Mistakes in Filing Bankruptcy - Avoid Them!

Bankruptcy can be filed intelligently with the help of an attorney. Filing for bankruptcy is not as bad as it seems. If you know when and how to file bankruptcy, you can well be out of the crisis in a few years without having to flesh out a lot of money. But if you make a mistake while acquiring your debts or while filing for bankruptcy, the US laws can give you nightmares you wouldn’t want to think of. Listed below are five mistakes you can avoid while filing for bankruptcy

1. Do Not Overuse Your Credit Card - Once you find that your financial condition is in a mess and you need to file for bankruptcy, you should stop using your credit card. This is one of the things that people do not do while filing bankruptcy. If your credit card reflects that you have made luxury purchases amounting to $500 in the last 90 days of filing bankruptcy, they will be considered as non-dischargeable fund. It should also be remembered that cash advances of $750 used within 75 days of filing bankruptcy will also be considered as non-dischargeable fund.
2. Trying To Solve Problems Yourselves - It is human tendency to first fall into a deep pit and then trying to scramble out and solve the problem. But when your problem is financial and you realize you have fallen deep, do not make the mistake of trying to solve the problem yourself. Consult a bankruptcy attorney and file for bankruptcy without wasting time.
3. Liquidating Retirement Account - It is a big mistake to touch your retirement account in an attempt to clear debts. The retirement account is one thing which remains protected in most circumstances under bankruptcy. The bankruptcy laws protect retirement assets under exempt items so do not touch it and weaken your case.
4. Making the Mistake of Transferring Your Property - If you think you are doing yourself a big favor by transferring your property into someone else’s name and stalling bankruptcy, you are hugely mistaken. However, a bankruptcy trustee can help undo the mistake if you had done so to hid assets from creditors. However, this can only work if the transfer happened within four years of filing for bankruptcy.
5. Hiding Facts from your Bankruptcy Attorney - A common mistake many debtors make while consulting an attorney is hiding information. While many think that the lawyer will not understand the problem or by hiding information you can save some items from being liquidated, in most cases the opposite happens. If you hide facts from your attorney you are only weakening your case. He is the best person to understand your problem and it is his duty to find the appropriate solution for you.

While you try avoiding the above mistakes, you should also make sure that you are not ignoring any lawsuit against you while filing for bankruptcy. Ignoring lawsuits are not taken lightly by bankruptcy courts.

Contact AttorneyforBankruptcy.com for any assistance related to medical bills bankruptcy and to hire tax attorney in california.

California Chapter 13 Bankruptcy Attorney

Filing a chapter 13 bankruptcy can be as easy or as tough as you make it. If you have an experienced California attorney with you, you can end up saving a lot of money while filing bankruptcy. But if you get the help from some small-time and inexperienced attorney, your case could weaken without your knowledge. But before anything else, it is very important that you understand what Chapter 13 bankruptcy is and how an attorney can help you with the bankruptcy process.

Key points About Chapter 13 Bankruptcy

• The Chapter 13 bankruptcy is also referred to as the individual debt adjustment chapter as it allows debtors to forego some debts and repay most in a readjustment plan lasting 3 to 5 years.
• You will need to have a regular income before you file for Chapter 13 bankruptcy. From the regular income, you will have to first meet your daily expenses and then repay debts according to a schedule set by the bankruptcy courts.

• Hiring an experienced bankruptcy attorney is very important as he will be the person who will make the repayment plan after understanding your present financial condition. The attorney will plan for repayment in such a way that it covers most or all of your debts without making things difficult for you.
• Once you have filed for Chapter 13 bankruptcy, the creditors cannot directly contact you for debt repayment nor can they make any plans to collect pending debts.
• After your repayment plan is approved by the court, you do not directly pay the creditor. The monthly remuneration goes to a court-appointed trustee who then distributes the amount to the creditors. This process ensures that the creditors cannot contact the debtor directly.
• In case you are unable to meet the repayment plan in the designated 5 years because you lost your job or do not have any stable income, your Chapter 13 can be converted into Chapter 7, the case can be dismissed or your debts can be discharged. You should always be prepared for the worst and keep in touch with your attorney.
• An experienced California attorney will help you get the credit counseling that needs to be completed within 180 days before filing for bankruptcy under Chapter 13.
• Lastly, it should be remembered that you have to pay an administrative fee to the court when you file for Chapter 13 bankruptcy. Apart from this the attorney will have his separate charges.

