1 month 1 week ago

It’s that time of year again: tax season. While the 2017 tax filing deadline has already passed, thousands of Californians who applied for extensions are still sorting through their financial paperwork. Some of them – perhaps yourself included – are probably wondering whether they can discharge (eliminate) income tax debts by filing for Chapter 7. This is a common bankruptcy question, but the answer can be complicated. Our Roseville bankruptcy attorneys explain whether you can discharge income tax debt by filing Chapter 7 in California, and discuss how other tax-related debts are treated in liquidation bankruptcy cases.

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Can Income Tax Debt Be Discharged in Chapter 7?
Thinking about filing a tax return leads many Californians to think about filing something else, too: a Chapter 7 bankruptcy petition. But when can Chapter 7 help with income tax debt? And is filing for bankruptcy a potential solution for other tax-related debts as well?
To answer these questions, we need to start by explaining the difference between dischargeable and non-dischargeable debt. Put simply, a dischargeable debt is any debt for which the filer will no longer be liable when his or her case is discharged. The debt itself continues to exist, but the filer can no longer be pursued by the creditor or debt collectors. Common examples of dischargeable debts in a Chapter 7 bankruptcy include medical debt, credit card debts, and debt from personal loans.
In contrast, non-dischargeable debts are debts for which the filer remains liable, even after his or her case has been discharged successfully. In other words, the filer will still be responsible for paying the debt, regardless of the discharge.
Income tax debts are generally non-dischargeable in Chapter 7 bankruptcy, but there are also a few exceptions that allow for certain tax-related debts to be eliminated. The standards you will need to meet in order to eliminate income tax debts are explained in the next section.
5 Requirements to Eliminate Tax Debt in Bankruptcy
You might be able to discharge tax debt if all five of the following facts are true:
1. The debt is an income tax debt. Federal income tax debt is the only type of tax debt that can be discharged in Chapter 7 bankruptcy. For example, you cannot discharge debts related to payroll taxes. But the nature of the debt isn’t the only important factor; the age of the debt is also critical. You can only discharge income tax debt if…
2. The debt is from at least three years ago. If the debt is less than three years old, it cannot be discharged.
3. The debt meets the 240-day requirement. In addition to being due at least three years prior to the date on which you intend to file for bankruptcy, the debt must also be able to pass another time requirement called the “240-day rule.” This rule requires that the IRS assessed the debt at least 240 days before the date you file for bankruptcy. (For quick reference, 240 days is just under eight months.) Having prior bankruptcies in your past can affect the 240-day rule, as well as other critical aspects of bankruptcy (such as the duration of the automatic stay), so it’s particularly important to review your situation with a Chapter 7 bankruptcy lawyer if you’ve filed for bankruptcy on a previous occasion.
4. You already filed a federal income tax return. The third time requirement is that you filed a tax return for the debt you want to discharge a minimum of two years before the date on which you plan to declare bankruptcy. Meeting this requirement is more complicated if you filed your tax return late–in which case, you are strongly advised to discuss your filing date with a Folsom Chapter 7 lawyer from The Bankruptcy Group.
5. You did not commit tax evasion or other forms of fraud. If you committed tax evasion, concealed income in offshore bank accounts, or committed or attempted to commit any other types of tax fraud, the bankruptcy court will not grant you a discharge.
Again, you must be able to meet all five of these criteria in order to eliminate income tax debt in Chapter 7 bankruptcy.
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California Bankruptcy Lawyers Serving Roseville, Sacramento, and Folsom
The Sacramento Chapter 7 lawyers of The Bankruptcy Group can help determine whether you may be able to wipe out your tax debts, and if so, how to time filing your bankruptcy petition strategically. We can also discuss with you the potential effects of filing under Chapter 13 as an alternative; though, in many cases, Chapter 7 is the more suitable option for eligible debtors who seek to eliminate tax-related debt. Our experienced attorneys will take the time to assess the entire financial picture, including your debts, assets, and disposable income, to aid you in a decision about filing for bankruptcy in California.
To review your legal options in a free and confidential bankruptcy consultation, contact The Bankruptcy Group today at (800) 920-5351. We serve residents of the Sacramento, Folsom, and Roseville area.
The post Can You File Chapter 7 on Back Taxes in California? appeared first on The Bankruptcy Group, P.C..

1 month 1 week ago

There is nothing in state or federal law that prohibits a California resident from filing for bankruptcy without an attorney, which is called “filing pro se” (“for oneself”). However, declaring bankruptcy without a lawyer exposes the debtor to grave legal and financial perils, particularly if the petitioner intends to file for Chapter 13 or Chapter 11, which are among the most technically complex forms of bankruptcy. Our Sacramento bankruptcy attorneys discuss eight reasons to avoid filing bankruptcy without a lawyer in California, and explain why legal representation is beneficial for debtors in a Chapter 7, Chapter 11, or Chapter 13 case.

