Posted on August 12, 2020 in Credit Score

You have likely seen TV commercials about the numerous credit cards available or regarding where you can go to calculate your credit score. These shiny advertisements can leave many young adults applying for credit cards without knowing the impact that this can have on their spending habits. Receiving your first colorful card in the mail can quickly lead to two or three more, each with their own amount of debt steadily piling up. While these bills may seem harmless as a young, single college graduate, the debt enclosed with these credit cards can burden you for years to come. As the debt continues to increase, you may be wondering where you can turn for help. Bankruptcy is a valid option; however, its negative impact on credit scores can have most people seeking out financial alternatives first.

Sell Some Assets

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 Posted on August 10, 2020 in Income Taxes

Bankruptcy timing can affect not only whether you must pay a tax debt but also whether you must pay certain tax interest and penalties.

This blog post is in a series about the importance of smart timing of your bankruptcy filing. Today we cover how good bankruptcy timing can prevent you having to pay certain income tax interest and penalties.

Avoiding Income Tax Interest and Penalties by Discharging the Tax Itself

Two weeks ago we discussed how to time a Chapter 7 “straight bankruptcy” appropriately to discharge an income tax debt. “Discharge” means to legally, permanently write off the tax. Then last week we discussed how to discharge an income tax in a Chapter 13 “adjustment of debts” case. When you discharge a tax in these ways what happens to the interest and penalties tied to that tax?

Generally, if you discharge an income tax debt, that also discharges any interest and penalties associated with that tax. That’s the most straightforward way to avoid such tax interest and penalties.

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 Posted on August 03, 2020 in Income Taxes

Usually you can discharge income taxes (write them off forever) by waiting long enough to file bankruptcy. Here’s how it works with Chapter 13.

Our blog post of three weeks ago introduced the importance of timing your bankruptcy filing right. We gave a list of 15 examples where timing can make a huge difference. Two weeks we covered the first one, timing bankruptcy to cover as many debts as possible. Last week was about discharging/writing off income taxes, specifically under a Chapter 7 “straight bankruptcy.” This week is about doing so under Chapter 13 “adjustment of debts.”

How to Time a Chapter 13 Filing to Discharge a Tax?

See our last blog post about the timing rules under Chapter 7. That’s because whether you can discharge an income tax is the same under Chapter 7 and 13. Very briefly, you can discharge an income tax as long as you file your Chapter 13 case both:

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 Posted on July 27, 2020 in Medical Debt

The U.S. has some of the highest medical costs in the world, leaving many patients who visit the emergency room or go to the hospital financially destitute. Even those who have health insurance may find that their coverage is not enough to fully cover their necessary medical treatments. No one can predict the manifestation of serious illnesses or accidental injuries, but you rarely have a valid choice, leaving you to choose between unwanted debt or suffer the possibly fatal consequences. If you find yourself overwhelmed with medical debt, you do have legal options to help you payback the costs overtime or relieve yourself of the costs altogether. Filing for bankruptcy may be your last resort, but it may also be your only chance of moving forward.

“Medical Bankruptcy”

Those whose debt is solely made up of pastdue medical bills may believe that they can file for “medical bankruptcy” and avoid their other assets getting involved in the process. There is no type of bankruptcy known as medical bankruptcy; however, medical bills are a common reason that people file for bankruptcy. Medical debt falls under the same category, known as unsecured debt, as credit card debt, personal loans, old utility bills, and borrowed money from family or friends. Since bankruptcy cases must be equally fair for both the debtor and creditor, you must list all of your debts, personal property, and real estate within your bankruptcy case. There are two ways that most people file for bankruptcy: Chapter 7 and Chapter 13 bankruptcy, both of which have a large impact on your credit score.

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 Posted on July 27, 2020 in Income Taxes

Usually you can discharge income taxes (write them off forever) by waiting to file bankruptcy long enough. Here’s how it works under Chapter 7.

Our blog post of two weeks ago introduced the importance of timing your bankruptcy filing right. We gave a list of 15 examples of timing considerations. Last week we started with the first one, timing the filing to cover as many debts as possible. Today it’s about discharging/writing off income taxes, specifically under a Chapter 7 “straight bankruptcy.”

Here are a few eye-catching facts:

• It is possible to discharge many income tax debts, so that you do not owe a dime of that tax.
• You just have to meet a list of conditions.
• Most, but not all, of those conditions involve the passing of time. You need to wait long enough before filing bankruptcy to permanently discharge a tax debt.
• If you don’t meet the conditions, bankruptcy does not discharge the tax at all. You owe it in full. If you filed a Chapter 7 case, you have to pay the tax after completing the case.

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 Posted on July 20, 2020 in Bankruptcy

A bankruptcy covers the debts you owe as of the moment you file your case, not future debts. So how do you know when to file your case?

