• Can Bankruptcy Discharge Tax Debt?

    Bankruptcy can help Chicago businesses and individuals that cannot pay their debts. Three common bankruptcy codes set the rules, and each deal with debt differently. However, whether you file Chapter 7, Chapter 11 or Chapter 13 depends on how much you will be required to pay, and which debts are forgiven. At Benjamin Brand, LLP, we assist clients in filing bankruptcy and finding the best solution to save your home.

    Credit Karma reports that most unsecured debt can be discharged, such as personal loans and credit card debt. Other forms of debt, such as Chicago child support, alimony and student loan debt, cannot be excused. Mortgages and car loans may or may not be discharged, depending on the type of bankruptcy you file. Tax debt is a bit more complicated.

    Requirements for Discharging Tax Debt

    The court considers three factors for discharging tax debt:

    • Taxes must be assessed within 240 days before you file.
    • Bankruptcy cannot forgive taxes until three years after they are due.
    • A tax return must be filed for the taxes owed at least to years before filing for bankruptcy.

    Even though bankruptcy is supposed to help you get a fresh start, it can affect more than your credit scores. If you tried to avoid Illinois or Federal taxes, they and any applicable penalties are not discharged. Income taxes can be forgiven under very limited circumstances. It should be noted that even if taxes are discharged, there may be tax liens that must still be paid. In situations where the lien is recorded before you file bankruptcy, it may be impossible to sell your property until the debt is settled.

    Filing Returns After Filing Bankruptcy

    Although you may be able to deal with past tax debt through filing bankruptcy, it does not protect you from current or future IRS obligations. Tax returns are due as usual, either on time or by submitting an extension. Taxes and bankruptcy are both complex issues. You don’t need to tackle them alone. Working with a Chicago attorney can help you choose the right type of filing for your needs.

    Located in the Heart of Chicago’s West Loop

    Our West Jackson Blvd office is convenient to 1000 W. Adams Condo Association, Brooklyn Boulders Chicago and a broad range of retail locations, so you can make an appointment to discuss your situation and still finish your errands. Contact us today or call 312-853-3100.

  • Avoid 5 Common Mistakes and Pay for College in 2020

    If you are the parent of a student starting their Senior year of high school in Chicago, you may be panicking about how to pay for college in 2020. One of the questions parents ask more often now than in the past is, “Will my personal student debt affect my child’s ability to get student loans?” On the upside, the short answer is typically “No.”

    On the downside, if you are struggling with loan payments while still making ends meet, you may need some help of your own. Contact the team at Benjamin Brand, LLP Attorneys at Law to learn more about how we can provide options that make dealing with your federal student loan debt in Chicago easier.

    While the status of your student loans does not affect your child’s eligibility for student financial aid, other issues affect your ability to pay for his or her college tuition. Here are five tips to help you avoid some of the most common mistakes parents make when helping their students plan for college.

    Mistake 1: Savings account for college in the student’s name instead of yours

    If the account is in your child’s name, it will be reported as a student asset on the FAFSA. This reduces eligibility for need-based aid by 20% of the account’s net worth. Depending on the type of account, you may be sheltered by the financial aid formula which can help you pay for college in 2020.

    Mistake 2: Failing to file the Free Application for Federal Student Aid to Pay for College in 2020

    You may assume that your student will not qualify for need-based aid. That is not necessarily true. The financial aid formulas are complex and virtually impossible to predict. They take into consideration numerous factors, including whether you have another child in college. Retirement plans and net home equity are omitted from the process.

    Mistake 3: Waiting to file the FAFSA

    Students who submit their applications in January, February and March often receive considerably more aid than those who file later in the year. As much as double the amount. Some schools and states have very early deadlines and award grants on a first-come, first-served basis until they are out of money. Don’t wait to file tax returns or the admission letter. Apply as soon as possible. You can update all other information later.

    Mistake 4: Disregarding scholarships

    Most families wait until the last half of the student’s senior year to start the hunt for scholarship funds. By then, many of the application deadlines have passed. There are also scholarships awarded when students are in lower grades. The sooner you start searching for money to pay for school, the more likely you are to make it an integral part to help pay for college in 2020 and keep federal student loan debt to a minimum.

