN provide relief to those who are overwhelmed with student loan debt. True, bankruptcy is not for every situation – but if you have staggering student loan debt – it is an option! You need to protect yourself – your property – and your paycheck. Chapter 13 bankruptcy allows YOU to decide how much you can afford to pay back monthly or if you cannot afford to pay anything right now – you can decide to pay $0 during your Chapter 13 bankruptcy plan while remaining under the protection of the court (you cannot be garnished, etc).

Bankruptcy law is the strongest set of consumer protections laws we have in this country. They were created to ensure that we, the consumer, have the ability to recover and sustain an adequate standard of living after experiencing financial difficulty. Life throws us all a curve ball (sometimes more than one) at times – job loss, illness, loss of a loved one. If you are experiencing difficulty – take advantage of a free consultation to get the information you need to decide what’s best for you.
**Image courtesy of renjith krishnan/FreeDigitalPhotos.net**

No. Domestic actions such as child support, alimony, maintenance, and other obligations cannot be discharged through any type of bankruptcy. If you are receiving support through any of these methods, know that it cannot be erased. family in hands.jpg
However, if you are the one paying child support, alimony, etc and have gotten behind on these obligations, possibly facing legal action – filing a Chapter 13 bankruptcy can be used to protect you and provide a way for you to catch up the support over an extended period of time while getting you back on track with the current requirements. The Chapter 13 bankruptcy can also assist you in getting your license back and addressing other possibly penalties you have may have already incurred due to failure to pay support. There are times when job loss, cuts in pay, etc can impact your ability to provide support so filing a Chapter 13 provides an opportunity to get things back on track and in order for the benefit of everyone.
**Image courtesy of smarnad/FreeDigitalPhotos.net**

Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.

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Chapter 7 – NO, it cannot be discharged (wiped out).
Chapter 13 – YES, it can be discharged.

Willful and Malicious Injury to PERSON:
Chapter 7 – NO, it cannot be discharged.
Chapter 13 – YES, it can be discharged as long as the Chapter 13 was filed before the state court action has gone to judgment.

**Image courtesy of Simon Howden/FreeDigitalPhotos.net**

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