In last week’s blog post we introduced how to time your bankruptcy filing. We gave a list of 15 examples of timing considerations. Today we start with the first example: timing your bankruptcy filing so that it covers as many debts as possible.

Debts You Might Owe Very Soon

Here are two situations in which you expect to soon owe a debt that you don’t owe at the moment.

First, let’s say you have a medical condition for which you are about to see a doctor or other health professional. Or it’s an ongoing condition for which you get treatment regularly. Let’s assume that you know that you can’t afford to pay the upcoming medical bills for these upcoming services. You are already feeling overwhelmed by your present debts. You’re feeling pressure to file bankruptcy now to get relief from those debts. But you’re wondering if you should wait to file bankruptcy until after you’ve finished incurring the upcoming medical debts.

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 Posted on July 13, 2020 in Debt Collection

The words "filing for bankruptcy" can be enough to send those struggling financially into a full-blown anxiety attack. You may be thinking about the dramatic television depictions of bankruptcy, with peoples’ belongings being publicly advertised for sale and everyone becoming aware of their financial destitute. Because of these dramatizations, many will seek alternative options for paying off their massive credit card debts. No one wants to find themselves in the situation where bankruptcy is their only option; however, these alternatives can be more harmful to your credit than properly filing for bankruptcy. Debt settlement companies are a commonly advertised substitute, but the promises are often too good to be true.

What Is a Debt Settlement Company?

A debt settlement program is one sponsored by a for-profit company with the promise that they will work with your demanding creditors to negotiate a viable settlement for you to resolve your past-due payments. This settlement will be a lump-sum amount that is less than your total debt owed. Since it is unrealistic that you would have this money on hand, you will be asked to set aside a fixed amount every month into a savings account. Once the sum totals the settlement that they negotiated, you will pay the settlement amount. These companies or programs often tell their clients to halt their monthly payments to their creditors as they gather their settlement funds in their savings account.

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 Posted on July 13, 2020 in Bankruptcy

The timing of your bankruptcy case is important, sometimes extremely important. It can determine if your case is as successful as it can be.

Five weeks ago we started a series on why you should get legal advice from a bankruptcy lawyer. We’ve also been making a point of showing why it’s smart to do so early, when you start considering bankruptcy.

It’s super important to get this legal advice so that you can learn:

1. if bankruptcy is the best option for you, and how to pursue other alternatives
2. how Chapter 7, 11, 12, and 13 work, and whether either are right for you
3. what actions you should take to position yourself, whether you’re possibly or definitely filing bankruptcy
4. what you should avoid doing
5. the best timing for your bankruptcy filing

If you want to look back, we covered #1 and #2 five weeks ago. The next four blog posts got into different aspects of what you should and shouldn’t be doing before filing (#3 and #4). These included keeping assets (4 weeks ago), taking on debt (3 weeks ago), filing income tax returns and paying the taxes (2 weeks ago), and paying child/spousal support (1 week ago).

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 Posted on July 06, 2020 in Child And Spousal Support

Before filing bankruptcy, should you pay child/spousal support debt in the meantime? This may depend on whether you file Chapter 7 or 13.

Our last three blog posts have been about what you should and should not do before filing bankruptcy. Three weeks ago we focused on keeping your assets, especially any retirement funds, and collateral, such as home or vehicle. Two weeks we discussed whether to take on more debt, maybe to buy time and not need to file bankruptcy. And last week we looked at whether you should file any unfiled income tax returns, and pay income taxes.

Today the question is whether to pay unpaid child/spousal support before filing bankruptcy. As with all of these issues, there are some general principles worth getting to understand. But everybody’s situation is truly unique. So you really do need the help of an experience bankruptcy lawyer to apply these principles to your personal situation. This blog post can be the first step towards becoming well-informed about your options. It’ll help you ask the right questions so that you can make the best decisions.

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 Posted on July 01, 2020 in Bankruptcy

For many people, the thought of filing for bankruptcy is a scary one. However, for many people, filing for bankruptcy is the best thing they could do for their finances. Filing for bankruptcy allows you to wipe your slate clean and discharge most of your unsecured debts, but it does come with some consequences. Filing for bankruptcy might make your life more difficult in the future, by making it harder to borrow money, lowering your credit score or even affecting your insurance rates. It can be difficult for some people to gauge whether or not bankruptcy is in their best interests, which is where a skilled Texas bankruptcy lawyer can help.

Your Debts Far Exceed Your Income

Think about all of your different types of debt: your mortgage or rent, car payment, all of your different credit cards, and personal loans. How much total debt do you have? Now, think of your income. How much money do you bring in each month? If your monthly debt obligations are much higher than the amount of money you bring in, you may want to consider filing for bankruptcy.

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