Blogs
This is the case of David Singer from Zion, Illinois which is located in Lake County, Illinois. Mr. Singer has never filed a bankruptcy before. He is not a homeowner. He is living with family and friends. He owns no vehicle. He owns very little in the way of personal property. He has a checking account and a savings account at Chase totaling $1000. He has minor household goods worth approximately $400 and minor clothing worth approximately $200. He is single with no dependent children and he is currently unemployed.
He is receiving unemployment income of approximately $740 per month. His monthly expenses exceed $740 per month that he is bringing in. So Mr. Singer is definitely in a position to get a fresh start.
Let’s look at Mr. Singer’s debts. He has credit card bills, approximately $14,000 worth. He has medical bills of only $2000 and he’s got past-due utilities of approximately $800. Since he is unemployed and unable to make ends meet, Chapter 7 would be a strong recommendation for Mr. Singer. Chapter 7 would eliminate the credit card debt, the medical bills and the personal loans and the past-due utility bills. He would be able to save for his future and he would be able to get a fresh start within approximately 110 days from filing until discharge.
This is the case of Elizabeth Sanford who comes from Berwyn, Illinois which is located in Cook County, Illinois. Elizabeth Sanford has never filed for bankruptcy before, either a Chapter 7 or Chapter 13. She owns no real estate. She is currently renting and she is in a yearly lease which expires in March. She owns a 2007 Mercury Montego which she wishes to surrender. The finance company is Capital One. It’s got 150,000 miles on the vehicle and she owes $13,000 on it. Even though she is current, she wants to surrender and get out of that debt. She also has a Pontiac through Regional Acceptance and that vehicle she wants to keep because there is a co-debtor and she does not want to see the creditor go after the co-debtor.
She has a checking and savings account at Chase with approximately $60 in both. She has a security deposit of $900 per month. She has household goods at $400 per month and normal clothing at $500 per month. Other than that, she owns no other personal property, no stocks, no bonds, no retirement; no tax refunds expected, no animals. She is currently single, she has no dependents. She has been working the past two years as a collection manager earning approximately $55,000 per year. It works out to approximately $2800 per month plus commission. In terms of expenses, they total about $2300 per month which includes $900 for rent, $150 for cell phone $150 for laundry, $200 for transportation, $125 for auto insurance and $398 for auto payments.
In the last three years, she has made anywhere from $13,000-$50,000. She did receive unemployment a couple years back. She had to close a checking account last year and she has got a couple other addresses in the last four years, one in Chicago, one in DeKalb, Illinois. She does not owe for student loans but she does have tax debt, federal tax debt owed from 2002 to the present totaling $15,000.
So what I am seeing here is a potential Chapter 13 where over the course of 3 to 5 years, this individual can pay back either all or more likely a portion of the debt that is owed to the creditors. So a Chapter 13 is my strong recommendation for Ms. Sanford from Berwyn, Illinois.
This is the case of John Zales who comes to me from Brookfield, Illinois which is located in Cook County. John is interested in a Chapter 7 fresh start bankruptcy. He has never filed for bankruptcy before. He does not own any real estate. He is currently renting from a landlord in Hodgkin’s, Illinois. It is a month to month lease.
In terms of vehicles, he has a 1997 Chevy Blazer which is paid for and it’s worth approximately $1500. He also has a 1969 Chevy Camaro which is estimated at approximately $10,000. He does have a promissory note from the landlord on that vehicle at $8000, so very little equity what you pay off the promissory note.
In terms of personal property, he’s got a checking and savings account at Bank of America with $200-$400 in the account, minor household goods of $400, three guitars totaling $1500 and normal clothing of $800. He does have an annuity which is worth approximately $100,000 but he cannot take it out until retirement. He also has a union pension, same deal. He is divorced, he’s living by himself and he is currently a laborer and a foreman and he makes approximately $18,000 per year. He is receiving unemployment right now because his work is seasonal.
In terms of expenses, it’s $800 per month for rent, $25 for water and trash, $120 for cellular phone, $75 for cable TV, $400 for food, $75 for clothing, $300 for gas and transportation, $100 for recreation and auto insurance on the two vehicles is $160 per month. He is also on a payment plan with the IRS totaling $200 per month. When you look at the income minus the expenses, there is no money available to repay creditors so in this case, I would recommend a Chapter 7 fresh start bankruptcy and eliminate the $4300 owed to American Express, the $16,000 owed to Discover and the $21,000 owed to Citibank. So Mr. Zales, Chapter 7 is my strong recommendation for you.