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Can You File Bankruptcy without a Lawyer in CA?
The short answer to this question is yes. Legally speaking, any adult resident of California may file for bankruptcy without an attorney. However, there are numerous reasons to avoid filing bankruptcy pro se – today more than ever before.
While filing for bankruptcy has always been a complex procedure in the United States, the process became substantially more convoluted in 2005. In April of that year, Congress passed comprehensive bankruptcy reform legislation called the “Bankruptcy Abuse Prevention and Consumer Protection Act,” or BAPCPA.
While this piece of legislation was well-intentioned, having been enacted primarily to reduce the abuse of bankruptcy regulations pertaining to Chapter 7 eligibility, it also had the effect of complicating bankruptcy regulations to the point where the average person is now effectively rendered unable to file pro se successfully, particularly if he or she is filing under Chapter 13 or Chapter 11, both of which require the debtor to propose – and gain court approval to proceed with – a long-term debt reorganization plan. Continue reading to learn some of the reasons we urge California residents – and, for that matter, all U.S. debtors – to seek legal assistance from a qualified Chapter 7, Chapter 13, or Chapter 11 bankruptcy attorney.
8 Reasons to Hire an Attorney for Your Bankruptcy Case
Though it is not necessarily impossible to obtain a bankruptcy discharge after filing pro se, it is very difficult. But don’t simply take our word for it – listen to what the website of the United States Courts has to say on the matter:

[S]eeking the advice of a qualified attorney is strongly recommended because bankruptcy has long-term financial and legal outcomes. Filing personal bankruptcy under Chapter 7 or Chapter 13 takes careful preparation and understanding of legal issues. Misunderstandings of the law or making mistakes in the process can affect your rights. Court employees and bankruptcy judges are prohibited by law from offering legal advice.

As these warnings go on to point out, “Pro se litigants are expected to follow the rules and procedures in federal courts and should be familiar with the United States Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the local rules of the court in which the case is filed.” Unfortunately, this is no simple task.
Not only are bankruptcy regulations vast in scope, they are also written using legal terminology that is unfamiliar to most debtors and often poses a barrier to the clear understanding so vital to success in a bankruptcy case. That does not even begin to touch on the many local rules, court procedures, and deadlines which are applicable to a given case.
In a worst-case scenario, the petition will suffer from errors or omissions that ultimately lead to dismissal of the case by the bankruptcy court, which for Placer and Sacramento County residents is U.S. Bankruptcy Court for the Eastern District of California. Even in a scenario where there are no critical errors, the debtor is likely to miss or be unaware of small but impactful details that can result in higher monthly payments, greater loss of property or assets, or inability to discharge certain debts.
How, for instance, do you know whether you are better off using System 1 or System 2 of California’s bankruptcy exemptions? How do you know whether it is more advantageous to file immediately or delay filing? How do you decide which chapter of bankruptcy you should file under? And what is your plan if an unforeseen obstacle develops, such as a creditor objecting to your Chapter 13 plan, or failing to file a proof of claim?
With a skilled and experienced Chapter 7, Chapter 11, or Chapter 13 bankruptcy attorney by your side, you will not have to worry about handling any of these problems or challenges by yourself. Your Chapter 7 lawyer will be there to:

  1. Help you decide which chapter to file under, and when.
  2. Determine which exemptions are most advantageous for protecting your property.
  3. Prepare and file your bankruptcy paperwork.
  4. Represent you in proceedings with your creditors.
  5. Protect you from harassment by creditors or debt collectors.
  6. Explain your rights and responsibilities under bankruptcy regulations, such as your responsibility to undergo credit counseling and debtor education.
  7. Prepare you for any tax-related consequences that may result from filing for bankruptcy.
  8. Help you explore alternative options to bankruptcy, where applicable.

Without legal representation, you will lose all of these advantages, and will have a more difficult time getting the debt relief you need.
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Roseville Bankruptcy Lawyers for Chapter 7, 11, and 13
The Bankruptcy Group serves Californians who reside in the Sacramento, Folsom, and Roseville areas. We handle business bankruptcies and personal bankruptcies, and represent both single filers and married couples who wish to file jointly.
If you’re thinking about filing for Chapter 7, Chapter 11, or Chapter 13 bankruptcy in the Sacramento area, make sure you get the legal help you need to give you the greatest chance of success. For a free and confidential legal consultation with an experienced Folsom Chapter 7 lawyer, Folsom Chapter 13 lawyer, or Folsom Chapter 11 attorney, contact our law offices at (800) 920-5351 today.
The post Can I File for Bankruptcy in California without an Attorney? appeared first on The Bankruptcy Group, P.C..

1 month 2 weeks ago

In our continuing posts about issues related to the decrease in the value of taxi medallions in New York City, this month we are covering two lawsuits regarding the dramatic drop in taxi medallion values. The first lawsuit involves two taxi medallion owners who have filed lawsuits against the New York City and the Taxi and Limousine Commission (“TLC”). This lawsuit was reported in the New York Daily News on May 3, 2017. The plaintiffs, driver Marcelino Hervias and medallion owner William Guerra argue that: (1) the apps for hailing cars and burdensome rules have made taxi medallions practically worthless and have created unfair competition; (2) New York City and the TLC are bound by a rule to create standards ensuring medallion owners remain financially stable; (3) New York City allows the apps to dominate the streets and provide rides similar to taxis, but with none of the financial and legal burdens that medallion owners and drivers face; and (4) the driver has to work harder and longer to cover his monthly medallion loan payments and expenses. Mr. Hervias estimates that his business is down 30% and that he must work extra shift hours each day to make up the difference. Mr. Hervias also states that there is no market for medallions because financial institutions will not lend money to buy a medallion. The attorney for the plaintiffs indicated that this is the first suit of its kind as it pertains to the taxi industry. The article states that Mayor de Blasio and the City’s Corporation Counsel (the entity that defends the City against lawsuits) did not return requests by the Daily News reporter for comments.