    Mistake 5: Choosing a school based on the aid amount vs. net price

    To get the net price of college, subtract the total of all gift aid (i.e., grants, tuition waivers, scholarships and other aid that does not need to be repaid) from the total college costs. This is the amount that the family will have to contribute to cover college costs. For example, your student is looking out of state, and the school costs $50,000 per year. They offer a merit-based scholarship for $5,000. The net price is $45,000. There are many Chicago schools which may offer equivalent scholarships, and you would be able to take advantage of in-state tuition. This could bring the net price down significantly.

    The general rule of thumb is that the student loan amount shouldn’t be more than a single year’s salary. Although that may not be practical in your situation, it is a place to start planning. When looking at schools, don’t completely disregard the costs because your student has his or her heart set on going there. If it drains all the family’s resources, or they drop out of school because they can’t come up with enough money, they will carry the debt for years, possibly decades.

    Contact Us Today

    Is your federal student loan debt in Chicago making it difficult to buy a home, go on vacation or finance a new car? Contact us today or call 312-853-3100. Located in the West Loop, we are easily accessed from I-90/I-290. The Benjamin Brand, LLP office is close to the University of Illinois at Chicago as well as the UIC-Halstead and Racine Metro stations. If you live or work in Little Italy, Greektown or the Near West Side, our office is nearby.

     

  • Senior Citizens and Chapter 7 Bankruptcy

    It used to be that people grew up, got jobs, raised families and happily retired. If you are like many older residents in Chicagoland, life has gotten more complicated than that. Your savings and Social Security payments may not be enough to cover your needs. Our team at Benjamin Brand, LLP, has the experience to assist clients when bankruptcy becomes the best option to get out from underneath overwhelming debt.

    For most seniors living in Chicago’s Lower West Side, Near West Side, East Garfield Park and West Town, bankruptcy is not one of the first options considered. However, according to the Washington Post, increased health care costs and reduced income result in more Americans filing for bankruptcy than ever before. It can help eliminate debt and provide protection from creditors so that they cannot seize personal assets or garnish wages.

    Protection Under Chapter 7 Bankruptcy

    Medical debt is one of the primary reasons people 65 and older file for bankruptcy. Chapter 7 can significantly decrease the amount due and help make payment plans manageable. Most retirees depend on retirement accounts throughout the golden years.  Federal law protects the following types of accounts from creditors:

    • Profit sharing plans
    • IRA’s
    • 402(b)s
    • 401(k)s
    • Defined benefit plans

    Social Security income is also protected under Chapter 7. While not everyone who files for bankruptcy qualifies, if the bulk of your funds come from SSI, you likely will.

    Alternatives to Bankruptcy

    Bankruptcy can cause a lot of changes in your life. Take the time to explore alternatives, such as interest debt reduction, deferment of debt and renegotiation of secured loans to find out if they can provide enough relief. If it looks like Chapter 7 is your best option, retaining an attorney can help ensure the process goes smoothly.

    You worked hard to get to your golden years. Filing for bankruptcy in Illinois can help protect your home, vehicle and other assets, lifting a heavy financial burden from your family. Visit our webpage or call us at 312.853.3100 to schedule an appointment.

  • Tips to Take Control of Your Student Loan Debt

    When you decided to go back to college or start your degree in the Chicago area, chances are you took out student loans. If you are like millions of Americans, you have finished school, but are saddled with overwhelming student loan debt.  Not only have your financial conditions not improved, but you are stressed about the way the debt affects other aspects of your life from buying a car to qualifying for a mortgage. At Benjamin Brand, LLP, we often help clients in the West Loop address financial issues, from bankruptcy and student loan debt to mortgage restructuring and foreclosure.

    Understand your Student Loan Debt

    If your life is full, juggling family, work and friends, it’s tempting to avoid dealing with student loans and other financial issues. Take the first step toward escaping student loan debt by analyzing the information in the emails or envelopes delivered by USPS from your student loan servicers. Here are some tips to reclaim control of your school debt by getting to know it a bit better.

    Start by writing everything down or entering it into a spreadsheet. Sometimes it helps to be able to see everything laid out.

    • How many student loans do you have? Are they public or private? The federal government backs public loans, but each type has different borrower protections. Take some time to read the fine print and understand what they are.
    • What are due dates and minimum payments for each? This can help you build a realistic monthly budget that incorporates the amounts.
    • What is the repayment timeline for each loan? Most default to a 10-year plan, but if you can pay them off sooner, you’ll pay less in interest over the loan’s term. Make sure there are no prepayment penalties.
    • What is the balance and interest rate for each? This will tell you how much you are estimated to pay over the life of the loan. It can also help you decide if refinancing the loan is a viable option.

