Chicago Bankruptcy Lawyer Warns of Tax Complications After Filing

If a person files bankruptcy, hopefully it is a once-in-a-lifetime experience. Therefore, the process is often intimidating as people have no previous experience with a personal bankruptcy. Lots of people are not sure how filing their personal income tax returns will change after filing a bankruptcy and what they need to claim and what they do not.

According to IRS Publication 908, Bankruptcy Tax Guide, the Bankruptcy Code requires anyone who files bankruptcy to file all tax returns, or at least file for an extension. If you have already filed bankruptcy, you will also need to file an estate tax return, or Form 1041.

“Taxpayers who have made the filing for a bankruptcy and are still currently in the process usually make the mistake of filing their tax return as they normally would,” says Joshua S. Barger, vice president of tax services for Foundation Financial Group. “This is not the process that should be taken.”

Tax laws differ depending on whether you filed a Chapter 13 or Chapter 7 bankruptcy . If you have filed bankruptcy or are considering doing so, please contact our firm for a free consultation.

Benjamin Brand Services- Chicago bankruptcy attorney .

Q&A With A Chicago Bankruptcy Attorney

Q:         I recently lost my job, and my wife has been out of work for almost a year. I believe I may need to file for bankruptcy , but I am worried about losing my home and vehicles. Is it possible to file for bankruptcy and keep both?

A:     Great question-these are common questions for people that are considering filing bankruptcy. There are two different types of consumer bankruptcies-a Chapter 7 and a Chapter 13.

In a Chapter 13 bankruptcy, you will organize a plan to repay some of your debts. You and your creditors will agree to a “financial reorganization,” which is supervised by a bankruptcy court. A Chapter 7 bankruptcy , on the other hand, is when an individual liquidates non-exempt assets to repay creditors. A Chapter 13 will allow you to keep your car and house, although both types will stop a foreclosure.

A Chapter 13 bankruptcy can protect your house and car, but you need steady income. A Chapter 7 will wipe out your debt, but you may need to surrender you house, your car or both.

Bankruptcies are different for each individual and family, seeing as how everyone has different circumstances and financial obligation. Please contact our firm for a free consultation if you are struggling with debt.

Benjamin Brand Services- Chicago bankruptcy lawyer .

Repairing Your Credit after Bankruptcy

For people who have filed a Chapter 13 or Chapter 7 bankruptcy , opening up another line of credit seems counterintuitive, but experts argue that it is important that you reestablish a good credit rating. Your credit takes a significant hit when you file for bankruptcy, and it will take some time and responsible use of credit to improve it to where it was before you filed.

Personal bankruptcy will stay on your credit report for up to 10 years. If you don’t take steps to improve your credit, your rating will not improve–even after the bankruptcy is no longer on your credit history.

Research credit cards before you take one out. Make sure to choose one that reports to all three of the major credit reporting agencies each month. Be sure to make all your payments on time-a late payment will hurt your credit more than it did before you filed. Also keep your balance low, experts suggest using no more than 10 to 15 percent of your available credit.

Please contact our firm for a free consultation.

Benjamin Brand Services- Chicago bankruptcy attorney .

Bankruptcy Filings Down in 2012; Chicago Bankruptcy Attorney Hopes it is Sign of Improving Economy

Personal bankruptcy filings in 2012 have decreased from 2011, according to statistics from the United States courts. The number of personal bankruptcies in the one year period, ending on September 30, dropped significantly. The number of Chapter 7 bankruptcy filings dropped from 1,036,950 in 2011 to 874,337 in 2012-a 16 percent decrease. Chapter 13 bankruptcies dropped from 417,530 to 375,521, down 10 percent.

Chapter 7 bankruptcies still account for approximately 67 percent of all bankruptcies. The states with the highest number of filings per capita are Nevada, Tennessee and Georgia. The lowest are Alaska, District of Columbia and North Dakota.

Consumer default rates have also continued to decline over the same time-down 1.5 percent from a year ago.

These are signs of a recovering economy, and hopefully the trends will continue into 2013. Despite these improving numbers, many Americans are still struggling with debt, and bankruptcy could be a viable option. Please contact our firm for a free consultation.

Benjamin Brand Services- Chicago bankruptcy lawyer .

Chapter 7 and Chapter 13 Bankruptcies

Personal bankruptcy is a difficult process for someone to go through, but many people are scared because they simply do not know what the process is like and how it will affect their lives. Gathering information about bankruptcy and what it would mean for you and your family helps to aleviate some of the uneasiness.

The two types of personal consumer bankruptcies are Chapter 7 bankruptcy and Chapter 13 bankruptcy. In a Chapter 7, the debtors are able to discharge all or part of their debt. In a Chapter 13, debtors agree to a payment plan to repay part of all of their debt.

During a Chapter 7 bankruptcy, you will likely be required to liquidate assets and then turn them over to your creditors first. This includes money in your checking and savings accounts. Some of your assets may be exempt in the bankruptcy process for a Chapter 7-laws vary by state. Generally after you liquidate your non-exempt assets, they are divided between your creditors and the rest of your debt is discharged. However, in the majority of Chapter 7 bankruptcies, most of people’s assets are exempt and therefore do not need to be liquidated.

In a Chapter 13 bankruptcy, individuals organize a payment plan to repay creditors. The individual will submit the plan to the court for approval and began making payments to the trustee, who then pays the creditors.

Bankruptcy is different for each individual, and there are many variables in each case. Please contact our firm for a free consultation.

