February 8, 2012 By Leave a Comment

Bankruptcy Filings Down from 2010

Bankruptcy filings dropped 12% from 2010 to 2011, the first time it has not increased since 2005, with some attributing this decrease to cautious consumers and declining credit card debt, while others attribute it to the fact that the people that could file already have, and there are just less people that are able to file.  There were less than 1.37 million bankruptcy filings in 2011 in the United States compared with almost 1.55 million in 2010.

Utah was the only State that saw an increase in filings, rising a whopping 1% from 2010 to 2011.  In Nevada they fell 19% from 2010 to 2011 an din Florida bankruptcy filings dropped 16%.  Although there was a drop from last year, Nevada still leads the country in per-capita bankruptcy filings with nearly 9 every 1,000 residents.  Georgia and Tennessee were second and third with about 7 filings for every 1,000 residents.

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Filed Under: Statistics
February 3, 2012 By Leave a Comment

 

Re-Affirmation Agreements

When filing a Chapter 7 bankruptcy with secured debt that one wishes to keep the property on and continue making payments, many creditors will want you to sign a re-affirmation agreement.  For example, if you have a car loan and you are current on your payments and want to keep the car and continue paying it off, then you might need to sign such an agreement.  A Chapter 7 bankruptcy discharges your obligation to pay your unsecured debts.  Therefore, if you receive  a discharge and continue to pay your car loan, and you default in several years and your vehicle is repossessed and sold, if your car is sold for a few thousand less than you owed, you would normally owe this deficiency amount.  However, having received a Chapter 7 discharge, your obligation to pay this unsecured debt (not secured once the car is sold) was discharged so you would not owe it.  But if you signed a re-affirmation agreement in the bankruptcy, then you would owe this deficiency in the future, since you would still owe all unsecured debt on the vehicle in the future.

Generally, if you want to keep the property and want to keep things just as they were with the creditor then you would sign this agreement.  Once it is signed, it is filed with the Court and it is sometimes set for a hearing for the Judge to approve it or not.  Usually, if your budget (schedules I and J) show that you have enough money each month to afford the payments, then a hearing might not be necessary.  However, if you are negative several hundred dollars on the budget, then the Court will want to question you to find out how you plan to pay this bill after the bankruptcy.  The Chapter 7 bankruptcy is supposed to give you a fresh start, and leaving you saddled with this extra debt (should the property be repossessed/foreclosed in the future) is considered a barrier to your new financial start.  If approved, then you will be responsible for the entire loan amount, should it come due by repossession.

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Filed Under: Reaffirmation Agreements
December 6, 2011 By Leave a Comment

What are the rules for discharging old tax debts in Chapter 7 bankruptcy?

There are generally five rules associated with discharging old tax debts in Chapter 7 bankruptcy.   These are as follows:

  1. The due date for filing a tax return is at least three years old, including any extensions.
  2. The tax return was actually filed at least two years ago.  This also means that the tax return has to have been filed at some point.  If you have not filed yourself then it cannot be discharged.
  3. The last tax assessment is at least 240 days old.  Assessments are just what they sound like, re-determining what you owed in taxes.
  4. The tax return was not fraudulent.  Some examples, where it may be considered fraudulent are if it was not filed at all, if filed incorrectly and there was a determination of fraud, or filed trying to hide or keep income from being taxed.
  5. The taxpayer is not guilty of tax evasion.

The first step to determine whether it is dischargeable or not, is to usually order your tax transcripts.  We can do this for you by having you sign a form 8821 allowing us to receive your transcripts directly.  This will have the last assessments, date of filing, date due, any extensions, and other information that is helpful in determining whether the tax debts are generally dischargeable.  Many times the IRS has already made a determination that the taxes are uncollectable, and if this is the case then, for practical purposes, they are not usually going to attempt to collect from you by using such methods as garnishments, etc.  These are just the general rules and tax debts are generally not dischargeable (like student loans and child support), but by seeing a bankruptcy attorney you can make a decision whether bankruptcy is right for you.

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Filed Under: Tax Debts
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