    Because student loans are installment loans instead of revolving debt, like credit cards, credit scoring models are generally more forgiving. Make on-time minimum payments to give your credit score a boost and limit credit card use. Maxing them out hurts your score.

    Consult with a Chicago Attorney Near Me

    Our team can help you make sense of your student loan paperwork and work with you to develop a plan to get your financial life back on track. Are the default minimum requirements out of the question?  We will discuss which repayment plans work best for your budget and current situation. Deferment may sound good, but the downside is an inflated balance due to interest fees. Contact us today to schedule an appointment and learn more about how we can help you take back control of your student loans and move on with your life.

  • Chapter 13 and Child Support

    When filing Chapter 13 bankruptcy in Chicago, it is critical to comprehend how child support payments and any past due balances are impacted. Unlike Chapter 7, where assets are liquidated to pay off these debts, Chapter 13 requires you to bring current all payments in arrears.

    This is because of a public policy determination by Congress to make sure that a child’s wellbeing is not jeopardized due to missed child support. This decision adds these debts to a special category called Priority Debts, which are paid off before other bills and takes precedence over others in the category such as taxes.

    However, this also means that filing for Chapter 13 bankruptcy in Chicago will not relieve you of these debts or discharge your obligations. It is extremely important that your payments continue to be made during the entire Chapter 13 repayment plan.

    Curing past due balances

    A benefit of Chapter 13 bankruptcy in Chicago is that it allows you to cure past due child support. To ensure the balance is paid off, available funds to pay bills may be applied unequally between your child support balance and ongoing payments. This may result in lower payments to non-priority debts like credit cards, medical bills and general debts.

    When you file a Chapter 13 bankruptcy in Chicago, an automatic stay is issued to all creditors. This stay does not stop efforts to collect child support debt using property that is not considered to be included in your bankruptcy estate. Different from Chapter 7, Chapter 13 includes your earnings in your bankruptcy estate. Due to this, a creditor cannot circumvent the bankruptcy to collect child support debt. Instead, they must attain permission from the court (through a motion) prior to them initiating any action to collect. Most often, this filing affects your earnings after bankruptcy, so meeting these obligations while under the repayment plan is of great advantage to you. If you are making plan payments on time and curing your pre-bankruptcy child support balance while in Chapter 13 bankruptcy in Chicago, you do not need to worry about a separate action to collect money from you outside of bankruptcy.

    Remember, Chapter 13 bankruptcy in Chicago only allows you to bring current your past due child support balance through your repayment plan. This means you must continue to make your regular payments during your filing. If you fail to pay child support during your Chapter 13, the court can lift the automatic stay and allow creditors to use your assets regardless of whether or not they are included in the bankruptcy estate.

    You are required to be current on child support payments to receive a discharge on any other debts

    You cannot receive a Chapter 13 discharge on any of your debts until you certify that you are current on all domestic support obligations, including child support when you complete your Chapter 13 plan. If you miss any child support payments during your filing, you must pay them off before you can receive your discharge.

    There may be other concerns when filing a Chapter 13 bankruptcy in Chicago as it pertains to family law and its impact related to a filing. Contact me now to have your scenario reviewed and see how I can help you determine how to file for best results.

     

  • Child Support in Chicago Chapter 7 Bankruptcy

    Filing for Chapter 7 bankruptcy in Chicago can be an uncomfortable experience, especially if you have child support payments. Making these payments on time is extremely important, but if you carry a past due balance and are filing a Chicago bankruptcy, they have a greater impact.

    Typically, when Chapter 7 is filed, an automatic stay is issued that stops most collection activities from creditors. However, child support is exempt from this rule. This financial commitment does not get discharged, postponed, suspended or changed in bankruptcy even if it is Chapter 7. It must continue as the obligation states. In fact, filing may not stop any court proceedings or lawsuits that may be in progress regarding the payment default.

    Why Can’t Child Support Be Discharged in Chapter 7?

    In Chapter 7, there are several types of “priority debts” which are not dischargeable in Chicago bankruptcy. Child support payments receive special treatment because it is considered to be one of these priority debts. This means that any outstanding commitment of this type will survive the bankruptcy and will not eliminate or change your obligation to make ongoing payments or catch up on any in arears. You must continue to make the required installments on time.

