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Tax Deductions You Don’t Want To Forget

1.  Property taxes – Combined with the new homebuyer tax credit this deduction can save many homeowners a lot on their taxes. You can add this deduction to your standard deduction if you don’t itemize, or if you choose, you can add it to you itemized deductions.
2. Sales taxes – Tax law allows you to deduct your local and state sales taxes. I you purchased a big ticket item such as a car, boat or prefabricated home last year, you can add the taxes paid to your itemized tax return to take advantage of the deduction.
3. New car deduction — If you purchased a new car (not used) in 2009 you may be able to deduct the state, local and excise taxes you paid for it.  You don’t need to itemize to take advantage of this deduction on your taxes.
4. Donations To Haiti – If you make a donation to the Haiti earthquake relief efforts between January 11, 2010 and March 31, 2010 those donations can be deducted from your taxes, but only if you itemize.
5. Energy efficiency credit – If you purchased an energy efficient air conditioner, furnace or water heater last year, you may be able to deduct 30 percent of the cost from your taxes. There is a $1500 cap; but you can include the cost for labor and materials. If you installed energy efficient window, insulation, sealant and radiant barriers you may also deduct 30 percent of the cost with a $1500 cap, but labor cannot be included.

Also remember, if you are unable to pay your taxes, you may be able to negotiate forbearance with the IRS.  Also, some taxes (depending on the age and other factors) may be dischargeable in bankruptcy.
Can I Stop the IRS from Collecting for Unpaid Taxes if I Can Not Pay?
The collection process can be stopped by resolving your liability.  If you receive a notice from the Internal Revenue Service (IRS) regarding tax debt , consider this your call to action.  It is common for taxpayers to ignore notices or think that it’s not a big deal.  The problem with ignoring IRS notices is that not only does your tax liability continue to increase with penalties and interest; collection actions against you become more aggressive and happen sooner than many realize.
Taxpayers are often quick to ignore notices when they know they are unable to pay what they owe.  The IRS has several options available for different financial situations.  The fastest way to stop collection action is to pay the amount due in full. If you’re not able to pay it as a lump sum, all at once, you may qualify for a payment plan that will stop collection action.
An installment plan allows taxpayers to pay what they owe in monthly installments and there are different plans based on what you owe and your finances.  After you apply and are approved for a plan, the collection action against you will end as long as you make payments as agreed.
If you are unable to pay anything toward the amount due, there are several options.  You can apply to be declared uncollectible due to financial hardship or apply for an offer in compromise.  Being declared uncollectible will temporarily suspend collection action until your situation improves and an offer in compromise allows you to make an offer on what you can pay; paying less than what is originally owed.
Getting Tax Debt Discharged in Bankruptcy: 4 Requirements Your Debt Must Meet
If you’re wondering whether you can get can tax debt eliminated in bankruptcy, you’ll need to review several factors to learn if your debt qualifies.  Chapter 7 and Chapter 13 bankruptcies may help you deal with your debt in different ways.  In order to understand your options in detail and learn if bankruptcy is an option to consider, review your situation with a bankruptcy attorney or tax expert.
Debtors are often confused about tax debt and bankruptcy, with many under the impression that you cannot discharge or eliminate tax debt.
Certain debts may qualify but it must follow a specific criteria:

1. Tax debt should be accessed by the Internal Revenue Service (IRS) with 240 days of filing for protection.
2. The tax return related to the outstanding debt was due at least 3 years before filing.
3. Tax returns have been filed within the last two years.
4. No tax evasion or fraud attempts were made by the debtor.