The second case involves New York City credit unions that manage more than 2 billion dollars in taxi medallion loans are appealing a court ruling that rejected their argument that the TLC treatment of medallions violates the equal protection clause under the United States Constitution. (information about this lawsuit can be found in a May 4, 2017 post on The credit unions’ legal argument was that medallion owners are required to comply with state regulations, while Uber, Lyft, Gett and other ridesharing services operate without being required to comply with the same regulations. The credit unions argue that such disparate treatment violates the equal protection clause of the 14th Amendment of the U.S. Constitution. However, on March 30, 2017, United States District Court Judge Alison J. Nathan ruled that there was no disparate treatment because a mobile app is not the same as hailing a medallion on the street. The judge wrote that “[q]uite simply, medallion taxicabs are not similarly situated to hire vehicles because medallion taxicabs… have . . . a monopoly over one particular form of hailing.” The ruling also notes that several courts around the country considering similar Equal Protection claims also came to the same holding. The original lawsuit was filed in November 2015 by Melrose Credit Union (‘Melrose”), Progressive Credit Union, LOMTO Federal Credit Union (“LOMTO”) and taxicab industry organizations and individual investors. The credit unions filed a notice of appeal on April 27, 2017 with the Second Circuit Court of Appeals in New York City.

It is this author’s opinion that individual lawsuits like that described in the Daily News article are expensive, could take years to conclude and the outcome or result is uncertain. With respect to Judge Nathan’s ruling, many taxi medallion owners would argue that “this is a distinction without a difference”. But Judge Nathan’s ruling is the law, unless it is reversed on appeal.

The article noted that Melrose was placed into conservatorship in February by the New York State Department of Financial Services. The article also states that LOMTO is undercapitalized, with a net worth of 5.87% according to the National Credit Union Administration.  

These two lawsuits would seem to suggest that litigation will not assist medallion owners whose medallions have dramatically decreased in value.

Many taxi medallion owners who’ve consulted with Shenwick & Associates own medallions, which, to use a finance term, are “underwater.” Underwater means that the value of the asset is less than the loan collateralized by the asset. In simple terms, many medallion owners have loans against the medallions totaling $700,000-$900,000 (or more) and the medallions presently are worth approximately $240,000. As Mr. Hervias noted in the Daily News article, if banks are not providing loans to medallion purchasers, in the future it will become increasingly difficult for buyers to buy medallions because of the lack of financing (unless they are all cash buyers).

What options are available for medallion owners? One possible solution may be for medallion owners and their organizations to lobby the City of New York and Mayor de Blasio to create a fund to compensate medallion owners due to the disparate treatment faced by medallion owners and the ridesharing services. Another solution is for the city or state to create an entity or mechanism to provide funding or financing for future medallion purchases. The city or state could also look to the ridesharing services to contribute to those funds, though the ridesharing services would argue that their technology is merely “disruptive” and that competition has decreased the value of medallions, not inappropriate actions on their part. Recent articles about the Uber culture would seem to suggest that Uber would not voluntarily contribute to such funds.

The issue for medallion owners is: (1) whether they should continue to make loan payments on their medallions, if the value of the loans exceeds the value of the medallions; (2) competition from the ridesharing services has reduced their earnings; and (3) banks are not lending money to finance medallion purchases. If a medallion owner stops making loan payments, he or she will be in default under their loan(s) and the banks can commence litigation to foreclose on the medallions and/or seek repayment of their loans.

As we discussed in a prior article dated February 2nd, medallion owners who stop paying their loans have four options: (1) arrange their financial affairs so that they are “judgment proof”; (2). negotiate an out-of-court settlement with the banks that financed their medallion purchases; (3) file for bankruptcy protection or (4) litigate with the banks that loaned them money to purchase their medallions (an expensive and often times losing proposition). The option that is best for an individual medallion owner depends on his or her facts and circumstances.

Medallion owners who need such counseling are urged to contact Jim Shenwick.

1 month 2 weeks ago

Chapter 13 is sometimes referred to as “reorganization” bankruptcy. That is because the core feature of Chapter 13 bankruptcy is a reorganization plan, which will last from three to five years depending on your disposable income, the nature of your debts, and other factors. Generally speaking, California debtors who file for Chapter 13 are able to keep their vehicles, provided they continue to make full and timely car payments throughout the duration of their reorganization plan. However, there are also some situations where a filer may be in danger of vehicle repossession. Our Roseville bankruptcy lawyers explain what happens to your car when you file for Chapter 13 bankruptcy in California.