    A Hidden Benefit of filing a Chapter 7 with Child Support

    If you have outstanding child support debt or cannot afford to make the required payments, Chapter 7 Chicago bankruptcy may have a silver lining. Since this court-mandated payment is prioritized over other debt, such as credit cards, those amounts may be wiped out leaving you enough cash to become current on the financial obligation to your child. Additionally, this requirement is at the top of the priority list, so it is paid even before other debts such as back taxes, making sure your children get precedence.

    Court Mandated Payments are Prioritized Debt

    If you have assets that are nonexempt, the Chapter 7 trustee appointed to your Chicago bankruptcy can liquidate them and use the proceeds to pay creditors. However, how the trustee distributes the proceeds depends on several criteria such as the amount owed and type of debt. Priority debt (child support), is paid before general unsecured debts (medical bills, credit cards, or car loans).

    As a result, filing for Chapter 7 in Chicago can assist a child support creditor in collecting past due payments without having to engage in a separate legal action. If you are considering bankruptcy and have financial obligations mandated by the court, contact me today to learn how I can work with you to find the best filing solution.

  • Getting help with Federal Student Loan debt

    Federal student loans have several options to assist people with paying them off. However, typically people are unaware of these options until they are in payment trouble. This is where I can help by getting people out of wage garnishment, delinquency, default, assist in lowering monthly payments, qualifying for forgiveness programs and more.

    Federal Student Loan Repayment Plans

    There are nine different federal Student Loan Repayment Plans. Each one has a different payment calculation method and uses different logic to determine how they work. Several plans are based on income such as IDR, New IDR, ICR and IBR. Other options are balance-based. The plans are as follows:

    • Standard Repayments
    • Extended Repayments
    • Graduated Repayments
    • Extended Graduated Repayments
    • Income-Based Repayments
    • New Income-Based Repayments
    • Income Contingent Repayments
    • Pay-As-You-Earn
    • Revised-Pay-As-You-Earn

    What to consider when choosing a plan

    There are many variables you should consider when selecting which of the Student Loan Payment Plans you want. These variables include:

    • How long has it been since departure from school?
    • What are the current annual earnings?
    • What is future earning potential?
    • Are there significant purchases expected in the future like a house, wedding, etc.?
    • What life-altering events are planned such as having children?
    • What other financial responsibilities are there?

    The answers to the above questions make a difference because some repayment plans put you on a gradually increasing payment regardless of future earnings growth. Other federal Student Loan repayment Plans dictate an amount that increases as your income increases. An annual review of income is required and evaluated. When contemplating these options, I can help you understand the ramifications of each plan and any affects on short and long term goals. Once we decide which program works best, I can complete the necessary documents, file them per procedure and help maintain the plan if yearly recertification is required.

    There are more options for working with federal student loans which include:

    • Forbearance and Deferment
    • Defense to Repayment
    • Federal Student Loan Consolidation
    • Federal Student Loan Rehabilitation

    Not all of the repayment plans are offered to everyone with some restricted to certain loans or can only be used once. Every program has a different impact on:

    • Public Service Loan Forgiveness
    • Teacher Forgiveness
    • Administrative discharges

    Schedule a consult with me to review and get the right repayment plan.

  • What is Bankruptcy in Chicago (and should I file)?

    Bankruptcy in Chicago is a legal process used to eliminate a variety of debts when a person is not able to afford payments. It is not always calculated or based on debts being larger than assets. It is more often related to the ability for a person to repay the debts based on income after paying necessities such as groceries, utilities, children needs, etc.

    Considering filing bankruptcy in Near West Side, Little Italy and Greektown?

    Ask yourself these questions:

    • Are credit cards used to pay for necessities?
    • Are minimum payments the only way payments can be made on your debts?
    • Are the debt amounts owed uncertain?
    • Do collection companies call repeatedly?
    • Does debt consolidation seem like the only answer?

    If the answer to at least one of these questions is yes, filing for Chapter 7 or Chapter 13 bankruptcy may be the best option.

    How do I know when to file Chicago bankruptcy?

    Many individuals feel filing for bankruptcy in Chicago is a scary experience and something a person should never do unless there are no other options. This fear is unnecessary and can lead to significant harm by not taking action. Filing for bankruptcy in Chicago can be refreshing as a person becomes unburdened with the immense financial pressures and receives an opportunity for a new beginning. When determining whether to file for Chapter 7 or Chapter 13 bankruptcy in Chicago, there are several actions a person should take.

    How do I declare bankruptcy in Chicagoland?