Chapter 7 bankruptcy can eliminate or offer IRS debt relief that meets necessary requirements.  Chapter 13 bankruptcy may help you deal with IRS debt relief that doesn’t qualify for discharge.  With Chapter 13 you may be able to repay what you owe without penalties or interest, making your payments more affordable. The 240 day assessment may vary if you had an offer in compromise pending. Specifications may also vary if you have a tax lien. You may need to provide proof of filing previous tax returns before filing your petition.
How Bankruptcy Can Offer IRS Debt Relief
Bankruptcy can help taxpayers deal with tax debt either by eliminating qualifying debt or creating an affordable monthly payment to put toward what you owe. Each bankruptcy chapter has regulations and requirements for handling tax obligations. In some cases you can get them discharged, if they don’t qualify for elimination, having them included in a repayment plan may be another option.
Handling IRS debt relief can be a struggle if you have other debt obligations such as credit card bills, medical bills, mortgage, car loan or even a wage garnishment. Bankruptcy may help you get in better financial shape to handle tax debt if the debt cannot be discharged or eliminated.
Chapter 7 bankruptcy can eliminate tax debt under specific circumstances. The taxes should be income taxes, at least 3 years old, be accessed by the IRS within 240 days of filing for bankruptcy, and your taxes should be filed and up-to-date. As long as tax fraud or evasion isn’t committed, you may be eligible to have the debt discharged.
Chapter 13 bankruptcy is another option if your tax debt is not eligible for elimination. This is a 3 to 5 year repayment plan approved by the court based on your ability to repay. At this point, the IRS has to accept your payment. This is often an option for debtors who have been unable to set a payment arrangement with the IRS on their own or need legal enforcement.
Reference:
http://www.nolo.com/legal-encyclopedia/bankruptcy-tax-debts-eliminating-29550.html
Can I Discharge Taxes In Bankruptcy?
There are certain circumstances where a debtor may be able to discharge their federal or state taxes partially or in full during.  But taxes are usually treated as a priority debt during bankruptcy, what this means is that tax debts will be paid before certain other debts.  For example, if a debtor owed federal taxes, the bankruptcy court would repay those federal taxes before the debtor’s mortgage or car note. However, there are times when tax debt is classified as non-priority debt.  If a tax was incurred within the 3 years prior to the debtor filing for bankruptcy, then those taxes must be repaid 100 percent during the bankruptcy.
However, if the tax debts were incurred more than 3 years before filing for bankruptcy, the debts will be categorized as a non-priority debt.  Under certain circumstances, a debtor may be able to discharge non-priority tax debt during bankruptcy.  Sometimes bankruptcy courts will discharge non-priority tax debt during bankruptcy if the debtor simply is unable to repay the tax debt AND  maintain reasonable living conditions.
For example, if a debtor is permanently disabled and experienced a significant drop in income the bankruptcy court may be willing to partially and even fully discharge tax debt in bankruptcy.  However, if a debtor has failed to pay their taxes or has attempted to evade paying their taxes, the bankruptcy court may not discharge their tax debt in bankruptcy.  And if the tax debt is classified as a priority debt, then the debtor is required to repay those taxes no matter what their circumstances are during the bankruptcy.
Does Discharged Debt from Bankruptcy Get Reported on Federal Income Taxes?
During tax season the question often arises regarding discharged debt and whether it has to be claimed as income on federal income taxes. This widely depends on whether the creditor acknowledges discharged debt as
being canceled debt. If this is the case debtors may receive a 1099c form from the creditor to include when they file their return. In many cases debtors will not have to worry about this, but this is something you can
review with your bankruptcy attorney for further clarification on exceptions to the rule.
Income recorded on federal income taxes often does not include discharged debt from bankruptcy. The IRS may provide more information for clarity on your unique situation. This is true for any bankruptcy chapter filed
including Chapter 7 , 11 and Chapter 13. The debt has to be successfully discharged, meaning if you filed for protection and your case was dismissed before the debt could be discharged, the exception may not apply.
In some cases if you were declared insolvent you may not have to worry about reporting anything on your federal income tax return. In short, this is where it is proved that what you owed debt wise was valued more
than the value of your assets at fair market value, including items with a lien or those that may be considered exempt under the bankruptcy code. The Internal Revenue Service (IRS) has additional information on this
matter you can review via publication p4681.
Reference:
http://www.txbankruptcyblog.com/2014/02/articles/bankruptcy-news/cancelled-debt-1099c/
Tax Liens And Bankruptcy
Debtors with delinquent tax debt often worry about IRS tax liens during bankruptcy.
1.    Tax liens survive the bankruptcy discharge.
2.    The tax liens that survive the bankruptcy discharge only apply to pre-bankruptcy property.
For example, if a debtor filing for bankruptcy has a tax lien on an old car that’s worth $1500, and the debtor sells the car, the IRS would be able to seize the proceeds. However, if the debtor purchased a car after bankruptcy worth $3,000, then sold it, the IRS would not be able to seize the money earned from that sale.  If you are considering bankruptcy and have tax liens on your assets speak with a bankruptcy attorney about your options. A qualified bankruptcy attorney can help you create a plan on how to handle tax or other liens against your assets during bankruptcy.
What Happens to a Tax Lien When Bankruptcy is Filed?
When you file bankruptcy, the automatic stay goes into effect which stops collection attempts from creditors. Yet, this may have a different effect on a tax lien depending on your situation. A tax lien is when a taxing authority, such as the Internal Revenue Service (IRS) or state government, places a lien on your property for failing to pay outstanding taxes due.
The lien allows the taxing authority to use your property to satisfy taxes due after selling your property. You may have a lien placed on the property in question if you owe property taxes. Or, the taxing authority who is
owed taxes may take additional steps to get a lien if you owe state or federal income taxes. When it comes to bankruptcy, you may need to determine whether the tax debt in question qualifies for discharge.
This can be complex situation depending on what type of tax debt you owe, how old the debt is, and when you file your petition. In some cases, you may file for protection before the lien is issued against you. In this
case, if a lien is issued it violates the automatic stay. Tax debt may be eligible for discharge but it depends on whether it meets qualifications according to the bankruptcy code. Getting the debt wiped out in bankruptcy
may depend on when it was due and whether it has been accessed by the IRS. Discuss your situation with an experienced Dallas-Fort Worth bankruptcy attorney.
Reference:
http://www.nolo.com/legal-encyclopedia/does-bankruptcys-automatic-stay-apply-tax-liens.html
What You Should Know About Tax Refunds and Bankruptcy
Tax season often raises questions about what will happen to a tax refund if bankruptcy is filed. This can be the best time to discuss your questions and concerns with an experienced bankruptcy attorney. In many cases it is about timing depending on your unique situation. It may be best for you to postpone your filing until after you have received and spent your refund. For others you may be able to keep it upon filing depending on several factors.
The following points are a areas to consider when understanding your options regarding your tax refund and bankruptcy:

