Posted on February 24, 2016 in Bankruptcy Law

Here are the rest of the important changes affecting Chapter 7 and Chapter 13 bankruptcy cases filed on or after April 1, 2016.

Our last blog post a couple days ago described how every 3 years many of the dollar amounts within the bankruptcy laws are adjusted for inflation. The next set of these adjustments will be effective April 1, 2016. The changes don’t apply to ongoing bankruptcy cases but only to new ones filed on or after that date.

The upward adjustments are relatively small, reflecting a 3% or so increase in the consumer price index over the last 3 years. But because these changes affect so many aspects of consumer bankruptcy, they are worth noting.

Our last blog post described a couple of the increased amounts. Here are the rest that are worth your attention. (You can see the entire list as just published by the federal Judicial Conference .

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 Posted on February 19, 2016 in Automatic Stay

Through bankruptcy, you may be able to and want to pay a co-signed debt. If not, you need protection from that debt and from your co-signer.

A friend or relative may have helped you earlier by co-signing a debt for you. But now you find yourself needing relief from all or most of your debts through either a Chapter 7 “straight bankruptcy” or a Chapter 13 “adjustment of debts.”

So what happens to your co-signed debt? And what happens to whatever responsibility you may feel towards your co-signer?

In the last two blog posts we explained how either a Chapter 7 “straight bankruptcy” or a Chapter 13 “adjustment of debts” may help you be able to pay the co-signed debt. These two kinds of bankruptcy provide a certain amount of indirect or direct protection for your co-signer.

But what if—even with the help of bankruptcy—you simply can’t afford to pay the co-signed debt now or at any time in the foreseeable future? You may no longer want to pay your co-signer because your relationship has soured. Your co-signer may be the one who received the benefit of the debt and should pay it back. Or you may still want pay it eventually but have no idea when. In all these situations you need legal protection against your co-signer.

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 Posted on February 17, 2016 in Automatic Stay

The “co-debtor” stay, available only under Chapter 13, is a creative tool for protecting your co-signer from being forced to pay your debt.

The last blog post was about filing a Chapter 7 “straight bankruptcy” case to “discharge” (legally write off) all or most of your other debts so that you could better afford to pay your co-signed debt. Today we get into how a Chapter 13 “adjustment of debts” gives you much more time to pay a co-signed debt if Chapter 7 doesn’t free up enough money to let you do so.

And if you don’t want to pay the co-signed debt, Chapter 7 and Chapter 13 can protect you from both your co-signed creditor AND your co-signer.

But first, today: if you want to, how can you protect your co-signer even better with a Chapter 13 case?

Chapter 7 Shortcomings

The Chapter 13 procedure doesn’t just give you more time to pay a co-signed debt—up to as long as 5 years. It also protects the co-signer throughout that time from the creditor. And during that time it also protects you from both the co-signed creditor and from your co-signer.

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 Posted on February 15, 2016 in Chapter 7

Bankruptcy may give a fresh start not just to you, but also to your relationship with your co-signer.

Bankruptcy Can Be the Best Way to Help Your Co-Signer

Even if you think that filing bankruptcy would give you the financial relief you need, you may not want to do it because you don’t want to hurt a co-signer. If so, we commend you.

And if don’t want to hurt your co-signer (or anyone otherwise obligated with you on a debt), you will be happy to hear that by filing bankruptcy you can often get both financial relief for yourself and the best practical protection for your co-signer.

Before showing you how, let’s look more closely at the two distinct ways that you might want to protect your co-signer. Then we’ll show how you filing a Chapter 7 “straight bankruptcy” case could provide that protection. And then in our next blog post we’ll show how a Chapter 13 “adjustment of debts” case could deal protect your co-signer in different situations.

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 Posted on February 12, 2016 in Income Taxes

Chapter 13 handles a tax lien on a home especially well when the home has enough equity to cover some but not all of the tax lien amount.

In our last two blog posts we dug into tax liens, and we do so one more time today. Two blog posts ago it was about tax liens that have no equity at all to attach to. Then the last blog post was about tax liens that have enough equity in the home to cover the entire amount of the tax lien.

Today we get into the in-between situation—where there’s enough equity in the home to cover part of the tax lien but not all of it. How can you get a fresh start on you home in this situation?