Considering all the above points, it can be said that Chapter 13 is a good answer for any debtors who have the possibility to repay their debts but need time. The right approach can only be decided by a California attorney. Choose an attorney you can trust blindly and with whom you wouldn’t hesitate to hide any information. While looking for a California attorney it should also be remembered that a firm which charges huge fees may not be the best. There are several attorneys in California who come cheap yet are extremely trust-worthy.

Attorneyforbankruptcy.com is a leading law firm of California where you can hire most experienced california chapter 13 bankruptcy attorney and tax attorney san jose.

New Debt Limits of Chapter 13

Chapter 13 is one of the most used chapters for filing bankruptcy. Though it is a tricky chapter, many debtors have no option but to use this chapter when their income doesn't allow them to file bankruptcy under Chapter 7. On the other hand, there have been many instances in the past where people could not use Chapter 13 due to its high debt limits. The good news is that recently, Section 109 (e) of the Bankruptcy Code has set new debt limits which went into effect from April 1, 2013. The new debt limits will now allow more people to file for bankruptcy under Chapter 13.

What are the New Debt Limits for Chapter 13?

The debt limit that was prevalent till 30th March, 2013 was $360,475 for unsecured debt and $1,081,400 for secured debts. But according to the new directions under Section 109 (e), for all cases filed on or after April 1, 2013 will now be $1,149,525 for secured debts and $383,175 for unsecured debts. All the debts are in terms of non-contingent and liquidated debts. Secured debts are mortgages or car loans that have been ‘secured’ during purchase. Unsecured debts on the other hand include almost everything else.

What Are Non-Contingent, Liquidated Debts?

Non-contingent debts are liabilities that you already owe on the debt. This could include your regular house payments and car payments. On the other hand, a contingent debt is an obligation that you are not liable of unless you agree upon in the future. Meanwhile, liquidated debt is a liability where the amount you owe can be easily determined.

It is important that all debtors understand the meaning of non-contingent and liquidated debts as if you do not clearly understand the distinctions, you could easily fall into a difficult trap. Thus it is not just enough to understand what are secured and non-secured debts.

What If Your Income Exceeds the Debt Limit?

There are several reasons to file for a Chapter 13 bankruptcy. Many prefer to file for Chapter 13 to catch up with mortgage arrears, get rid of any lien on property or your income doesn’t allow you to use Chapter 7. But unfortunately under the new debt limit, if your debt amount is more than what has been laid down by the law, you will have to forget about Chapter 13 and either opt for a Chapter 11 bankruptcy (used for reorganization of businesses, corporation and individual proprietorship) or Chapter 7 (liquidation laws). Though Chapter 13 is more expensive and risky and Chapter 7 gets rid of your secured debts, you do not have an option but to use one of them because you are not eligible under Chapter 13.

Conclusion

The new debt limits can be seen as both good news and bad news. Its good news for people who want to file for bankruptcy under Chapter 13 and bad news for those whose debt amount is high and thus cannot use Chapter 13 for filing bankruptcy. It is advisable that you consult an attorney before using Chapter 13 for filing bankruptcy.

Attorneyforbankruptcy.com is a leading law firm of California where you can hire most experienced california chapter 13 bankruptcy attorney and tax relief lawyers.

How to Discharge Taxes in Bankruptcy?

One of the reasons why you could file for bankruptcy is to discharge your taxes. There are several state, federal and local income taxes that can be discharged under the various chapters of bankruptcy. However, discharging taxes under the chapters of bankruptcy isn’t as easy as it seems. There are several things that need to be understood before anyone tries to discharge their taxes using bankruptcy. Before you decide on filing for bankruptcy for discharging your income taxes, consult an attorney in your state who specializes in bankruptcy. The three chapters on bankruptcy – Chapter 7, Chapter 11 and Chapter 13 have different clauses for discharging taxes and only an expert can give you the right method.

While the law does allow debtors to discharge several taxes under bankruptcy, not all income taxes can be discharged. There are certain criteria that you have to meet to be eligible to let go of tax obligation under bankruptcy laws. The five considerations are mentioned below -

1. Return Due For Three Years - If you want to discharge your income taxes, they will have to be due for at least three years before the time of filing bankruptcy. If the tax payer received an extension from the state (which is not uncommon), the time of filing a bankruptcy will automatically be from the date of extension.

2. Return Filed Two Years Ago - This is often called the 2-year rule where the tax payer must have filed his income tax returns at least two years from the date of filing for bankruptcy. This means that a person has to file the tax forms at least two years before filing for bankruptcy. However, if a person doesn't file for a return even after it is due in a tax year, the tax for that year cannot be discharged or shown under bankruptcy. It must be remembered that if the IRS files the return for the tax payer, it will not come under this rule.