• Your tax refund may be considered part of your bankruptcy estate. There may be exemptions available depending on your state that can help protect it if it is considered an asset.
• If you plan to spend your refund before filing and use it toward necessities such as mortgage/rent payments, vehicle payments, and other household needs.You can review expenses and purchases you want to make prior to filing with your attorney to ensure they are qualified expenses.
• You may be able to keep a portion of your refund depending on exceptions to the rule. This may also apply to those who may have filed a previous bankruptcy in the past.
• Review with your attorney about transactions to avoid with your refund that could raise a problem in your bankruptcy.
• Making payments to certain creditors such as a family member you owed money to could result in the court requesting the payment to be turned over to the court.

What You Should Do with Your Tax Refund If You Plan to File Bankruptcy
If you are expecting to receive a tax refund before filing bankruptcy you may be able to spend it wisely without causing legal headaches. There are a few actions to consider when it comes to using your refund before
you file and this includes reviewing your intentions with your bankruptcy attorney. You can get further insight on how to use your refund safely to reduce the risk of having purchases scrutinized by the court.
This is important since there have been a large number of debtors filing before receiving their refund. Tax refund payments may be considered part of your bankruptcy estate. They could be used to satisfy creditors and
because of this, in some cases, you may be better off waiting until it is spent before filing for protection.
How to safely use your refund:

• Use your refund with guidance from your bankruptcy attorney. This can help you get exemptions necessary that can help you keep your refund while establishing financial control even after your case is completed.
• Bankruptcy filing fees: you may be able to use your refund to pay for necessary expenses such as retaining an attorney, credit counseling and financial management courses, and filing fees. These are expenses you can review with your attorney.
• Making necessary payments and expenses: food, clothes, medications, and repairs to your home or vehicle may be purchases you can make with your refund. You may be able to catch up on other payments such as utilities, mortgage or the rent.