A Quick Summary about Tax Liens

A recorded tax lien on your home turns an income tax debt that you could have completely discharged (legally written off) in a Chapter 7 “straight bankruptcy”case into one that you may have to pay in full. If that income tax debt meets the conditions for discharge (mostly by being old enough), whether and how much you have to pay that tax depends mostly on whether there is equity in the home to cover this tax debt.

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 Posted on February 10, 2016 in Income Taxes

A tax lien encumbering the equity in your home is dangerous. Chapter 13 takes away the danger.

If the IRS or your state tax collector records an income tax lien against your home, and you want to keep the home, sometimes through bankruptcy you don’t have to pay the tax. If there’s no equity at all in the home to cover the tax lien, and if the tax meets the conditions for being “discharged” –written off, mostly by being old enough—you may not have to pay most of that tax. You might even not have to pay any of it. And that’s in spite of the recorded tax lien, which would be removed from your home’s title. See our last blog post about how this can happen.

But it’s a different story if there’s equity in your home to cover the tax lien.

You Have to Pay the Tax

If your home is worth enough so that it has equity to cover the entire amount of the tax lien, you’re going to have to pay the tax. Even in bankruptcy. That’s as long as you want to keep the home.

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 Posted on February 08, 2016 in Income Taxes

You owe income taxes, and now the IRS or state has recorded a tax lien on your home. Chapter 13 may get rid of both the tax and the lien.

Income Taxes that Can Be “Discharged” (Legally Written Off)

If you owe an income tax debt, it can be discharged like most other debts. The tax debt just needs to meet certain conditions for that to happen. Essentially, two conditions have to be met:

• 3 years must have passed since the tax return for the tax was due, and
• 2 years must have passed since that tax return was actually submitted to the IRS or state.

There are a couple other possible conditions but they very seldom come into play. So most of the time you can get rid of income tax debts simply by waiting until both of those two periods of time have passed.

If you owe a bunch of income taxes, having that legal obligation lifted off you would sure help you get a fresh start.

But What If a Tax Lien is Recorded against Your Home in the Meantime?

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 Posted on February 05, 2016 in Child And Spousal Support

The good news is that if you are behind on child or spousal support, with a resulting lien on your home, you can safely protect that home.

If you are behind on your support payments, your ex-spouse and support enforcement agencies have tremendous tools to use against you to try to force you to catch up. And if you own a home, those tools include the support lien that is very likely imposed on your home’s title. Chapter 13 “adjustment of debts” gives you a powerful tool with which to fight back.

Child/Spousal Support and Bankruptcy

Bankruptcy is admittedly limited in its ability to help deal with child and spousal support debts. But the way it can help sometimes makes all the difference.

Chapter 7 “straight bankruptcy” is not able to directly help other than to free up money so that you can better afford to pay any ongoing monthly support, and to catch up on any previously unpaid support. Any lien that you might have on your home remains throughout that time. And you have no protection from collections under that lien.

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 Posted on February 03, 2016 in Income Taxes

Falling behind on property taxes is dangerous, and scares your mortgage lender. Bankruptcy can help you deal with both.

Is Chapter 7 “Straight Bankruptcy” Enough Help?

It possibly can give you enough of a fresh start with your other debts so that you can catch up on your property taxes. But doing so while keeping your mortgage lender also satisfied is difficult to pull off.

If you’ve fallen behind on your property taxes, sometimes just writing off your other debts would give you enough financial breathing space so that you could catch up on your property taxes. Tax foreclosures usually don’t happen until you’re years behind, so you may have a fair amount of time to get current.

So find out from your attorney how much time you would have to catch up. Some tax creditors will set up a monthly payment plan with you. Find out if that would be available to you and if you could afford the payments once you discharged (wrote off) your other debts.

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 Posted on February 01, 2016 in Secured Debts

Bankruptcy can’t get rid of most creditor liens on what you own. But judgment liens on your home are an exception.

Our last blog post was about judgment liens, why they are so dangerous, and how both Chapter 7 and 13 types of bankruptcy can deal with them. Today’s blog post explains what determines whether a particular judgment lien can be removed, or “avoided,” and how that’s done.

The Rules for “Avoiding” Judgment Liens

If a creditor has sued you and gotten a judgment, and your name is on the title of any real estate, including your home, most likely that creditor now has a judgment lien against that real estate.

If you file bankruptcy, the debt that was the basis for that judgment would in most cases be legally discharged (written off forever). But the judgment lien is legally separate from that debt. The lien could survive the bankruptcy discharge, unless you qualify for judgment lien “avoidance.”

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