3. Tax Assessment Done 240 Days Ago - Under the 240-days rule, your taxes must be assessed at least 240 days before you filed for bankruptcy. Usually the IRS assesses your tax returns as soon as you file your returns. However, if you seek a correction in the IRS audit, the 240-day cycle starts afresh from the day of the new assessment.

Even after you meet one or all the three considerations mentioned above, you have to understand that not all taxes can be discharged under bankruptcy. Exceptions include -

• Filing Fraudulent Returns or Evading Taxes - If the IRS finds that you have used fraudulent methods to pay your taxes, you cannot discharge your taxes. At the same time, if it is found that you have willfully tried to evade tax, you are not eligible for discharge.

• Other Taxes - While income tax can be discharged under bankruptcy, several other state, federal and local taxes cannot be discharged under bankruptcy.

• Tax Liens - A tax lien is not included under discharging income tax. You will continue with your tax lien that can include lien against property during the process of bankruptcy.

Attorneyforbankruptcy.com is a leading law firm of California where you can hire most experienced san jose chapter 7 bankruptcy lawyer and tax attorney san jose.

Importance of Tax and Bankruptcy Fillings

Bankruptcy is not only an answer for your difficult times but bankruptcy can also solve many of your tax debt issues. There are several provisions under the US Bankruptcy Code that can help you solve many of your tax problems, though it may not always erase tax debts completely. If you file for bankruptcy at the right time, you can buy time from the IRS. Otherwise you would be forced to accept the repayment plan proposed by IRS. However, it should be understood that bankruptcy isn't the solution or the answer for all tax woes. If you do not carefully use bankruptcy clauses, you could fall into a deeper pit.

Tax reliefs can come in various forms. The automatic stay is the most endearing feature of the Bankruptcy Code. When you get an automatic stay after you have filed for bankruptcy, it stops all creditors from directly collecting their debts from you. The stay is also applicable to IRS which cannot seize your property or issue a tax lien. However, the automatic stay doesn't stop the IRS from auditing your taxable income, issuing a tax deficiency notice; issue a notice for tax assessment etc. While the only way private creditors can resume debt collections is when they request the judge to remove the automatic stay, the IRS rarely takes that effort.

The Taxes Which Will Be Wiped Off In Cases of Bankruptcy

There are five instances where taxes can be completely wiped off under Chapter 7 of the federal laws. Only when these five conditions come true, will your tax be wiped out completely.

1. Only income taxes can be pardoned under the law. Other taxes such as Trust Fund Recovery Penalty, payroll taxes, fraud penalties are never eliminated under any clause of bankruptcy.
2. When you do not have a case of filing a fraudulent tax return. Additionally, if you haven't willfully attempted to evade paying taxes by using a false Social Security Number, you taxes may be pardoned.
3. The tax return should originally be due at least three years prior to your filing for bankruptcy.
4. If you had filed for a tax return two years from the time you filed for bankruptcy.
5. If the IRS carried forward a tax assessment at least 240 days before you filed your bankruptcy petition.

Important Things to Remember With Regard to Tax Exemption and Bankruptcy

A Chapter 7 clause can only wipe off your personal tax obligations but not anything else. If there is any lien that was pending before you filed for the bankruptcy, the IRS has the right to seize your property that you owned before you filed the bankruptcy case.

Once your bankruptcy case is over, the IRS doesn’t come to seize your property immediately. There is a provision that the IRS can only seize your retirement accounts, pensions and real estate after the term of the bankruptcy. Remember that the IRS usually has 10 years to collect pending tax. Thus they actually have quite some time to get back their dues.

Contact Attorneyforbankruptcy.com to hire bankruptcy attorney san jose ca. Here you can have detailed information on tax attorney in california and dept consolidation san jose.

How to Recover from Bankruptcy?

Once you have filed for bankruptcy and you are on the path of recovery, it is very important that you plan your future course of action carefully. This is important so that you do not meet any new roadblocks in the future. Bankruptcy should always be looked as a means of starting afresh, of making a new beginning. Thus keeping this in mind, it is important that you follow a strict regime that will get your credit score back in track and also allow you to lead a normal financial life.