Reference:
http://www.txbankruptcyblog.com/2014/02/articles/debt-relief/how-to-spend-tax-refund-money-before-bankruptcy/
If I File My Taxes Late Can I Still File for Bankruptcy?
Even if you file your taxes late you can still file bankruptcy. When you begin the filing process you are required to provide documentation about your finances, debt, and monthly income. Your tax returns are necessary
for a matter of reasons.
Tax returns, including federal and state tax information, should be accurate for verification purposes. When you file you are required to include information for the most recent tax year. Even if you file for an extension to submit your return after the April 15 deadline, your return should be completed and filed. If your taxes are not filed before the creditor’s meeting occurs your case could get dismissed.
Having your returns filed helps accurately determine your budget and repayment options. Whether you file Chapter 7 or Chapter 13 bankruptcy, you may not have a clear idea on what debt is owed or how you can repay
it unless your tax information is completed. In many cases, the Internal Revenue Service (IRS) may complete a return on your behalf to estimate potential taxes owed until you file the return. If this occurs it could
lead to higher Chapter 13 payments due to tax returns that have not been assessed or filed.
When you complete your returns it is important to report information accurately as it will be reviewed when bankruptcy is filed. Any problems could delay the bankruptcy court from discharging debt. Discuss you tax debt concerns with your bankruptcy attorney in Dallas-Fort Worth.
Reference:
http://www.duncanlawonline.com/do-my-taxes-have-to-be-filed-before-filing-for-bankruptcy/
Four Tax Tips For A Troubled Economy
1. Write Off Property Sale Losses
If you experienced a foreclosure , deed-in-lieu of sale, mortgage-loan modification or a short sale and had debt forgiven, you need to know that the Mortgage Forgiveness Debt Relief Act of 2007 will treat any forgiven debt as taxable income. But in an effort to aid people during the credit crisis, Congress allowed homeowners with mortgage debt forgiven in 2007, 2008 and 2009 to avoid this tax.
The Mortgage Forgiveness Debt Relief Act of 2007 was suppose to prevent homeowners who experienced foreclosure from receiving a huge tax bill on forgiven debt caused by the foreclosure. But to many homeowners’ surprise the law doesn’t protect all homeowners who have lost their property to foreclosure. Under the Mortgage Forgiveness Debt Relief Act, the tax liability incurred from the foreclosure will be waived only if the debt was accrued from buying or improving the property.
Sounds simple enough, right? Not so fast. Remember all of those home equity loans and refinances that required homeowners to roll their credit card debt into their mortgage? Well, that is taxable. So if you refinanced your $100,000 home for $140,000 and rolled $20,000 of credit card debt into the refinance, after your home is foreclosed on you will still owe taxes on that $20,000. For those homeowners who have suffered from foreclosure, paying any type of tax is a huge blow, especially on a home they no longer own. The only way that a foreclosed homeowner can avoid this tax liability is to file for bankruptcy.
But the law states that the taxpayer must be insolvent at the time of the foreclosure or the foreclosure must occur after or during the bankruptcy in order to have the tax waived. That means if a debtor has retirement funds or any other assets at the time of the bankruptcy, they might still be stuck with the tax debt caused by the foreclosure
2. Write-Off Losses From Selling Stock
If you experience a financial loss this year from selling stocks or other property you can use the loss to offset capital gains from other property or stock sales. Losses exceed capital gains? You can apply as much as $3,000 of the additional losses toward ordinary income. Any amount above $3,000 can be placed on future tax returns.
3. Write-Off Work Related Expenses
There are many expenses employees incur that are not covered by their employer. You can deduct these excess expenses on your tax return if they exceed more than 2% of your income.
4. Write-Off Business Equipment
If you have a business, you can write off the cost or depreciation of certain business purchases, such as business furniture, machinery, office equipment and laptops.
Unemployment, Taxes and You
If you’re unemployed during this recession, several factors may greatly impact your tax liability. For unemployed workers who received unemployment insurance benefits, the IRS will tax all benefits after the first $2400.  If taxes were not automatically withdrawn from your unemployment benefits check you could end up being liable for hundreds, if not thousands of dollars in taxes.
Here’s what you need to know about reducing your tax liability and/or deferring payment as an unemployed person:

• If you are searching for a job, gather all of your job search related receipts. You may be able to deduct expenses for items such as parking fees, resume services and even long distance phone calls and travel expenses related to searching for work.
• If you owe taxes on your 2009 income, you may be allowed to defer payment if you are unemployed.  Unemployed taxpayers are often able to receive what’s called “uncollectible status” if they do not earn enough income to pay their taxes or if paying their taxes would jeopardize their basic living standards.