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Chapter 13 Car Repossession
If you live in the Roseville, Sacramento, or Folsom area and are worried about losing your vehicle to repossession, you should contact a Sacramento Chapter 13 attorney immediately for legal guidance. You may be able to prevent your car from being repossessed if you file for Chapter 13 bankruptcy, but it is vital to act quickly. While it may be possible to get your car back if it has already been repossessed, the simpler course of action is to prevent repossession before it occurs.
On the other hand, there can also be strategic advantages to delaying a bankruptcy filing under certain circumstances, which is one of the reasons it is so crucial to consult with a knowledgeable bankruptcy attorney prior to filing a petition in U.S. Bankruptcy Court for the Eastern District of California (which has jurisdiction over Placer and Sacramento Counties, among others). An experienced Chapter 13 lawyer will be able to review your debts, assets, disposable income, and financial objectives to help you make an informed decision about the drawbacks and benefits of filing immediately versus filing at a later point in time.
folsom bankruptcy attorney
What Happens to Your Car Payments in Chapter 13?
Getting back to the subject of car payments under Chapter 13 bankruptcy, you will generally be able to keep your vehicle provided you comply with the terms of your reorganization plan, which must be approved by the bankruptcy court. In the period between filing for bankruptcy and getting court approval of your plan, it is very important that you continue to make payments. Car payments made after filing but prior to plan approval, which are known as “adequate protection” payments, are meant to compensate for the depreciation of the vehicle while you are waiting on the court’s approval. In most but not all cases, filers should expect adequate protection payments to be equivalent to their normal car payments.
Once your plan has been approved by the bankruptcy court, you will continue to make payments toward the vehicle. This is known as “secured debt,” because it is secured by collateral (the vehicle). Secured debts generally must be paid off in full in Chapter 13. The benefit of filing is that you will be granted time to catch up on late or missed payments, which are known as “arrearages,” enabling you to keep your vehicle. While it is sometimes possible to keep a vehicle in Chapter 7 bankruptcy by using exemptions, Chapter 13 is generally the better option for eligible filers who do not wish to surrender their property.
Not only does the Chapter 13 reorganization plan give the petitioner time to catch up on missed payments; a court order known as the “automatic stay,” which takes effect automatically (hence the name) upon filing for bankruptcy, generally prevents creditors from collecting debts while the case is underway. However, there is an exception in cases where the creditor is granted court approval to lift (remove) the automatic stay after filing a document known as a “motion for relief from the automatic stay.” If you fall behind on your auto loan payments, the creditor may file this motion in an effort to repossess your vehicle. The protective powers of the automatic stay can also be diminished by multiple bankruptcy filings, so be sure to consult with an attorney about this potential issue if you have filed for bankruptcy in the past.
There is another additional point that is important to mention. Chapter 13 bankruptcy regulations require that all of the debtor’s disposable income – that is, any income remaining after Chapter 13 payments and reasonable living expenses – goes toward his or her reorganization plan. If you own an expensive luxury vehicle, the bankruptcy court might determine that your car payments are not actually a reasonable living expense, and require you to claim a lower expense instead.
CA Bankruptcy Lawyers Serving Roseville, Sacramento, and Folsom
Are you a California resident who is worried about losing your vehicle to repossession, or your home to foreclosure? Are you struggling to pay off car loans or other debts that have become overly burdensome and difficult to manage, including medical debt and credit card debt? You may be able to solve all of these problems by declaring bankruptcy with assistance from a Folsom Chapter 13 lawyer. To speak confidentially about your legal options in a free bankruptcy consultation, contact the attorneys of The Bankruptcy Group at (800) 920-5351 today.
The post Can You Keep Your Car if You File Chapter 13 in California? appeared first on The Bankruptcy Group, P.C..