One spouse can file for bankruptcy without the other joining in the process, or even consenting to it. There are many instances where a couple would only want only one spouse to file. If one spouse has all the debt, but all of the assets are in the name of the other spouse, only the... Read More »
One spouse can file for bankruptcy without the other joining in the process, or even consenting to it. There are many instances where a couple would only want only one spouse to file. If one spouse has all the debt, but all of the assets are in the name of the other spouse, only the debt-ridden spouse would file. This would result in the couple keeping all of the assets while getting rid of the unmanageable debt—what is known today as a “win-win” situation.
In the situation where only one spouse files for bankruptcy the income of the non-filing spouse must be included in the budget and the Means Test portions of the filed bankruptcy petition. This is true in both a Chapter 7 filing and a Chapter 13 filing. Sometimes this “additional income” can affect the debtor’s eligibility for Chapter 7 relief, but frequently the income attributable to the non-filing spouse can be effectively negated on the Means Test by use of the Marital Adjustment allowed on line 17 of the Means Test.
If a couple has joint debt but only one spouse files for bankruptcy, the non-filing spouse remains fully liable for all of the joint debt. We frequently hear clients tell us that “my spouse is the primary debtor on the loan, I only co-signed”. This distinction might mean something to you, but in the eyes of the creditor and the law, you are each fully liable. If only one spouse files for bankruptcy in a situation where joint debt is involved, the “family unit” (ie., debtor and non-filing spouse) is still on the hook for all of the joint debt.
The assets individually owned by the non-filing spouse do not have to be listed in the debtor’s petition and, absent any fraudulent transfers involving said assets, are not administered by the Chapter 7 Trustee. However, if assets are jointly owned and only one spouse files, the filing spouse’s interest in the joint asset (usually one-half) is part of the bankruptcy estate and can be administered (ie., liquidated) by the Chapter 7 Trustee in certain circumstances.
Chapter 13 bankruptcy is often used to save a person's home from foreclosure. Under chapter 13, you are allowed to stop the mortgage foreclosure case and catch your mortgage up-to-date. The chapter 13 plan usually involves paying off the mortgage arrearage over a 3 to 5 year period in addition to making your regular ongoing monthly mortgage payments.
If your home has decreased in value, sometimes you are able to wipe out or "avoid" your second mortgage. For example, if you owe $300,000 on your first mortgage and $100,000 on your second mortgage and your home has gone down in value to $299,000, there is no equity or value to "secure" the second mortgage. Under these circumstances, the chapter 13 plan (and related section 506 motion) may provide to wipe out or avoid the second mortgage lien. The $100,000 debt owed on the second mortgage will be wholly unsecured and usually only receive a small dividend like the credit cards receive -- typically around five cents on the dollar.
A certified copy of the order avoiding the second mortgage may be recorded in the county public records to document that the second mortgage is void.Jordan E. Bublick, Miami and Palm Beach, Florida, Attorney at Law, Practice Limited to Bankruptcy Law, Member of the Florida Bar since 1983
Nobody looks forward to filing bankruptcy. Most would say there is never a good time to need to file bankruptcy. Some times are better than others. A better time to file the bankruptcy is after you receive the refund.
Tax Refunds are not safe in Arizona Bankruptcy
A tax refund owed to you is not protected when you file bankruptcy. The bankruptcy trustee will require that you give him the check. You run the risk of losing the benefit of filing the bankruptcy if you do not cooperate in giving up the refund check.
There is an easy way around this.
The key element is whether or not the IRS owes you the refund when you file the bankruptcy. If you have not received it yet, it is owed. The trustee then has a right to take it from you once you receive it.
So long as it is practical for you to delay filing your bankruptcy until after you have received the tax refund, it won’t be owed to you when you file your case. The trustee cannot require that you hand over that money.
The reason the trustee can take the money if it is still owed to you is because it is not one of the things that the law allows you to protect. When Congress wrote the bankruptcy code it allowed each state to create a list of things that cannot be taken by bankruptcy trustees or creditors. These laws are called exemptions. The items on the list are “exempt” from being taken by a creditor or bankruptcy trustee.
Arizona’s list of exemptions does not allow you to protect your tax refund.
Easy to protect tax refund money
The easy way to deal with this is to spend the refund before you file your bankruptcy. It is okay to spend it on almost anything. It would be smart to spend it on services that you need or things that are also protected when you file your bankruptcy. For example, using the refund for needed medical or dental care, car repairs, home maintenance are all fine. Many people use tax refunds to pay for the bankruptcy.
What can cause problems is using the money to pay debts. The money used to pay a debt before filing bankruptcy can be collected from the person you paid it to by the bankruptcy trustee. One of the worse things a tax refund could be used for is to repay a family member. If you are not able to settle the matter, the trustee has a right to sue your family member to get the money back.