It’s important that unemployed taxpayers take the time to consultant a tax accountant who can help them navigate the system.
Texas Residents Can Now Deduct Sales Taxes On Federal Income Tax Returns
According to an article in the Star-Telegram, Congress made permanent a tax law that allows Texas residents to deduct state and local sales taxes from their federal income tax returns.
The article said:
In 2004, Congress approved the provision allowing taxpayers who itemize to deduct either their state income tax or their state and local sales tax expenses, and it has been extended on a one- or two-year basis ever since. It was due to expire after the 2009 tax year. Deduction of sales taxes had originally been eliminated in the Tax Reform Act of 1986.
The new tax law will save Texans millions of dollars in taxes and will go a long way in easing the financial strain of those who are already struggling with financial issues. Taxes are becoming more of a burden to Americans as they are forced to face job losses, foreclosures and reduced wages. Before 2004 many Texans missed out on the federal tax savings that most other Americans enjoyed because they were not allowed to deduct sales taxes. Luckily for Texas, that’s changed now. If you have not filed your taxes this year, please don’t forget to take advantage of this tax deduction when you file. If you are delaying the filing of your federal tax returns because you owe money and don’t have the income to pay, you may qualify for a payment plan. Visit www.irs.govfor more information on your payment plan options.
According to an article in the Wall Street Journal, the Obama administration has created a new program to encourage mortgage lenders to modify a second mortgage in its efforts to reduce foreclosures. Under the new foreclosure prevention program, the government will pay mortgage lenders $500 up front and $250 a year for three years for each second mortgage they successfully modify, such as a home equity loan.
The article said:
According to the U.S. Treasury Department, up to 50% of at-risk mortgages have second liens and many properties in foreclosure have more than one lien. Senior administration officials Tuesday told reporters they expect a significant amount of big banks to sign up for the updated federal program to bring relief to troubled homeowners.
Isn’t that what they said about Hope For Homeowners and the other foreclosure abatement programs that have been unsuccessful? Our government is spending another few billion on a program to pay mortgage lenders to help homeowners avoid foreclosure, the same mortgage lenders who created the foreclosure crisis. It is in the best interests of mortgage lenders to avoid foreclosure , so why do they need to basically bribed into acting in their own best interests? I really am beginning to believe that there are some government officials who are not taking this foreclosure crisis serious. Maybe they don’t realize that these are real lives that this foreclosure crisis is destroying. We will keep a close watch on how “successful” this particular foreclosure prevention program is in stopping foreclosures. Because the bottom line is that we aren’t stopping foreclosure if the numbers are steadily increasing.
IRS May Require Tax Preparers To Get Licensed
According to an article in the Star-Telegram, the IRS is considering new rules that require tax preparers to be licensed in hopes of reducing fraud and tax preparation errors.
The article quoted IRS Commissioner Doug Shulman:
Shulman said he wants better leverage to make sure tax preparers act ethically, not only to improve enforcement, but to ensure that taxpayers get quality help in preparing their returns.
“Paying taxes is one of the largest financial transactions individual Americans have each year, and we need to make sure that professionals who serve them are ethical and ensure the right amount of tax is paid,” Shulman told the House Ways and Means Subcommittee on Oversight.
Currently tax preparers aren’t required to be licensed unless they plan to represent taxpayers in proceedings with the IRS.  And although using a tax preparer is relatively inexpensive compared to a tax accountant, many unscrupulous tax preparers have taken advantage of low income taxpayers, according to the article.   Since 2006, 356 tax preparers were convicted of fraud with over 80 percent of them going to prison.  These convictions don’t just create problems for the tax preparers; it’s their clients who end up paying the additional taxes, interest and penalties.
Yes, tax season is behind us; but it’s worth reminding taxpayers that you are ultimately responsible for information submitted on your tax return.  Make sure you work with an experienced tax professional when filing your taxes, even if they’re late and you owe money.  Remember, if you owe back taxes, you may be able to discharge these taxes in Chapter 7 bankruptcy or repay them in a Chapter 13 bankruptcy .  To find out more about how bankruptcy can help you get a handle on your taxes contact a Dallas-Fort Worth bankruptcy attorney today.
Many Jobless Americans Facing Heavy Tax Burden
According to an article in the Star-Telegram, many unemployed Americans are facing unexpected tax bills because they don’t fully realize the amount of taxes they will owe on their unemployment benefits.
The article said:
At a time when the newly laid-off are swelling unemployment rolls to record numbers, the painful surprise for many is that jobless benefits are taxed like income. That leaves many on the hook for hundreds or thousands of dollars because the taxes aren’t automatically withheld from benefit checks. To make things worse, some people are also hit with a state unemployment tax bill.
American unemployment benefits have been fully taxable since 1987; but the impact on those who have faced a job loss has been great. Many jobless Americans are facing a steep tax bill this year because of state and federal taxes on their unemployment benefits–and they’re not prepared.
The article quoted a business systems analyst:
“I knew I’d have to pay something, but to think I was going to get gouged $1,500 for three months’ unemployment,” he said. “What if I was out the whole year?”
Taxing unemployed workers receiving unemployment benefits is like squeezing blood from a turnip and is completely counterproductive. Unemployed Americans can barely survive on unemployment benefits that range from a minuscule $400 – $1600 a month depending on where they live and their previous income.
Luckily President Obama’s stimulus package includes provisions that make unemployment benefits tax-free up to the first $2,400 of benefits received. This is a temporary, one-time measure that may give jobless Americans a bit of breathing room; but not much. What we really need is a law that makes unemployment benefits completely tax-free so that the unemployed are not going deeper into the whole with tax debt .
Mistaken Tax Debt Plus Credit Card Does Not Equal Nondischargeable Debt
In the Chapter 7 bankruptcy case of Rollings, Joseph W. and Janet S.; In re (Chase Manhattan Bank, USA, v. Rollings) the bankruptcy court ruled that credit card debt incurred because debtors used the credit card to pay a IRS bill that they mistakenly believed they owed was not nondischargeable.
The details of the bankruptcy case:
The Chapter 7 debtor and her husband be¬lieved that they owed $2,267 in federal income taxes. They paid this amount using a cash advance from the debtor’s credit card. Shortly after they filed for bankruptcy, the IRS informed the couple that they were entitled to a refund of $2,793 because they failed to claim an Earned Income Credit. The credit card company asserted that its claim was nondischargeable pursuant to Section 523(a)(14) because the debtor used a cash advance to pay a tax liability. The court, however, found that the debt was not “incurred to pay a tax … that would be nondischargeable” as stated in the statute. Consequently, the debtor could discharge the debt.
The court also found that simply because a debtor files a tax return stating that they owe the United States government money does not in and of itself prove that there is actually such a liability. Debtors considering bankruptcy should also note that federal and state income taxes are dischargeable in bankruptcy under certain circumstances and according to how old the tax debt is at the time of filing bankruptcy. If you have old tax debt that you would like to include in a Chapter 7 bankruptcy, speak with a Dallas-Fort Worth bankruptcy attorney today about your options.
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The post IRS Debt Relief appeared first on Allmand Law.