1 month 2 weeks ago

NACBA Convention
I belong to the National Association of Consumer Bankruptcy Attorneys (NACBA), the only national organization devoted exclusively to serving consumer bankruptcy attorneys and their clients. The NACBA has over 4,000 members located in all 50 states.
The NACBA is a resource I use every day in my practice. Their website is filled with useful information for attorneys and for people wanting to learn more about the bankruptcy process. Every single day I receive emails from the NACBA Listserv where attorneys ask questions and receive answers from member attorneys throughout the nation.
NACBA’s Listserv is a vital resource for me. It allows me to ask questions to the brightest consumer bankruptcy attorneys in the nation. Sometimes I ask technical questions and other times I just want an opinion about how others have approached situations I am facing.
When you really get to know an area of law and you begin to feel like you have become an “expert” in your area, a strange thing happens. You begin to realize how much you really don’t know. You begin to question the deeper meaning of a legal phrase or section of the law. When you are young you assume things mean what they appear to say, but as you get older you keep running into examples of how a term can be defined in two opposite ways. You notice examples and cases where creative lawyers read the law differently than you do. What you assumed was safe now seems dangerous. That’s when you turn to the NACBA Listserv to see if others have dealt with the issue before. It’s a great help.
NACBA member
The NACBA helps me break the isolation of trying to figure out everything myself.  Although I am deeply involved in our local bar association and I do frequently quiz the brightest bankruptcy minds in Nebraska, you reach a point where local attorneys have not encountered an issue before. Nebraska is a small state with a small number of bankruptcy cases filed each year.  To get the best answer sometimes you need to ask a larger audience, an audience filled with the smartest consumer attorneys in the nation.  NACBA fills that need.
NACBA does more than just sponsor a Listserv.  It also sponsors the very best educational seminars on consumer bankruptcy topics.  Last week the NACBA held its annual convention in Orlando, Florida and it conducted a 3-day seminar on the newest bankruptcy topics. The conventions spit out volumes of outlines, case law reviews, and practice guides that are delivered by nationally recognized speakers including law professors, judges, and prolific consumer attorneys.
Unfortunately, few local attorneys attend the NACBA conventions.  They are not cheap and when choosing to spend travel dollars to attend a legal seminar or to take the family to the beach, most of us opt for the later.  Most attorneys attend local educational seminars and the deciding factor in choosing a seminar is usually cost and location. (Nebraska attorneys must attend a minimum of 10 hours of continuing legal education each year.)
The good news is that NACBA seems poised to start the process of strengthening local consumer groups. According to conversations I have had with some of the national leaders, NACBA will begin to offer local Listservs in each circuit court area (Nebraska is in the 8th Circuit court system that includes Iowa, North Dakota, South Dakota, Minnesota, Arkansas, and Missouri).  Such Listservs would be a great service since all of the attorneys in this region must apply the bankruptcy decisions of the 8th Circuit Court of Appeals. In addition, such Listservs have the tendency to sponsor a greater regional community because attorneys who frequently ask and answer questions in the forum start a process of getting to know each other.
NACBA would be well served to focus its efforts on empowering local consumer attorney groups and to allow their great educational resources to be utilized in state-based educational seminars. The sharing of such resources and the creation of lawyers-helping-lawyers local Listservs would lead to increased membership and a renewed enthusiasm in consumer bankruptcy practice.

3 weeks 8 hours ago

How to Rebuild Your Credit
financial stressFeel like you are stuck and cannot find a way out?
Are you overwhelmed by financial challenges?  Do you want to rebuild your credit?  Many people try to solve their problems in the privacy of their homes, rather than asking for guidance.  Fortunately, the Internet allows them to research answers to their financial questions, without exposing their situation to neighbors, co-workers or family.  Unfortunately, there is a lot of bad advice on the Internet, just like bad advice from neighbors, co-workers and family.
The best answers – follow your gut, do your own research and use common sense.
The following article gives some very simple suggestions about rebuilding your credit, whether after bankruptcy, or other financial disaster. I have not edited this article because it is short and to the point.  My thanks to the author for sharing this information.

How to Build Your Credit: Your Step-by-Step Guide

By Maurie Backman,(TMFBookNerd) May 1, 2017

Step 1: Check your credit report on a regular basis
One of the easiest ways to build your credit is know where you stand, which means you should access and review your credit report at least once a year. More than one-third of Americans don’t check their credit reports regularly, but by law, you’re entitled to a free copy of your report each year from all three major credit bureaus — Equifax, Experian, and TransUnion. You can access your free credit report online here.
Step 2: Dispute credit report errors immediately
It’s estimated that 20% of credit reports contain errors, but if you’re among the 16% of Americans who never check their credit reports at all, you could be missing out on an easy way to boost your score overnight. According to the Federal Trade Commission, 20% of consumers who dispute credit report errors see their scores increase as a result, so if you spot a mistake, be sure to contest it at once. Credit bureaus are required by law to respond to disputes within 30 days, or otherwise remove the data in question, so you have nothing to lose by making your case.
Step 3: Pay your bills in full and on time
Your payment history plays a big role in determining your credit score, and if you make a habit of paying your bills on time and in full month after month, you can build up your credit sooner than you’d think. While there are other factors that come into play when calculating your credit score, your payment history carries more weight than any other aspect, so it pays to get into a good bill-paying pattern early on.
Step 4: Don’t use more than 30% of your available credit
Your credit utilization ratio, or the extent to which you’re using your available credit, is another factor that goes into calculating your credit score. You should always aim to keep your credit utilization ratio to 30% or less, which means that if you’re given a $5,000 line of credit, you should never borrow more than $1,500 at any single point in time.
Step 5: Pay down existing debt
Erase your debt whenever possible.
Paying off existing debt can help your credit in several ways. First, if you start making timely payments, it’ll boost your payment history. Additionally, the more debt you eliminate, the lower your credit utilization ratio will fall. A good way to approach your present debt is to tackle those balances that carry the highest interest rates first and then work your way downward. Another option is to transfer your existing high-interest debts to a credit card with a lower rate.
Step 6: Get a secured credit card
A secured credit card differs from a regular credit card in that it requires you to keep a certain amount of money in a linked savings account as collateral. Getting approved for a secured credit card is relatively easy, even if you’re not starting out with great credit, because your lender is taking on significantly less risk. But if you use that card and pay your bills on time, they’ll count toward your payment history just as regular credit card payments would.
Step 7: Become an authorized user on somebody else’s card
Getting your name added to an established account can work wonders for your credit score, even if you don’t actually use that card yourself. When you become an authorized user on someone else’s card, that person’s credit limit gets added to yours, which can help bring your credit utilization ratio down. Furthermore, becoming an authorized user on another card can help you beef up your credit history if you’re fairly young and haven’t had time to establish a solid one of your own.
Step 8: Take out a credit-builder loan
As the name implies, credit-builder loans are designed to help folks with poor credit improve their financial standing. You can open one through a credit union or bank, and once you do, the amount you borrow will be deposited into a savings account that you can’t touch until your loan is repaid in full. While a credit-builder loan won’t give you immediate access to extra cash, your payments will be reported to all of the major credit bureaus, which means you easily can boost your credit by sticking to the terms of your loan.
Step 9: Avoid opening too many new accounts at once
Some people shy away from checking their credit reports for fear that doing so will lower their scores. But while a soft inquiry, such as requesting your own credit report, won’t damage your score, a large number of hard inquiries could impact it negatively. Any time a lender delves into your credit history, it’s considered a hard inquiry, and having too many at once can hurt you. That’s why it’s best to open new accounts slowly over time.
Step 10: Keep your accounts open for as long as possible
Your credit history is another factor that goes into figuring your credit score. Unlike your payment history, which speaks to your ability to pay your bills in a timely fashion, your credit history represents the amount of time you’ve had active accounts. Closing an old credit card, therefore, can actually hurt your credit history, but more so than that, it can impact your credit utilization ratio by lowering your overall credit limit. Unless you have a pressing reason to close an old account (say, the introduction of a high annual fee), you’re better off keeping it open and being smart about how you use it.

