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By Bankruptcy Lawyer in Post St Lucie Jon L Martin, the author of “What Everyone ought to Know about Debt Relief Today!” 

bankruptcyOK! So you’ve finally decided to file bankruptcy! You figure you’re going to get a big tax refund anyway and it will help start you on your way to a new financial life. Not so fast!

Before you file for bankruptcy you need to be sure your taxes are filed first and get that refund NOW so you can make the most of it. That refund that you’re counting on is going to become property of your bankruptcy estate if you don’t take some preventative measures first! The bankruptcy code provides that your tax refund is part of your bankruptcy estate. As such, your trustee in bankruptcy will be looking to intercept those refunds to distribute to your creditors. This is so, as long as you have not received and spent the refund. It is imperative to file your taxes and spend the money on allowable measures, before you file the bankruptcy case!

Keep a record of how you spend the money. The refund can be used in a number of valid ways, including most ordinary household expenses. This includes things like rent; mortgage payments; HOA dues; food; utilities; clothing; educational expenses for your children; medical and dental expenses; insurance; car payments; car repairs and maintenance; and of course, home maintenance and repairs. Make sure there is minimal if any tax refund left in your bank account on the day you file the bankruptcy. Be warned however; DO NOT spend your tax refund on luxury goods or to repay a friend or family member. This would most likely trigger an objection from the trustee, which could result in a demand for the money even if you have already spent it.

If you have not received the tax refund and spent it by the date of filing, the trustee will be entitled to get it as soon as you receive it. With a little planning, you can keep most if not all your tax refund.

There are some exceptions to the rule. For instance, earned income credits and additional child tax credits are excluded. You should also be able to exempt your tax refund in bankruptcy if you do not own, or intend to surrender your home. Many times the so-called “wild-card” exemption can be used to protect the tax refund.

The best way to avoid the problem altogether is to arrange it so that you will not receive a tax refund. This is done simply by adjusting the withholding on your regular paychecks so that only the amount of taxes owed is withheld from each paycheck. Many people claim fewer deductions than they are allowed for the sole purpose of receiving a tax refund. It creates a “forced savings,” so to speak, that they use to pay property taxes, take a vacation, etc. At a minimum, make sure any tax refund will be small. Instead of receiving a tax refund and giving it to the trustee, wouldn’t you rather have a little more money in your paycheck? With or without bankruptcy, a bigger paycheck benefits you instead of someone else. Who knows? Exercising control of these funds may even serve to avoid the bankruptcy altogether!

If you would like to schedule a FREE consultation with a Bankruptcy Lawyer Port St Lucie, please contact Jon L Martin Bankruptcy Attorney at (772)419-0057 or visit us online http://jonlmartinlaw.com/. With over 40 years of combined legal and business experience, we have helped hundreds of people in and around Martin and St Lucie County to relieve their financial problems. Bankruptcy Lawyer Port St Lucie Florida and a chairman of Martin County Bar Bankruptcy Committee Jon L. Martin helps clients throughout the following cities and surrounding areas: Hobe Sound, Jensen Beach, Palm City, Port Salerno, Port St. Lucie, Stuart, Vero Beach, and the entire Treasure Coast of Florida.

Non-Dischargeable Debts

By Bankruptcy Lawyer in Post St Lucie Jon L Martin, the author of “What Everyone ought to Know about Debt Relief Today!” 

bankruptcy-port-st-lucie-lawyer

Filing for Chapter 7 Bankruptcy can be a great way to start again with a clean slate. Such procedures will help relieve the burden of debt for those who have gotten in over their heads. However, there are certain kinds of debts that cannot be discharged through bankruptcy. These debts generally (though exceptions do exist) follow you to the grave. When considering a bankruptcy filing, it is important to keep in mind the debts listed in this article cannot be discharged and you will still be responsible for paying them off.

Owed Taxes

In general, taxes cannot be discharged through a Chapter 7 filing. This primarily refers to income taxes less than three years old and all trust-fund taxes. Income taxes that are three years old may be discharged under certain conditions. First you must have filed an income tax return for the year you want discharged and an offer in compromise is not pending or has not been pending within eight months of the filing of bankruptcy.

Do note that any back taxes owed as a result of fraud or tax evasion schemes are never dischargeable.

Money Obtained by Fraud

Naturally, any funds obtained through fraudulent means that have to be paid back are non-dischargeable. This pertains to how the money was originally obtained and does not necessarily apply to wealth or property concealed during the filing (though such concealment can create other negative consequences).

Most important about this classification to most readers pertains to use of credit cards or a cash advance on the eve of bankruptcy. If you run up a massive credit card debt on luxury goods just before filing, this debt is presumed to be fraudulent. The exception is if the cash advance or credit card debt was incurred by an emergency situation (for instance: staving off imminent foreclosure). In general, it is best to avoid making use of credit cards or cash advances for at least 90 days before filing if at all possible. If you are uncertain about how a cash advance or credit card charge may look to the courts, talking to a qualified bankruptcy attorney for advice would be your best course of action.