TheMarch 2019 New York City Taxi & Limousine Commission (TLC) sales resultshave been released to the public. And as is our practice, provided below are Jim Shenwick’s comments about those sales results.
1. The volume of transfers fell from February. In March, there were 38 unrestricted taxi medallion sales.
2. 28 of the 38 sales were foreclosure sales (74%), which means that the medallion owner defaulted on the bank loan and the banks were foreclosing to obtain possession of the medallion. One sale was an individual to an LLC and two sales were an estate sale. We disregard these transfers in our analysis of the data, because we believe that they are outliers and not indicative of the true value of the medallion, which is a sale between a buyer and a seller under no pressure to sell (fair market value).
3. The large volume of foreclosure sales (approximately 74%) is in our opinion evidence of the continued weakness in the taxi medallion market.
4. The seven regular sales for consideration ranged from a low of $135,000 to $310,000 (three medallions) to $340,000 (one medallion) and a high of $350,000 (two medallions).
5.  The fact that 74% of all transfers in March 2019 were foreclosure sales shows continued weakness in the taxi medallion market and no sign of a correction.
6. At Shenwick & Associates we believe that the value of a medallion is approximately $160,000 and the value of medallions continues to weaken.
Please continue to read our blog to see what happens to medallion pricing in the future. Any individuals or businesses with questions about taxi medallion valuations or workouts should contact Jim Shenwick at (212) 541-6224 or via email at j[email protected].