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About Diane:
Diane L. DrainDiane L. Drain is a well known and respected Arizona bankruptcy attorney. She is an expert in both consumer bankruptcy and Arizona foreclosure. Since 1985 she has been a dedicated advocate for her clients and spokesperson for Arizona citizens. Diane is a retired professor of law teaching bankruptcy for more than 20 years. As a teacher she believes in offering everyone, not just her clients, advice about the Arizona bankruptcy laws. She is also a mentor to hundreds of Arizona attorneys.
I would be flattered if you connected with me on GOOGLE+
*From Diane: This article/blog is available for educational purposes only and does not provide specific legal advice. By using this information, you agree there is no attorney client relationship between you and me, and that this information should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state.*

The post How to Rebuild Your Credit – guest post appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.

1 month 3 weeks ago

New Rules To Recover Impounded Vehicles In recent months, there has been a tidal wave of activity surrounding bankruptcy, the City of Chicago, parking tickets and consumers trying to recover their impounded vehicles. For many years, it was common practice for the City of Chicago to release vehicles back to a debtor upon the filing+ Read More
The post Filing Bankruptcy After Your Car Has Been Impounded For Parking Tickets, No Longer A Good Option appeared first on David M. Siegel.

1 month 3 weeks ago

Unlike Chapter 7, which is a liquidation bankruptcy, Chapter 13 requires debtors to create a reorganization plan lasting three to five years. Under the reorganization plan, the debtor makes monthly payments on various debts, some of which must be paid off in full in order for the plan to succeed and the bankruptcy to be discharged. While every debtor’s reorganization plan will ultimately be unique, there are a few basic principles that generally apply in California Chapter 13 cases. Our Roseville bankruptcy attorneys explain some key information about the payments that are generally required in Chapter 13 reorganization plans.

folsom bankruptcy attorney
How Much Do I Have to Pay in Chapter 13?
If you are a resident of Folsom, Sacramento, or Roseville who plans to file for Chapter 13 bankruptcy, you will likely do so in U.S. Bankruptcy Court for the Eastern District of California, which has jurisdiction over Sacramento and Placer Counties, among many others. Your Roseville Chapter 13 lawyer will assist you with this process and the documentation that is required.
The court will assign a person called a “trustee,” who will oversee the bankruptcy proceedings, to your case. One of the trustee’s most important jobs is to distribute your monthly payments amongst your creditors, according to how your debts are categorized. Generally speaking, debts are paid in the following order in Chapter 13:
1. Secured Debts – Debts secured by collateral, such as mortgage debt, where the collateral is your house.
2. Priority Debts – Debts which are given special priority despite not being secured by collateral. Examples include alimony, child support, certain tax-related debts, and any earnings you may owe employees, where applicable.
3. Unsecured Debts – This category covers all other debts, ranging from medical debt to personal loan debt to credit card debt.
Chapter 13 debtors are generally required to pay secured debts and priority debts in full, plus interest. Unsecured debts are of lesser importance in bankruptcy. Creditors holding unsecured claims are not necessarily required to be paid in full, but must receive at least the amount they would have received if you had filed for Chapter 7 bankruptcy. This standard is called the “best interest of creditors test.” Moreover, Chapter 13 cases require the debtor to put all of his or her disposable income toward the plan. Additionally, some debtors are approved for a three-year plan, while others are required to disperse payments over a period of five years, which, perhaps needless to say, can have a significant effect on payment amounts.
These factors – the duration of your repayment plan, the amount of disposable income you have, and your ratio of secured debts to unsecured debts to priority debts – all have an impact on the amount of you will pay in order to satisfy your Chapter 13 plan. If the plan becomes too expensive and unmanageable while the case is underway, you may be required to convert your case to a Chapter 7 bankruptcy.
California Chapter 13 Payment Calculator
Be wary of any Chapter 13 payment calculators you find on the internet. There are numerous websites that feature these calculators, but no matter how much detail they require you to input, they invariably fail to account for the financial complexity of reorganization bankruptcy. An online bankruptcy calculator may be able to give you a rough idea, but you should not rely on the calculator’s estimate as an accurate reflection of what your final plan will be.
Remember, the repayment plan you propose must gain approval from the bankruptcy court. Moreover, one or more of your creditors might object to the Chapter 13 plan that you initially propose. Many pitfalls can arise in a Chapter 13 bankruptcy case, which is why it is so critical to be assisted and represented by a knowledgeable Folsom Chapter 13 attorney with prior experience handling cases similar to yours.
bankruptcy attorneys in sacramento
Contact Our Roseville Chapter 13 Bankruptcy Attorneys
Bankruptcy has an unfair and rather exaggerated reputation. Despite the many pernicious myths about bankruptcy, the reality is often quite different, and many people go on to say that filing was one of the best financial decisions they ever made. Not only can bankruptcy help erase liability for various debts – it can also help you protect your car from repossession, save your home from foreclosure, and put an end to harassment by debt collectors.
If you’re a California resident and are struggling to manage debt that has grown too overwhelming, we urge you to contact The Bankruptcy Group for a free and completely confidential consultation regarding your legal options. Chapter 13 or Chapter 7 bankruptcy may be the optimal solution for getting your finances back on track. For a free consultation with our Sacramento Chapter 13 attorneys, contact The Bankruptcy Group at (800) 920-5351 today.
The post How Much Do You Have to Pay Back in a Chapter 13 Bankruptcy in California? appeared first on The Bankruptcy Group, P.C..

