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By Mary Ann Pekara
It's tax time and you're getting ready to file your taxes. Have you had any debt forgiven this year? How much debt? Have you thought about how that affects your taxes?
Many people do not realize that forgiven debt is sometimes taxable income. Now, there are exceptions to every rule but it is important to look into if you had debt forgiven last year and what that could mean.
Certain types of forgiven debt are exempt from Federal taxes. Those include but may not be limited to:
- Debts discharged in bankruptcy
- Debts canceled when you are insolvent
- Mortgage debt forgiven in foreclosure
- Some student loan debt
Other forgiven debt, specifically if you saved over $600, may be considered taxable income according to the IRS. This must be claimed on your tax return, otherwise the IRS has grounds to come after you.
Credit and debt collectors are required to file 1099-C forms with the IRS for forgiven debts of $600 or more. Some collectors will send a copy of the form to their customer but it is not required that they do so.
The 1099-C is a very complicated form and it is important to double-check the form before submission to verify that all the information is correct.
The IRS is expected to get $6.5 million in debt forgiveness this year based on the 1099-C form.
If you're unsure of anything, contact a local professional as soon as possible.
Medical bills continue to be one of the main reasons why consumers seek bankruptcy protection. Anyone who has dealt with a long term illness, hospitalization, being underinsured or no medical coverage is aware of rising healthcare costs. Even a brief stay at the hospital has been known to create a financial burden on monthly living [...]
When You Can Be Contacted
Unless you agree to it, debt collectors cannot contact you at inconvenient times, like prior to 8am or after 9pm. If you tell them, in writing, to stop contacting you, they generally must stop contacting you altogether. Also, if they are told they cannot call you at work, they may not contact you in that way.
Who May Be Contacted
Generally, a debt collector cannot discuss your debt with anyone other than you, your spouse, co-signer, executor, administrator, guardian, parent of a minor, or your attorney. However, if you are represented by an attorney for your debt, the debt collector may not contact you, and instead must contact your attorney. They may contact others (usually only once) to obtain information about where you are located, what your phone number is, and where you work. They cannot reveal that you owe a debt or discuss details of the debt, aside from identifying the name of the collection agency, but they may only do that if asked.
Prohibitions
Debt collectors are not allowed to harass you. This means they cannot threaten to harm you, use profanity, call you repeatedly to annoy you, publish your name as someone who refuses to pay her debt, or harass you in any other way.
Debt collectors may not make false statements. They may not claim they are an attorney when they are not, use a fake company name, accuse you of committing a crime, lie about the amount of your debt, falsely claim that documents they send you are or are not legal forms, or make any other false statements. Furthermore, they may not send you a document that looks like it is from a court or government agency. They are also prohibited from giving false credit information to credit reporting companies or anyone else.
Debt collectors cannot falsely claim they are going to take legal action against you, like telling you that they will have you arrested. They might claim that they will seize your property, garnish your wages, or take other legal action against you unless you pay your debt. They may not say these things unless they are permitted by law to take those actions and they intend to do so.
Debt collectors must not use unfair practices when trying to collect. They cannot deposit post-dated checks early, contact you by postcard, or try to collect additional charges (such as fees or interest) over your owed amount unless your contract or state law allows it.
A debt collector cannot disregard your payment choices; you have the right to choose which debt you make a payment on. A debt collector cannot apply payment for one debt to another debt that you did not choose to pay. Additionally, the collector cannot apply your payment to a debt you do not believe you owe.
Garnishment
Generally, you may be sued by a creditor or debt collector to collect a delinquent debt. If you lose your case, the court will enter a judgment stating how much you owe and may allow the creditor or collector to secure a garnishment order. This means the creditor or debt collector will be able to direct a third party, such as your bank or employer, to turn over your funds. If your wages are garnished, your employer will withhold part of your pay to satisfy your debts.
Whether your wages can actually be garnished in Texas is a complicated matter. While it is generally the case that wage garnishment is not allowed in Texas, several factors and exceptions need to be considered. Factors include whom the creditor is, who you work for if you have moved, your financial obligations, and how you are paid. Do not trust that your wages are automatically safe in Texas.
While wage garnishment is one possibility, there are many federal benefits that generally cannot be garnished:
- Social Security Benefits
- Supplemental Security Income Benefits
- Veteran’s Benefits
- Civil Service and Federal Retirement and Disability Benefits
- Service Members’ Pay
- Military Annuities and Survivors’ Benefits
- Student Assistance
- Railroad Retirement Benefits
- Merchant Seamen Wages
- Longshoremen’s and Harbor Workers’ Death and Disability Benefits
- Foreign Service Retirement and Disability Benefits
- Compensation for Injury, Death, or Detention of Employees of U.S. Contractors Outside the U.S.