A common misconception is that irresponsible people are the ones who usually file for bankruptcy. However, nothing could be farther from the truth. While it is true that bad budgeting or overspending may be attributed to being irresponsible, managing money is harder than ever thanks to inflation. Thus, a combination of bad budgeting and a habit of spending too much money can cause your debt to skyrocket and lead you to bankruptcy a lot faster than ever expected. But, then again, there are times that overwhelming debts may have been a result of life-changing events that you have no control over. We, at Northwest Debt Relief Law Firm, are here to take off the wool over your eyes and enlighten you about the realities of bankruptcy.
It is unfair to be prejudiced against another person who files for bankruptcy, to judge that he or she was irresponsible. Why? Because there are many other causes of bankruptcy. Some of them totally unexpected and not of their fault. The following are just some of the common ones:
➤Medical expenses
A study done by Harvard University indicates that the leading cause of bankruptcy is due to medical expenses. These expenses account for a whopping 62 percent of all reported personal bankruptcies. The study also showed that 78% of filers had some form of health insurance, thus bucking the myth that medical bills affect only the uninsured. Rare or serious diseases or injuries can easily result in hundreds of thousands of dollars in medical bills – staggering amounts that can quickly wipe out life savings and retirement accounts, college education funds and home equity. Bankruptcy may be the only way out when they are left almost penniless, regardless of whether the patient or his or her family had health insurance to cover a portion of the bill or not.
➤Reduction in Income
There may be times that some companies also have to cut costs to keep the company afloat. In such instances, this may mean employees putting up with pay cuts and bonus reductions.
➤Job loss
Losing your job, whether through layoff, termination, or resignation equates to the loss of income. This may mean challenging times ahead especially if you have not been able to set aside enough funds to tide you over to the next job. While some people may be able to receive severance packages, others are not as lucky with finding pink slips on their desk without any prior notice. An emergency fund will have been helpful. Otherwise, you will have no choice but to use your credit cards to pay off bills and this move could entrap you in debts with no clear indication on whether you can pay them off later on. The loss of insurance coverage and the cost of COBRA insurance also drain the job seeker’s already limited resources. People who are not able to find similar gainful employment for a long period of time may find it challenging to recover in time to pay off creditors.
➤Divorce or separation
Marital dissolutions result in dreadful blows on the finances of both parties. They need to deal with legal fees, which may cost a lot of money.  They also need to deal with the division of marital assets, paying off child support and/or alimony, and finally the ongoing cost of keeping up two separate households after the split. The mounting costs of legal representation are enough to force some people to file for bankruptcy, while wage garnishments to cover back child support or alimony can strip others of the ability to pay the rest of their bills. Spouses who fail to pay the support dictated in the agreement often leave the other completely destitute.
➤Excessive use of credit
Credit companies are aggressive in selling their credit cards, mortgages, and other forms of consumer debt. However, credit card bills, installment debt, and other loan payments can eventually get out of control, until eventually,  the borrower may not be able to even settle the minimum amount due for each type of debt. In the end, the borrower will have no other choice but bankruptcy if funds are not obtainable with the help of friends or family or debt consolidation.
➤Unexpected Expenses
Other times, unexpected expenses such as loss of property due to theft or natural calamities like earthquakes, floods or tornadoes for which the owner is not insured can force some into bankruptcy. Most homeowners are now aware that there is a separate coverage for fortuitous events like earthquakes. As such, they can lose their homes, if not all of their possessions in the face of such calamity.
➤Foreclosure
When people face foreclosure on their homes, more than 1% of Americans to filing for bankruptcy. This enables them to re-organize their debt which may prevent them from having to foreclose in the future.
➤Utility payments
With the rising costs in real estate, the utility payments people have to pay are also increasing. Heat, electricity and other necessities are paving the way to bankruptcies.
➤Student loans
A lot of people have not been able to fully pay their student loans well beyond college. Studies show that student loans account for 1% of all filed bankruptcies. That 1% translates to approximately 15,000 bankruptcies a year.
➤More money being spent versus the income earned.
At the end of the day, people have to keep track of expenses.  When your income is running low, do not be surprised if you may be in the red sooner than you think. Bills come at a steady pace. They will not stop just because you do not have sufficient means to pay them off. There are many reasons why people are forced-or choose-to declare bankruptcy. But more often than not, common sense, sound financial planning, and preparation for the future can nip the problem in the bud.
Should you speak to a bankruptcy attorney in Seattle?
Worse comes to worst, you may need solid legal advice before you actually dive into bankruptcy. Do not hesitate to speak to an experienced bankruptcy lawyer in Seattle. One of the best bankruptcy attorneys is at Northwest Debt Relief Law Firm. Our bankruptcy attorneys will help you with the options available to you and guide you on the path to a fresh start. Call us now for a free initial case evaluation.