1 month 3 weeks ago

By Damon Trent

Whether you’re drowning in debt because of unemployment, medical bills, or just good old-fashioned spending—in 2016, almost 772,000 Americans found themselves in one of those situations—you’ve probably considered declaring personal bankruptcy, an option designed to allow people in financial distress to hit the reset button. But does it work? And should you consider it? Here’s what you need to know.
When should I consider bankruptcy?Anytime you find yourself with more debt than you can handle, bankruptcy is an option worth exploring. Bruce Weiner, a New York bankruptcy attorney, says that in nearly 40 years of practice he’s found “a good thumbnail is when the amount you owe starts to approach what you make in a year.” (Note: Some debts—like taxes, child support, and mortgages—aren’t usually eligible for bankruptcy relief, so if you owe those, you’ll have to pay them even if you file for bankruptcy.)
The U.S. offers a half-dozen forms of bankruptcy to choose from, each named for the chapter of the law that established it. The most popular for individuals are Chapters 7 and 13.
Chapter 7Also known as “liquidation” bankruptcy, Chapter 7 is by far the most common form of personal bankruptcy in the United States (versus Chapter 11 for businesses).
After you file your paperwork, the judge appoints a “trustee,” whose job it is to sell (“liquidate”) any assets you have and distribute the proceeds among the people to whom you owe money.
Luckily, this won’t leave you naked and homeless. Part of the trustee’s job is to ensure that you’re left with the resources you need to live and work. Plus, any money you earn from that day forward is yours to keep.
Chapter 13If you have a steady income, Chapter 13 offers a somewhat gentler solution. Instead of selling your assets, a Chapter 13 trustee works out a legally binding plan for paying back your debts, or a percentage of them, over a fixed time period, usually three to five years.
Along with letting you keep your stuff, in some cases Chapter 13 can apply to common types of debt that Chapter 7 doesn’t cover.
What happens when I file?Different kinds of personal bankruptcy all share one glorious feature: the “automatic stay.”
The day you file your paperwork, your creditors are legally barred from trying to collect their debts. That means no more lawsuits. No more “Final Demand” on red-trimmed envelopes. No more voicemails demanding you call the sinister “Mr. Peterson” back “immediately.” Instantly, those headaches are gone for good. And soon your debts are also gone—or “discharged,” in legal terms.
What’s the catch?There’s one great reason not to file for bankruptcy: Your credit score takes a hit. Of course, if you haven’t paid a bill for a year or two, your score may already be in the basement. If not, you can expect a drop of several hundred points. And that black mark stays on your record for eons—a decade for Chapter 7, eight years for Chapter 13.
In many cases, though, declaring bankruptcy will actually leave you with a higher credit score than if you simply allowed your debts to fester. Weiner says that many of his clients are shocked to start receiving offers for credit cards and mortgages only months after filing for bankruptcy.
So, going bankrupt is good?No. Bankruptcy is unpleasant, and intrusive, and creates an indelible record of a low point in your life.
“Nobody wants to end up here,” says Weiner. But it beats the constant, crushing stress of unpayable debt.
Not only that, but, well, bankruptcy is also fundamentally American. That’s why it’s in the Constitution. The Founding Fathers knew that if this land was going to be a place where citizens could dream big and take risks, they also had to have what Weiner calls “the freedom to fail.”
That freedom is yours to enjoy— if you’re ever unlucky enough to need it.

