All items from Northern California Bankruptcy Lawyer

217/365 August 5 - Found MoneyTax penalties seem like a further insult when you’re having trouble paying the tax itself.
Everything seems subject to an additional penalty:  failure to file timely;  failure to pre pay sufficiently;  failure to be accurate.
They mount up quickly, often equaling the unpaid tax.
Bankruptcy can not only eliminate your liability for certain taxes, it can wipe out the tax penalties as well.
Here’s how it works.
Three rules for discharging tax penalties
Penalties for dischargeable taxes are dischargeable
Tax penalties are tied to a particular tax year.  If the tax for that year is dischargeable in bankruptcy, the discharge wipes out the penalties too.
The formula for a dischargeable tax, roughly speaking, says you can get rid of an unsecured tax if  1) the return for that year was due more than three years before the bankruptcy was filed;  2) if the return wasn’t filed on time, it’s been on file for at least two years; and 3) the tax for that year was assessed at least 240 days before bankruptcy.
Discharge the tax, discharge the penalty.

Posted 4 days 4 hours ago

8717466531_3c0832952a_zGetting a check from the government isn’t necessarily a great thing.
Not when it’s the government returning YOUR money as a tax refund.  You’ve struggled without the money for a year while Uncle Sam used it without interest.
But it’s even worse when you’ve filed bankruptcy during the tax year, and come April, the bankruptcy trustee demands the turnover of a portion of the refund as having accrued before you filed bankruptcy.
Ouch!  You lose twice.
Cut your creditors out of your tax refund
Part of your pre bankruptcy planning should include a look at your current year withholding.
If you usually get a substantial refund, or if something in your tax life suggests you’ll get a big refund for the year you file bankruptcy. do something!
The trustee can demand a portion of the refund only if there IS a refund.
Decrease your withholding as soon as you decide to file bankruptcy such that your reduced withholding for the last part of the year brings you close to the amount you expect to owe.

Posted 1 week 4 days ago

Uncle Sam public domainIt’s easy to assume that debts owed to the federal government can’t be discharged in bankruptcy.
Easy, but wrong.
Just because the creditor is Uncle Sam doesn’t mean the debt can’t be wiped out in bankruptcy.
In fact, debts to the government range from freely dischargeable to not-in-this-lifetime nondischargeable.
Honesty required for discharge
To be subject to discharge in bankruptcy, a debt cannot be incurred by fraud.  Any creditor who is induced to lend you money by false statements or actual deception can fight the discharge of a debt otherwise dischargeable.
The creditor has to challenge the discharge within a short time limit and has to prove that fraud was involved in the initial transaction that created the debt.  If the creditor does so, the debt will live on beyond the bankruptcy.

Posted 5 weeks 1 day ago

sheikh_tuhin_To-Do_List-public domain Got your bankruptcy discharge?  
The end of the bankruptcy case is the start of your new financial life.
Now, you’ve got work to do to maximize that fresh start.
Save your bankruptcy papers
The bankruptcy schedules listed everyone you owed money to when you filed.  Those creditors got notice of your case. The discharge wipes out your liability to most of those creditors.
Save the creditor lists and the discharge order because chances are that some of your creditors will sell your discharged debt to a debt buyer who will try later to collect from you.  That’s zombie debt.
Proof of notice to the original creditor and the discharge order should ward off zombies.
List the debts that weren’t discharged
You may have debts that the law doesn’t allow to be discharged:  family support, recent taxes, and student loans .  If you have these kinds of debts, they survive the bankruptcy discharge.  The creditors retain their rights to enforce them.

Posted 7 weeks 6 days ago

Unbalanced_scales wikimedia public domainSeniors in California enjoy stout protections against collection actions by their creditors.
Those protections often make it unnecessary for a debt laden senior to file bankruptcy.
But no one talks about one consequence of relying on exemption law to fend off creditors.
California exemption laws that  fully protect the assets of seniors provide no protection to the heirs.
The elder who elects to rely on state law exemptions during his lifetime may be leaving his estate , in effect, to his creditors.
Probate pays creditors
Probate is a proceeding to assure that the property of the decedent (the person who has passed away) goes to the correct parties after payment of the decedent’s debts.
In probate, creditors have a short period to file their claims.  Allowed claims are paid in full before the heirs receive anything.
Once the allowed claims are paid, the heirs have no liability to the decedent’s creditors.