The post What are the Top Causes of Bankruptcy? appeared first on Portland Bankruptcy Attorney | Northwest Debt Relief.

Matthew DeBord

Yellow taxi cabs and New York City — what could be more iconic?
Successfully hailing a cab has always been a rite of passage for New Yorkers. It has bewildered out-of-towners but was traditionally handled with little effort by seasoned residents of the Big Apple: spot an on-duty cab, raise a hand, hop inside, enjoy a potentially strange, yet authentic, experience.
The old-school taxi business has been under assault in New York for some time, however, as Uber and Lyft have spent half a decade rapidly expanding their operations. Ride-hailing has flooded Manhattan with cars and driven down the value of the city's allocated taxi medallions: There are 13,500 cabs in New York City — but there is something like 80,000 vehicles aligned with ride-hailing services, according to The Wall Street Journal. 
Taxis now have a new challenge, and it could be an existential one: congestion charges in New York, which are set to be the first in a US city.  
The congestion-pricing scheme is now part of a New York state budget, with the fees to kick in by 2021. People driving into the congestion zone — Manhattan island below 60th St. — will be hit with a $12 to $14 fee (it will likely be assessed using the E-Z Pass system, which already covers many bridges, tunnels, and toll roads in the region). Taxis will be billed $2.50 per ride, while ride-hailing services will be billed $2.75. 
Taxis don't cause congestion But Uber and Lyft, for example, will be able to carve out a discount for a "pooled" ride, knocking the fee down to $0.75. Taxis won't be able to do this — and it could be impossible to monitor whether ride-hailed pools actually wind up transporting multiple passengers. 
The whole thing is intended to generate $15 billion over five years for capital improvements to the city's mass-transit system (in one of those "only in New York" twists, the state government in Albany oversees mass transit in New York City). That's much-needed funding, and one hopes it will be wisely spent. But the most recent expansion of the city's subway, the Second Ave. line, took decades and cost a staggering $3.8 billion, so don't get your hopes up.
Congestion pricing, of course, should ease Manhattan gridlock, but it will do this at the expense of turning over the city's most lucrative sections to Uber and Lyft while continuing the destruction of the taxi business. It's a hard political bargain, which was forged by New York Gov. Andrew Cuomo.
As far as I can tell, the plan combines accepted economic theory about congestion caused by personal cars — it's an unpriced "externality" — with a cunning effort to get well-capitalized Silicon Valley companies to pay for upgrading mass transit. Taxi drivers caught in the middle Taxi drivers are caught in the viselike middle. They've persuasively argued that because their numbers have long been capped, they aren't part of the congestion problem. This is accurate — in fact, it's hard to see why taxis aren't exempt from the charge. They're sort of the longstanding third leg of a New York City transit stool, with buses and subways being the other two. 
The taxi business has evidently lost that argument and could now have a tough time competing with Uber, Lyft, and others because ride-hailing services — already losing massive amounts of money as they chase the growth that investors desire — will simply cut prices to avoid any passenger sticker shock.
The double standard at work here is actually so glaring that it's almost hard to believe it's real. Uber, Lyft, and other ride-hailing services simply deluged New York City streets with vehicles in an effort to rapidly build their businesses. And we know how big those businesses can be: Lyft's initial public offering last week valued the company at over $20 billion.
The taxi business is hardly pure — economists have often argued that it was a monopoly, and, at one point, taxi medallions were costing more than $1 million. But New York is now using its lawmaking and budgetary power to pick a clear winner in the transit game; the kind of money that the Ubers and Lyfts can bring to the table is simply too humongous to resist.
Pragmatists will tell you that the horse, so to speak, has left the barn anyway, so it makes sense for New York to effectively tax ride-hailing to make up for years of neglecting the transit systems that have nothing to do with gridlock. In that case, the taxi business, iconic or not, is expendable.
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