    The first step regardless of whether debts and assets have been calculated is to call me for a free consultation where we can discuss the types of bankruptcy in Chicago. Chapter 7 and Chapter 13 bankruptcies are typically the most filed but have different timelines, benefits and procedures. Chapter 13 bankruptcy has several protections that Chapter 7 does not but takes longer to complete. Contact me today,  and I will assist with selecting and processing the best bankruptcy option.

     

  • Stopping Federal Tax Intercept & Keeping Your Tax Refund

    Federal Tax Intercept occurs when the Internal Revenue Service takes (intercepts) a tax refund you think you are getting in order to pay off government debt.  Federal Student Loans are one such qualifying government debt that can lead to a tax intercept. Often, the IRS will not notify you in advance of the intent to have your tax refund intercepted. You typically find out the hard way when you realize you did not receive your tax refund. Most often, you have received several notices from collection agencies or loan servicers well in advance which may include a warning that a tax intercept is possible.

    How Do I Stop A Federal Tax Intercept?

    Stopping a Federal Tax Intercept is not easy, but it can be done. The first thing is to get ahead of it by taking action before filing your tax returns. Most often, it requires preparation of several documents, which can be confusing. A trained Student Loan Lawyer like Benjamin Brand can create a strategy with you, prepare and file the necessary documents. Consolidating loans, performing rehabilitation or changing your current arrangement to an Income Driven Repayment plan before things get bad can help to avoid or resolve the default before the federal tax intercept scenario can occur. Some variables that come into consideration when preparing a strategy include:

    • Marital Status
    • Child Support and Alimony
    • Income type and source

    Does My Spouse Lose Tax Refunds as Well?

    Not necessarily. It depends on the filing status with your spouse. If you file jointly, your spouse has generated enough income that part of the tax refund is theirs and you incur a Federal Tax Intercept, your spouse does have an option.  Your spouse can file the Injured Spouse form with the Internal Revenue Service and receive a refund in a proportional amount your tax return justifies as their portion of the refund.  This is somewhat discretionary on the part of the IRS as it does not have to agree with the amount you feel your spouse is due. However, the IRS is most likely to go with the refund amounts calculated directly from the tax return. If you do not file joint tax returns, your spouse will most likely not have their tax refund intercepted due to your federal student loan default.

  • Do You Have Federal Student Loans in Bankruptcy in Chicago?

    Federal Student Loans are not the same as other debts when in bankruptcy.  In fact, if you are considering Chapter 13 bankruptcy in Chicago, there are ways to have your federal student loan payments count towards IDR. Do you know how to negotiate this? At Benjamin Brand attorney in Chicago, they do. Ask them about your IDR payment and how to get on an Income Driven Plan if you are not already on one. These plans can lower your monthly payment and lead to alleviating you of any remaining balance after 20, 25 or 30 years depending on your scenario.

    How low can my payment be while in bankruptcy

    Federal Student Loans can be modified in bankruptcy in Chicago to be as low as $0 or to take priority discriminately meaning that more money goes towards them lowering your payment to credit cards and other debtors so you get more benefit for the federal student loan. This requires modifying the payment schedule you submit with your Chapter 13 bankruptcy through your attorney in Chicago and completing the necessary documents as needed. This is important because your federal student loan is not discharged in bankruptcy and you want your payments during bankruptcy to count towards the final payment requirement. Since your bankruptcy can take up to 5 years, you don’t want that period of time to be disqualified.

    This does not mean your Federal Student Loan can get all the money in the plan instead of other debtors while in a Chapter 13 bankruptcy, but bankruptcy in Chicago can account for this disproportionate payment if you use the right bankruptcy expert. Benjamin Brand is one of the rare attorney in Chicago that can do this for you. They know the process and techniques to get your IDR payment to count and have the payment adjusted to be acceptable to the courts. This process is not just about submitting your financial plan but proper negotiation with the trustee.

    What is a Trustee

    A Trustee is important to the Chapter 13 bankruptcy in Chicago as they are a court-appointed representative who has decision making power to keep the bankruptcy plan fair for all involved.  Being able to negotiate with the trustee takes talent and experience as well as an understanding of how everything in bankruptcy relates. A good attorney in Chicago knows this and can maneuver to get you the best financial options in bankruptcy.

    Chapter 13 Bankruptcy in Chicago

    When filing for bankruptcy in Chicago, you want to make sure you are in Chapter 13 in order to take advantage of the federal student loan payment plan options.  A chapter 7 bankruptcy offers you little protection or advantage towards your federal student loan.