Posted 8 weeks 6 days ago

New lawyer as life saver
Your bankruptcy case is filed.  It’s not going as smoothly as you expected.
In fact, you’re worried you’re going under.
Can you change bankruptcy lawyers after your case is filed?
Certainly, you can always fire your lawyer.  It may be disruptive.  It will certainly cost more money.
To decide you need to know how big are the stakes?  Are your worries real?
How do you know if you need a new lawyer?
What’s troubling your bankruptcy case
Lots of things can cause you unease once your case is filed.  Not all of them are predictable or preventable.  Maybe they aren’t as serious as you fear.
Did you provide all the information required?
The bankruptcy schedules ask for a lot of information, about your financial history, your assets and your debts.  Trustees, the court appointed official who reviews your schedules, have different standards about how detailed that information needs to be.
If your initial filing is challenged as to its completeness, your schedules can be amended.

Posted 10 weeks 1 day ago

bankruptcy secret about means testI can tell you a secret about bankruptcy law to make your case easier that your real bankruptcy attorney can’t.
Bankruptcy reform in 2005 tried in a number of ways to discredit and gag lawyers from helping debtors.
One of those additions to the Bankruptcy Code prohibits lawyers from advising those filing bankruptcy from incurring new debt.  The statute makes no distinction about the kind of debt involved or the purpose served by the loan.  Lawyers are not to advise incurring new debt.
But I’m not your lawyer, so I can tell you what you need to know about cars.  Or really about car loans, since I know nothing about cars beyond that.
Cars and the means test
Car loans are the most frequently found secured debt.  And secured debts on cars are deductible on the means test introduced by bankruptcy “reform”.

Posted 12 weeks 1 day ago

One of the first questions a bankruptcy trustee will ask you at the hearing in your bankruptcy case is:  did you read the schedules before you signed them?
The obvious, and expected, answer is YES.
And if your answer is “yes”, then the trustee can conclude that you stand behind the information that the schedules contain.
You signed them under penalty of perjury, after all.
But did you really read them?
Let’s talk about it.
Get your schedules right
Schedules is bankruptcy lingo for the lists of assets, creditors, budgets and financial history that make up the initial bankruptcy papers.
Your right to a discharge of dischargeable debts is based on making full disclosure about your financial situation.
That disclosure starts as the official forms that make up the schedules.  They are one-size-fits-all.  So among the questions are inquiries about the airplanes you own and the livestock you own.
Starting with the schedule of personal property assets, Schedule_B , the form asks 35 questions about what you own.  Unless you read each question carefully and give thought to your answer, it’s all too easy to carelessly omit assets.
Assets are more than things with a physical presence:  assets include rights in a probate estate, participation in a class action suit, and rights to a tax refund.

Posted 13 weeks 2 days ago

5175015713_3641d60dde_zIt’s easy to tell ourselves that getting into debt was stupid.
Maybe, maybe not.
Lots of debt happens without making bad decisions.  Think of medical bills.  Natural disasters.  Divorce.
But regardless of how you got in debt, there’s more bad news.
Just being in debt makes you stupid.
Stupid, as in, your IQ goes down under the stress of being in debt.
Stupid, as in, you are likely to make poor choices about issues in addition to money.
Stress suppresses intelligence
Researchers at Harvard, Princeton and the University of Warwick found that financial worries impeded not just thinking about money issues, but also spatial and cognitive tests.
People worrying about having enough money to pay their bills tend to lose temporarily the equivalent of 13 IQ points, scientists found when they gave intelligence tests to shoppers at a New Jersey mall and farmers in India.

Posted 14 weeks 21 hours ago

Money is the single largest source of stress in the US.
Other sources of stress are work, the economy, family and relationships.  I can’t offer a remedy for these stressors.  But I have the cure for debt troubles.
On National Stress Awareness Day, the connection between money, stress and bankruptcy merits  some thought.
The debt plan that scares me
Of all the chilling things my clients say to me, the pronouncement that they will just continue to juggle their money worries rather than file bankruptcy is the worst.
Scared of taking steps to get rid of debt, they consign themselves to worry, sleepless nights, and constant tension over their money problems.

Posted 14 weeks 6 days ago