Alimony and Child Support

If you owe alimony or child support as a result of a divorce or other court settlement, this debt is non-dischargeable. There are certain debts related to divorce that may be dischargeable under federal law (property settlement for instance). If you are looking to discharge debts incurred through divorce, an attorney can guide you through which debts are dischargeable and which are not.

Unlisted Creditors

Part of the bankruptcy process is making sure creditors are made aware of the bankruptcy proceedings so they may file objections if desired. Debts to creditors who are not listed during the bankruptcy filing proceedings nor are aware of your plans to file will not be discharged. This is why being accurate and listing all of your creditors is important.

Student Loans

The most common non-dischargeable debt these days would be student loan debt. This form of debt will follow you until paid unless discharged by special statute. While there are a few exceptions where student loans may be discharged if they create undue hardship, courts have been notoriously stingy with the undue hardship definition. As such, unless you find yourself homeless and destitute, you will be unlikely to receive a student loan discharge.

Whether or not a debt is dischargeable will have a major impact on your bankruptcy proceedings and just how much of the debt is wiped away. This list is by no means exhaustive, but contains some of the more common forms of non-dischargeable debt we come across. If you’re planning to file for bankruptcy, talk to a qualified bankruptcy attorney who will help you determine which debt can be discharged and which cannot.

If you would like to schedule a FREE consultation with a Bankruptcy Lawyer Port St Lucie, please contact Jon L Martin Bankruptcy Attorney at (772)419-0057 or visit us online http://jonlmartinlaw.com/. With over 40 years of combined legal and business experience, we have helped hundreds of people in and around Martin and St Lucie County to relieve their financial problems. Bankruptcy Lawyer Port St Lucie Florida and a chairman of Martin County Bar Bankruptcy Committee Jon L. Martin helps clients throughout the following cities and surrounding areas: Hobe Sound, Jensen Beach, Palm City, Port Salerno, Port St. Lucie, Stuart, Vero Beach, and the entire Treasure Coast of Florida.

CHAPTER 13 – DON’T TRY THIS AT HOME!

By Bankruptcy Lawyer in Post St Lucie Jon L Martin, the author of “What Everyone ought to Know about Debt Relief Today!” 

Bankruptcy-lawyer-port-st-lucie-Jon-Martin-HeadshotA recent article in the American bankruptcy Journal shows the success rates of chapter 13’s filed by debtors who filed Chapter 13 without the guidance of a bankruptcy attorney. The difference between those who filed with an attorney and those who didn’t are striking. Moreover, when three other considerations are taken into account, the probabilities of success are slim indeed.

The study used a sample of 123,185 chapter 13 cases across the country. The four criteria considered were:

  1. Did the debtor have an attorney?
  2. Was it a joint case including husband-and-wife?
  3. Were the filing fees paid in full at the time of the filing?
  4. Was there a prior filing for either party?

The results for those filing without an attorney showed successful results ranging from .05% (Yes, that’s less than 1%!), to as high as 14.8%. The high number was limited to first-time filers filing without an attorney, where both husband and wife were filing, and filing fees were paid in full at the time of the filing.

Interestingly enough, the study also indicated that even under the best of circumstances, filing with an attorney resulted in a success range of 31.8% to only 52.7%. (A small segment fitting in between the high and low ranges in the study were omitted for space-saving in this article).

More interesting, is that when the entire sample was considered, less than 40% of all chapter 13 cases resulted in a successful outcome. For purposes of the study a successful outcome meant that the debtor had successfully completed the payment plan and ultimately received a discharge.

Clearly, chapter 13 is not all it is purported to be, and in the vast majority of cases provides only temporary relief from overwhelming debt and the accompanying onslaught of creditor harassment that drives people to seek bankruptcy relief in the first place

This is why it almost every case, chapter 7 should be carefully considered with the help of a bankruptcy attorney. Most people are amazed when they learn that chapter 7 does not mean the loss of assets they have spent a lifetime accumulating; nor the end of life as they know it. In fact, if properly done, Chapter 7 provides far better solutions than ill-conceived chapter 13’s.

There are many factors to be considered but without a complete assessment, debtors may be wasting their time and money when filing Chapter 13 without guidance and a complete picture of likely results in both 13 and 7.

If you would like to schedule a FREE consultation with a Bankruptcy Lawyer Port St Lucie, please contact Jon L Martin Bankruptcy Attorney at (772)419-0057 or visit us online http://jonlmartinlaw.com/. With over 40 years of combined legal and business experience, we have helped hundreds of people in and around Martin and St Lucie County to relieve their financial problems. Bankruptcy Lawyer Port St Lucie Florida and a chairman of Martin County Bar Bankruptcy Committee Jon L. Martin helps clients throughout the following cities and surrounding areas: Hobe Sound, Jensen Beach, Palm City, Port Salerno, Port St. Lucie, Stuart, Vero Beach, and the entire Treasure Coast of Florida.