All items from Northern California Bankruptcy Lawyer

Work full time for a governmental agency or non-profit, and you can discharge your federal student loans after 10 years of payments.
Regardless of the balance.
Tax free.
And regardless of the job you hold in a qualifying employer.
Rich man, poor man,
Beggar man, thief.
Doctor, lawyer,
Indian chief !

Not sure about these job titles from the nursery rhyme, but the student loan forgiveness isn’t confined to the professionals at these agencies.
The IT person, the school janitor , the administrator and the bus driver are equally entitled to a public service loan forgiveness.
It’s easy to know if you work for a governmental agency of some kind, but drawing the line between non profits and 501(c)(3) entities may be harder.

Posted 2 days 22 hours ago

Trying to decide between bankruptcy and debt settlement as the better path to financial health?
Own a home?
Here’s the killer reason why bankruptcy alone protects you from a serious tax consequence down the road.
Debt forgiven outside of bankruptcy gets deducted from the basis of your home.   Result:  more potentially taxable capital gains on sale.
Here’s the backstory and the low down on the exception to the exception that protects your home from a tax hit in the future.
Tax consequences of forgiven debt
When choosing between bankruptcy and settling your debts outside of the bankruptcy court, an advantage to bankruptcy has always been the favorable tax treatment of forgiven debt.
Debt forgiven or cancelled in bankruptcy is not added to taxable income. IRC 108
You may receive a 1099 form showing the forgiven debt, but by filing Form 982, you claim your right to exclude the forgiven debt from your income.

Posted 5 days 21 hours ago

When only one spouse files
Let me tell you a secret about bankruptcy law.
You can get 3/4 of the benefits of a bankruptcy discharge without ever going near a bankruptcy court if you are a married person in California, or any other community property state.
If your spouse files bankruptcy and you don’t join in, you still reap much of the protection from your creditors that you would get if you had filed.
How can that be?
It’s the law,  a little known feature of the bankruptcy code that applies to a bankruptcy discharge in a community property state.  §523(a)(5)
Here’s how and why it works this way.

Posted 1 week 3 days ago

A disappointed young woman looking at a documentApplying for a mortgage modification is equal parts torture and miracle drug.
It can mean the difference between staying in your home and foreclosure.
Yet it comes with more questions than answers.

  • What’s the difference between HAMP and HARP?
  • Do I want to appear broke or prosperous?
  • Should I default before I apply?

Critical questions, the answers to which determine whether you keep your house or not.
Enlist free help
Get help from a skilled counselor who is on your side, for free.
The federal Housing and Urban Development Department (HUD) certifies agencies to help consumers with foreclosure prevention, loan modification, reverse mortgages and other complications that come with home ownership.
Below are the HUD certified agencies in the immediate Bay Area.  The complete California list is here, and a locator for HUD counselors nationwide here.

Posted 1 week 5 days ago

frozen moneyPreparation for filing bankruptcy should include getting your money out of Wells Fargo Bank.
Unless, of course, you’re willing to have Wells freeze your money for days or weeks, on its own initiative.
Wells says they are “helping” the bankruptcy trustee by denying you access to your money.  Only the bankruptcy trustee didn’t ask for help.
The bank is, in that delicious phrase, an officious intermeddler.
Move it anywhere else, preferably to a bank where you have no recent history.  But whip up your horses, and get it out of Wells Fargo.
Here’s the issue.
While a Chapter 7 bankruptcy filing is a moment in time, capturing the assets of the filer and the existing claims of her creditors on the day a bankruptcy is filed, life is more like a flowing stream.

Posted 2 weeks 2 days ago

Gavel and money in wallet isolated on white“Your wages have been garnished, ” reads the letter from your employer.
Do nothing and twenty-five percent of your after tax earnings will be sent to your judgment creditor.
So, do something:  keep reading this action guide for Californians subject to a wage garnishment.
This guide has three parts:

  • the short run guide for minimizing the hit to your income,
  • the medium range attack on the judgment, and
  • the long run look at the bigger picture of your personal finances.

Wage garnishment explained
A wage garnishment is a legal order that a creditor with a judgment against you can obtain from the court to collect on its judgment.
The existence of a judgment means that a court has already issued its order finding that your creditor is entitled to a sum of money from you to satisfy a debt.

Posted 2 weeks 6 days ago

california map with roadsWhat do you do when creditors from your spouse’s past threaten?
Chances are your first reaction is to put the title to your biggest assets in just your name.
Whew! Safe.
Just because  the deed to the house now reads Jane Doe instead of John Doe and Jane Doe it’s easy to think the house is Jane’s separate property and  the operation of California community property law has been beaten back.
Why does it matter whether the house or a business is community property?  Because the character of the property determines which creditors of the married couple can levy on the asset to pay a debt.
Community property is available to creditors of either spouse, for debts incurred during their marriage and before marriage.
Registered domestic partners are also presumed to have community property and are subject to the benefits and burdens of community property.

Posted 3 weeks 3 days ago

Tax deductions may be hiding in your Chapter 13.
Did you file for an extension of time to file your income tax return?
Well, time to get the return done is running out:  returns are due October 15th.
If you are in a Chapter 13 bankruptcy case, you may have deductions you haven’t considered found in the payments the Chapter 13 trustee has made in your case.
If your plan provides for

  • curing mortgage arrears,
  • paying taxes,
  • spousal support or
  • business expenses,

consider claiming amounts paid to those creditors through your plan.
The Chapter 13 trustee is paying those claims with your money.  I see no reason that the trustee’s expenditures aren’t deductible to you.  Check with your tax professional.
And if you are several years into a Chapter 13, consider whether you can amend prior years to claim the trustee’s distributions for earlier years.

Posted 3 weeks 4 days ago

California taxpayers who lost their home to foreclosure or a short sale in 2013 got a last minute tax break when the legislature extended favorable tax treatment for forgiven mortgage debt.
The state law covers only sales or foreclosures occurring prior to January 1, 2014.  It mirrors but is less expansive than the federal law on  qualified mortgage indebtedness.
If the new break applies to you and you’ve filed your return, you can amend the return to claim its benefits.
The FTB supplies more details on AB 1393.
Bad news if you lost your home in 2014:  at present, neither state nor federal tax law for 2014 will exclude from income debt that was cancelled when you sold or lost your home to foreclosure.

Posted 5 weeks 2 days ago

256px-CalendarUncle Sam expects a quarterly tax payment from the self employed next week on the 15th.
Make this the last quarterly tax payment you pay.
Think I’m advocating tax resistance?  No way.
The tax collectors  have more weapons than you want to encounter.  It’s like the advice from the era of newspapers  not to pick a fight with someone who buys ink by the barrel;   Don’t spit in the face of the tax man.
Give up making them quarterly, I say.
Pay taxes monthly, just like every other recurring bill in your life.

Folks who get a paycheck have their income tax liability, or at least some estimate of that liability, deducted from each paycheck.  No fuss, and, well,  only some bother.
Their take home pay has already paid the taxes.  The paycheck is what is available to pay the bills.
Not so the self employed.
We are expected to make quarterly estimated tax payments in January, April, June, and September.

Posted 5 weeks 3 days ago