- Federal Emergency Management Agency Federal Disaster Assistance
Not all federal benefits are immune from garnishment in all circumstances. For example, if you are delinquent on your child support, alimony, student loans, or taxes, your benefits may be garnished.
Garnishment is a serious matter, so contact an attorney immediately if you are facing garnishment. Immediately stopping wage garnishment is possible through bankruptcy. An attorney will help you consider all of your options.
See Related Blog Posts:
Even Debt Collectors Have a Mean Big Brother
Deny that Friend Request: How Debt Collectors Utilize Facebook
The post The Basics – Fair Debt Collection Practices Act: Your Rights appeared first on AKB.
The Bankruptcy Code mandates that every Chapter 13 bankruptcy filing include a plan. In essence, a Plan is a summary sent to your creditors that lets them know how much you intend to repay and how long you are going to take to do it.
If you have filed a Chapter 13 bankruptcy and you don’t have a copy of your current plan, contact your attorney immediately and get a copy so that you can familiarize yourself with its terms.
Once your case has been filed, the court mails your plan to your creditors well in advance of your first meeting of creditors in order to allow them the chance to review and, if need be, object to your proposed treatment of their claims.
Once the plan has been sent on to your creditors, you will meet with the Trustee for what is called the 341 hearing in order to review the plan and discuss potential revisions. Though creditors rarely appear, if they do appear, they are given them a chance to ask any questions as well.
About 6 weeks after the 341 hearing, you will have what is called a confirmation hearing. You will not have to attend this hearing and your attorney will appear on your behalf. At that hearing, the judge will hear from the Trustee and any creditors that want to object to their treatment in the plan. Once the judge is satisfied that all creditor and trustee objections have been resolved, the judge “confirms”your plan and signs an Order of the court that approves your plan.
The bankruptcy judge, who must approve your plan, regards the Chapter 13 plan as a contract between you and your creditors. All bankruptcy judges take this duty very seriously. The entry of the confirmation order binds both you and your creditors to the contract, or in this case, the plan.
If you are later unable to heed the terms of your current plan, contact your attorney immediately to come up with a new plan that you can fulfill.The Chapter 13 Trustee is obligated to pay your creditors exactly as described in your plan. The Trustee does not have any discretion to change those payments. If they need to be changed, you must file an amended plan which must be then in turn be approved by your bankruptcy judge.
If you have any questions at all about how to come up with a Chapter 13 Plan in either Oregon or Washington, please feel free to give me a call or go to the appointment section of the Northwest Debt Relief Law Firm website(you are on it) to set a phone or in person appointment at either the Seattle or Vancouver, Washington or at the Portland or Salem, Oregon bankruptcy law offices
The original post is titled What is a Chapter 13 Bankruptcy Plan? , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
If you file for Chapter 7 bankruptcy, you may not need to worry about your tax refund if you take simple steps to plan beforehand. If you are anticipating a refund or you have received it and you plan to file for protection, it is likely you want to know what will happen. It [...]
By Mary Ann Pekara
March Madness is in full swing now and gamblers' wallets across the country are a little lighter as they wait in anticipation to see how their brackets play out.
Whether you're a regular college hoops enthusiast or not, it has been projected that over 100 million people will take part in the "bracket" sensation that encompasses March Madness.
It has been estimated that those 100 million people will be collectively gambling approximately $12 billion on this NCAA tournament.
Based on the government's census calculations from 2012, the amount of money spent on gambling during this year's March Madness could have paid off over 2.6 million people's credit card debt at $4,554.97 each!
With approximately 191 million credit card holders in 2012, the credit card debt was projected at $870 billion.
Is it even worth asking ourselves why gamble when we could pay off some of our debt?
March Madness is its own world. It's a distraction from our lives. It brings us highs and lows. It brings people together. It pulls people apart. It pits people against each other. All in all, it is great fun.
What else could this $12 billion pay off if we didn't gamble it away?
- The Heinz Company's $12 Billion Debt
- Clear Channel Communications' $12 Billion Debt
- Portugal's Town Hall's $12 Billion Debt
- Texans' $11 Billion Unpaid Child Support
- Illinois' $9 Billion Unpaid Bills
There's a lot of debt that could be paid off with $12 billion but right now this country is busy watching their brackets.
Stopping Debt Collection Contact
If you want a debt collector to stop contacting you, you must write a letter to the collector telling them to stop. It is a good idea to send the letter certified mail, return receipt requested and make a copy of the letter. Once you make that request in writing, the collector cannot contact you except to inform you that they are ceasing contact or to inform you that they are going to do something specific, like turn the file over to an attorney or file a lawsuit. While the contact should stop, the collector or creditor can still sue you to collect the debt.