Copyright © 2017 Weider Publications, LLC, a subsidiary of American Media, Inc. All rights reserved.

1 month 3 weeks ago

On April 26, 2017, the White House unveiled a plan to provide “tax relief to both our corporations that will help grow jobs, and to middle Americans.” In a briefing, Secretary of the Treasury Steven Mnuchin and Director of the National Economic Council Gary Cohn admitted that the President’s plan takes away a critical benefit for student loan borrowers.
Under the plan, which looks to slash corporate tax rates in an effort to spur a business expansion, the federal tax deduction for interest paid on student loans would be eliminated.
This comes on the heels of well-publicized moves by the U.S. Department of Education to strip away various consumer protections for borrowers in default.
Existing Student Loan Interest Deduction Rules
The student loan interest deduction is one of the few tax benefits that favors the taxpayer with limited income who doesn’t own a home, has no children, and otherwise would be hard-pressed to find a way to lower his or her tax bill.
Under current law, taxpayers with income of less than $80,000 ($160,000 if filing a joint return) can deduct from their taxes the amount paid for interest on qualified student loans. This adjustment to income, available to taxpayers even if they don’t itemize their deductions, can reduce the amount of income subject to tax by up to $2,500 per year.
For interest on the loan to be deductible, it must have been incurred for payment of qualified educational expenses of the taxpayer, his or her spouse, or a dependent. Loans taken from relatives or an employer’s retirement plan don’t count, but the loan doesn’t lose its status if the taxpayer later gets divorced or the dependent becomes self-supporting. A student loan for your child, for example, would qualify even if the child eventually moves out of the house and gets a job of his or her own.
The student must be enrolled at least half-time in a program leading to a degree or certification at a college, university, vocational school, or other postsecondary educational institution eligible to receive federal student loans. Certain educational institutions located outside the United States, as well as institutions conducting internship or residency programs leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training also qualify.
The deduction provides a benefit to millions of taxpayers each year as they try to balance their student loan obligations with the demands of making ends meet. Given the income limitations, it comes as no surprise that the student loan interest deduction is important to people who need the money most.
This is exactly the benefit the Trump tax reform plan seeks to eliminate. But the Administration claims the overall benefit to the middle class will far outweigh the loss of this crucial deduction.
Who Benefits From the Administration’s Plan?
The White House plan doubles the standard deduction from the current $6,350 for single taxpayers and $12,700 for married taxpayers filing joint returns. It also does away with the alternative minimum tax as well as the estate tax. In exchange, all other deductions except those for mortgage interest, charitable giving and retirement savings are eliminated.
There’s no doubt that doubling the standard deduction will help millions of people, effectively giving $24,000 in tax-free money to married couples. But the alternative minimum tax, or AMT, is another story entirely.
AMT is a complex system that requires taxpayers to pay the higher of either their tax calculated under regular income tax rules or their tax calculated under the alternative minimum tax (AMT) rules. Given the way the numbers are calculated, AMT is more likely to hit households with higher incomes. In fact, according to the Tax Policy Center, 30.9% of households with income between $200,000 and $500,000 will be affected by the AMT in 2017. Married couples filing joint tax returns in 2017 will not be subject to AMT at all if their income is below $84,500.
The repeal of the so-called “death tax”, pitched as a tax cut for the middle-class, is also laughable. The IRS currently exempts the first $5.49 million of an estate’s value from taxation (though some states such as Massachusetts and Oregon have a lower limit). The estate tax does not affect people who die with less than $5.49 million worth of assets. In fact, according to the Joint Committee on Taxation, 99.8% of estates owe no estate tax at all. That means only the estates of the wealthiest 0.2 percent of Americans are impacted by estate taxes.
In the end, it’s the wealthy and super-wealthy who benefit from the tax plan.
Guess Who Bears the Tax Burden?
Over 44 million Americans have student loan debt, with average monthly payments at about $350. According to a 2011 analysis of IRS Statistics of Income data performed by the Association of American Universities, over five million taxpayers benefited from the student loan interest deduction.
These are people with income below $80,000, or $160,000 for married couples filing a joint return.
None of these couples will have to worry about estate taxes because not only are they alive (estate taxes are taxes on the estate, not the beneficiaries) but their income is far below the $5.49 million mark. Even those subject to AMT are still able to deduct their student loan interest so long as they fall within income limits.
In other words, the burden imposed by the loss of the student loan interest deduction will be felt by households with more than $24,000 in annual income. The benefits of the new tax proposal, however, will be felt solely by those who make enough money that they would not qualify for the deduction in the first place.
Don’t Want to Lose Your Tax Deduction for Student Loans?
If you think this sounds like a raw deal, now’s the time to contact your Congressional representatives and let them know. Tell them you want them to vote against the 2017 Tax Reform for Economic Growth and American Jobs. Let them know the tax reform proposal will hurt you financially, and that you oppose it.
If you don’t let your elected officials know how you feel about the tax reform, how can you expect them to know?

Learn More Here

The post How Trump’s Tax Reform Plan Will Affect Student Loan Borrowers appeared first on Shaev & Fleischman LLP.