5 Steps to Recover from Bankruptcy

1. Re-establish Financial Independence and Self-Evaluate Your Finances: The first step to recovery from bankruptcy is by re-establishing your financial independence. If you have lost your job or you had declared your business bankrupt, do not sit at home and brood. Instead re-work on your resume and try to get a job. If you look diligently, it won't be difficult. The point is to become financially independent. At the same time, introspect into what went wrong. Take counselors help if necessary.
2. Protect your Future and Make a Plan: Let bankruptcy never touch you again. For this you will need to protect your future. Introspection should have given you reasons about what went wrong. Make a plan of action that will ensure that such a mistake will not happen again. Prepare a monthly budget and stick to it no matter what. From your monthly income, save for an emergency fund that can be used when a medical emergency comes.
3. Set Your Credit Score Correct: Unless you have discharged all your dues, your credit score cannot be corrected. However, once that is done you can start building your credit score again. Maintain reports of your credit cards. Equifax, TransUnion and Experian, the credit-reporting agencies issue yearly credit report. Request for one by visiting www.annualcreditreport.com.
4. Start Using a Secured Credit Card: A secured credit card is different from a normal credit card. A secured credit card will enable you to purchase things on credit depending on the amount in the account. When you open a secured credit card, you will have to make an initial deposit as collateral. If you regularly pay your credit on time, the limit on the secured card will also increase. This is a good way of limiting your expenditure and taking control of your finances.
5. Apply for Loan Only When Credit Score is Good: Once you have declared bankruptcy, the road to normalcy is quite long. It might take you 2-4 years to become completely stable. Even then, do not apply for a loan unless your credit score is good. Since you already have a bankruptcy record, you do not want to harm your credit score by taking an untimely loan. You can apply for a FHA-approved loan only after two years of declaring bankruptcy. Even if you want to apply for a loan, make sure you have the down payment ready.

Attorneyforbankruptcy.com is a leading law firm of California where you can hire most experienced california chapter 13 bankruptcy attorney and tax relief lawyers.

Bankruptcy - Facts and Trends

Many people believe that declaring bankruptcy is the end of the world. But in reality filing for bankruptcy is what a wise and farsighted person will do. Contrary to this popularly held false believe doesn't mean the end of the world. It is time that the myths surrounding bankruptcy be broken and the real picture be shown to the people.

Myths Commonly Associated With Bankruptcy

• Bankruptcy Is Always The Defaulters Fault: No, it is not always the debtors fault. There are several bigger forces that affect the market and on which simple, working people have no control over.
• Bankruptcy Ruins Credit System: Once again, bankruptcy doesn’t ruin the credit system. In fact nothing can prevent you from getting a good credit score once you have discharged your debts.
• You Will Lose Ownership of Home, Cars etc.: There are several chapters and clauses mentioned under the Bankruptcy Code that assures that you do not necessarily need to lose your property or your car if you file for bankruptcy.
  Facts That Everyone Needs to Know About Bankruptcy

• Bankruptcy Can Prevent Foreclosure: Filing bankruptcy at the right time means you can stop the foreclosure of your house allowing you to keep it.
• Avoid Repossession: If there is a threat that creditors might claim repossession of your property or your car, filing bankruptcy at the right time might even lower your repayment percentage.
• Benefit for Married Couples: Many married couple believes that if a spouse’s financial conditions have hit a roadblock, the other spouse will automatically be affected. But this is not the case. Even after being married, you can file a bankruptcy individually. In this case, all the debts will be in your name and your spouse will not be affected.

• Allows You To Keep Your Property and Car: If you want your property and car to remain with you even after declaring bankruptcy, all you need to do is act wisely. The trick is to file bankruptcy at the right time and under the appropriate chapter. It is always advisable to consult a Bankruptcy Attorney
• Bankruptcy can be Filed Secretly: Everyone need not know when you file for bankruptcy. Very few people can find out if anyone has filed a bankruptcy. Only the attorney, the creditors and the courts are in the know-how.

Bankruptcy Trends As Seen in 2012

Bankruptcy reports released in the year 2012 have shown some positive trends. According to the reports published by the Administrative Office of the U.S. Courts, there has been a considerable decline in the number of bankruptcy filed during 2012 as compared to those filed in 2011. The states of California, Florida and Michigan have recorded the most number of filings while states like Idaho, North and South Dakota, Ohio etc. have shown a considerable decrease in the number of bankruptcy cases that have been filed.

In the year 2013, there is an expectation that the number of bankruptcy cases could increase. The reason behind this is – many defaulters from 2005 (who filed under Chapter 7) can file once again.

Contact AttorneyforBankruptcy.com for any assistance related to medical bills bankruptcy and to hire tax attorney in california.