Knowing Your Debt
Debt collectors must inform you, in writing, of how much money you owe within five days after first contacting you. This “validation notice” must list the name of the creditor you owe and inform you what to do if you do not believe you owe that money. If you send a letter denying you owe some or all of the money, or if you ask for a verification of the debt, the collector may not contact you again (except to inform you of the actions listed in the section above). This letter must be sent within 30 days of receiving the validation notice, and it is effective until the collector responds with written verification of the amount you owe.
Can You Sue?
If you believe debt collectors have violated your rights under the FDCPA, you may sue them in state or federal court within one year from when the violation occurred. If you win, you may recover actual damages you can prove you suffered. Even if you cannot prove damages, you may be awarded up to $1,000. You might also recover attorney fees and court costs. Know that winning a suit for a collector’s violation of the FDCPA has no affect on your debt if you owe it.
In Texas, if anyone trying to collect a consumer debt has harassed or deceived you, they have not only violated the FDCPA and the Texas Debt Collection Act, but they have also violated the Texas Deceptive Trade Practices/Consumer Protection Act. This allows the Attorney General to take action in the public interest.
You can and should also report debt collection violators to the FTC and the Attorney General of Texas. Whether you should sue should be a decision you make after consulting with an experienced attorney.
Will You Be Sued?
Under Texas law, a creditor or debt collector cannot sue you for debts over four years old; it is ten years under the FDCPA. However, they can still contact you to attempt to collect it. So, if you are threatened with a lawsuit over “time-barred” debt, or if you are in fact sued over such debt, talk to an attorney about your options. Obviously, you will want to defend yourself in a lawsuit with an experienced attorney. If you are simply being contacted about time-barred debt, still consider talking to an attorney. You have options, and an attorney can explain the pros and cons of each of them, and help you decide what is best for you in your situation.
If you are sued to collect on a debt you allegedly owe, make sure you respond to the lawsuit, no matter what. You will lose the opportunity to fight for your rights if you do not respond on time. You do not want your wages garnished simply because you failed to respond. An attorney is best able to evaluate your situation, explain your options, and help you follow through with the best course of action.
See Related Blog Posts:
How to Deal with a Debt Lawsuit
Debtors Are Now Fighting Back
The post The Basics – Fair Debt Collection Practices Act: Fighting Back appeared first on AKB.
If you file bankruptcy, you need to send in proof of your income. For most people, that means your pay stubs. Section 521 of the Bankruptcy Code requires people to send in at least two month of their “payment advices“–meaning pay stubs–received from your “employer.”
What if you are self employed? You don’t get a pay stubs and don’t have en employer. Do you dodge that requirement?
If you are self employed, you need to send in your income statement, or "profit and loss"
Well, no. The Bankruptcy Rules, Rule 4002, requires “evidence of current income.” Around here, the bankruptcy trustees want to see what they call a “profit and loss.”
What is that?
Your income statement, or profit and loss, shows your revenue and expenses, money in and money out, and what was left for you. How much money is left for you is a big part of determining your eligibility under the bankruptcy means test.
I don’t find the label “profit and loss” very helpful and some of my small business clients are baffled by it. Income statement seems clearer to me.
Either way, you need to do one for each month of the six months ending the month before you file your bankruptcy. If you are not making much money, it can be pretty simple.
This article in Wikipedia has an example of a simple income statement–that’s all you need. and then some complicated ones. I think it was pretty helpful.
(Wikipedia also says that “income statement” is American English, and “profit and loss” is British English. Around here in Northern Virginia anyway, the bankruptcy trustees call it “profit and loss.”)
If you have a bookkeeper, or keep track of stuff on Quicken, this is a snap. If you just throw your receipts in a drawer, then you will have to take some time to put this together.
Here’s a simple Profit and Loss for Bob Weed’s Lawn Service. You can use this as a guide.
January 2012
Gross sales $3000
Expenses
Wages, paid to others $550
Draws, paid to you 1,000
Utilities 60
Rent 300
Office supplies 50
Insurance 90
Advertising 50
Phone 50
Travel 50
Interest paid 20
Taxes & licenses 50
Total Expenses (2,270)
Net Income 730
Bringing you the most up-to-date news, tips and blogs throughout the web. Here’s your Bankruptcy Update for March 21, 2013 Chinese Solar Panel Giant Is Tainted by Bankruptcy Speed Into Bankruptcy With the World’s Most Powerful Electric Outboard Motor Ruling cracks open asbestos bankruptcy records
Ross Boydston, 57, of Creston, Nebraska, pleaded guilty this week to a federal charge of bankruptcy fraud. He admitted he was involved in a scheme that included selling livestock he pledged as collateral without telling the lender about proceeds received from the sale. He also failed to mention the transaction had occurred while in bankruptcy. [...]
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