Phoenix Bankruptcy Attorney can help
There is no need to turn a good thing – a large tax refund—into a serious problem. There are legal and ethical ways to protect the benefits of the refund and put an end to the overwhelming debt that is causing the stress in your life. Bankruptcy law is about more than eliminating debt. Protecting what you have and what is owed to you is an important part, too.
Original article: How to Protect Your Tax Refund in Arizona Bankruptcy©2013 Arizona Bankruptcy Lawyer. All Rights Reserved.The post How to Protect Your Tax Refund in Arizona Bankruptcy appeared first on Arizona Bankruptcy Lawyer.
Typically the filing of a bankruptcy, whether it be a chapter 7 or a chapter 13 eliminates any type of tax liability with regard to the discharged debt. You might find that a creditor will send you a 1099C at some point after you file for bankruptcy. However, if you contact your accountant or your CPA or your tax preparer, they will likely advise you that the debt does not have to be or that the tax on the debt does not have to be included in your taxable income because you eliminated it in your bankruptcy case. Many creditors will simply send those statements not knowing whether or not you have filed for bankruptcy and not really caring what the tax consequences are. It’s almost a routine motion that some creditors go through with regard to issuing 1099C’s.
You, however, should rest assured that filing a bankruptcy will eliminate the debt and it will eliminate the tax ramifications concerning your debt. If you have any questions at all, contact your attorney, your accountant, your CPA or your tax preparer.
Now, if you don’t file for bankruptcy and there is a surrender or a cancellation of the debt, then you are responsible for the tax on that. In that case, you must include that taxable portion in your income and pay income taxes on it. So filing bankruptcy might be the best way not only to get out of debt but to eliminate the tax debt that corresponds to any kind of cancellation of debt by either a mortgage company, a finance company or any other creditor.
As with any type of tax issue, it is best to consult with a tax professional so that you get the best possible advice available. If you do not have a tax professional, contact your attorney who should be able to make a recommendation for you.
Typically, your neighbor will not find out that you filed for any type of bankruptcy protection. Although bankruptcy is public record, it is not widely published in any newspaper. It is found online and somebody who wants to search the Clerk of the United States Bankruptcy Court website could find out whether or not you have ever filed for bankruptcy. However, the likelihood of one of your neighbors out of the blue contacting the Bankruptcy Court website and searching around for your name is very rare.
You should rest assured that filing bankruptcy is your federal right. It is protection. It is your right under the Constitution to either get a fresh start or to repay your debt over time. Bankruptcy filing has led to such wonderful results for people. It has taken people who are thousands of dollars in debt, struggling for year after year after year, subject to bank garnishments, wage garnishment, creditor harassment, and turn their whole situation around by simply filing for bankruptcy through a licensed attorney in their local area.
Under chapter 7, you get a fresh start. Don’t worry if your neighbor is going to find out. They are typically not going to do so. And if they do, you should hold your head up high that you fell into a situation but you rectified it and you took advantage of existing federal laws to turn your situation around. Under chapter 13, you might be saving your home from foreclosure. Again, you should not be embarrassed about your elected to go for your federal right to save your home from foreclosure. You have the ability to reorganize over a three to five-year payment plan. By saving your home, you are actually helping your neighborhood. And helping your neighbors increase the value of their property so that your neighborhood doesn’t become a blight area.
So typically, no one will find out about your bankruptcy unless you want them to know.
You must list everybody that you owe and everything that you own on a bankruptcy petition. It doesn’t matter if the item is paid in full or if there’s money owed on it or if you have a partial interest, if you have any interest or owe any money or even if it’s paid, you must list all of your property.
There are a couple important schedules with regard to property. The first important schedule is Schedule A which deals with real estate. You must list all of the real estate that you own, either entirely or partially, owned outright or not, in your name anywhere in the world. This means that if you have a house in one state and you have a vacation home somewhere else or even a timeshare that can be used anywhere in the world, you must list those items.
Secondly, Schedule B talks about all of your personal property. You must list bank accounts, furniture, vehicles, retirement accounts, stocks, and bonds, anything else that produces income for you. You must disclose whether or not you have a personal injury case pending, whether it be for Worker’s Comp or for straight injury. You must list everything that you owe in your petition. There’s even a catchall section called Other which lists all other personal property that wasn’t previously asked about. So there is no way to avoid listing everybody that you owe money to on your petition.
Some people think because they have a paid off vehicle, they don’t need to listed. This couldn’t be farther from the truth. Some people think that because the property is being held by a family member, they don’t need to list it. This also couldn’t be farther from the truth. You must list every single piece of property that you own whether it be real estate or otherwise and you must disclose every interest in any property wherever held in the world.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.