Benjamin Brand Services- Chicago bankruptcy attorneys .

Four Things to Remember About FTC Rules on Debt Relief

According to an October 23, 2012 WVTM-TV article, it has been two years since the Federal Trade Commission (FTC) implemented new rules regulating the debt relief industry. WVTM noted that consumers are carrying $864.2 billion in revolving debt, and the average American with credit card debt owes more than $15,500. The Federal Reserve says the total household debt in the United States is $11.4 trillion.

While the FTC changes were good for the many consumers who need help with debt, WVTM pointed out four things to know when seeking debt relief:

  1. Know what debt settlement is – Debt settlement plans can sometimes reduce total principals owed by about half, and the programs generally take two to four years to resolve a consumer’s debt. While WVTM wrote that debt settlement “can be helpful for individuals who are unable to make minimum payments on credit card debt ,” consumers must remember that debt settlement companies often engage in abusive practices. These abuses led Illinois lawmakers to pass legislation in 2010 that banned charging upfront fees for helping consumers negotiate relief from creditors. In July, one Chicago based firm agreed to refund $2.1 million after Illinois Attorney General Lisa Madigan said the lawyers were a “front” to collect hefty fees from desperate consumers.
  2. Understand the FTC rules – The FTC rules “require debt relief companies to renegotiate, settle or reduce the terms of at least one debt, with the consumer’s agreement, before collecting fees from the consumer.” (WVTM.) The FTC rules also define the advertising claims these companies can make. WVTM pointed out that debt settlement companies need to disclose how long it should take to see results, program costs and any negative consequences that may result.
  3. Know where to finding a debt settlement provider – WVTM noted that it remains legal for debt settlement companies and law firms that do not participate in telemarketing to charge up-front fees. The article recommended looking for a firm that is a member of the American Fair Credit Council (AFCC), which “enforces the strictest code of conduct in the industry,” according to WVTM.
  4. Proceed with caution – “Consumers should look for a firm that has an established, long-term record of successfully getting results for customers,” WVTM said. The article cautioned that impatient debt counselors, high-pressure sales tactics and claims that sound too good to be true are all “warning signs of firms that should be avoided.”

If you are among the many households carrying thousands of dollars in revolving debt, you should know that filing Chapter 7 bankruptcy may allow you to discharge all of your unsecured debt in a matter of months. You can also catch up on late mortgage payments or reduce your mortgage principle by filing Chapter 13 bankruptcy . Both chapters can be safer alternatives to debt settlement programs, and our Chicago bankruptcy lawyers can tell you which plan would work best for you when you contact our firm at (866) 930-7482 or fill out the form on this page.

Benjamin Brand Services – Chicago bankruptcy attorneys

Obamacare May Reduce Some Large Medical Bills, But Not Everybody Can Be Protected

A Harvard study published in 2005 found that nearly two-thirds of bankruptcies were linked to illnesses and medical bills . “The cost of health care now causes a bankruptcy in America every 30 seconds,” President Obama told a March 2009 summit that marked the starting point for the Patient Care and Affordable Care Act (ACA), commonly referred to as Obamacare. “By the end of the year, it could cause 1.5 million Americans to lose their homes.”

The US Supreme Court’s decision to uphold the constitutionality of the health reform bill has given many families hope that they will not find themselves going bankrupt because of medical bills. However, a Salt Lake Tribune story published on October 22, 2012, noted that “the pioneering reform law in Massachusetts upon which federal reform was built may have kept debt in check, but it hasn’t solved it.” The Tribune reported that two surveys have shown no significant change in the percentage of residents struggling with medical debt.

Mark Rukavina, a former consumer advocate and founder of a hospital advisory group, Community Health Advisors in Massachusetts, told the Tribune that medical debt is a problem that affects everyone but the extremely wealthy, and it is a matter of bad luck for the people who incur it. “Health reform will probably succeed at reducing many of the large bills,” Rukavina told the Tribune. “But there will still be out-of-pocket costs that eat into people’s budgets.”

Mark Rieger, a vice president at Gateway EDI, a St. Louis-based company that sells software to help doctors better manage their bills, told the Tribune that it used to be that no more than 9 to 10 percent of a physician’s income came directly from patients. In some parts of the country, that figure is now close to 20 to 30 percent. However, Rieger told the tribune that health care providers “are only about 50 to 60 percent successful on collecting on patient responsibility.” This has led to more clinics and hospitals becoming “less tolerant of past-due balances.”

Many ACA provisions will not go into effect until 2014, but you should take action now if your family is struggling because of medical expenses. If you file Chapter 7 bankruptcy , it is possible to wipe out your medical bills in a matter of months. If you enter a Chapter 13 repayment plan, you may be able to have your medical debt discharged without having to pay the full amount. If you want to know which option would work best for you, contact our firm at (866) 930-7482 or complete the form on this page to see how our Chicago bankruptcy lawyers can help.

Benjamin Brand Services – Chicago bankruptcy lawyers

More Consumers Refuse to Be Cleaned Out by ‘Messy Business’ of Debt Collection

Dr. Chris DeRitis, a consumer credit expert at the economic research and consulting firm Moody’s Analytics, told the Times-Tribune of Scranton, Pennsylvania, that all debt collection is under the microscope. “A lot of this debt gets traded three, four or five times,” Dr. DeRitis told the Times-Tribune for the story published on October 21, 2012. “It’s a messy business.”

The Times-Tribune noted that many collection agencies that buy debt do not have all the documentation to support the original agreement, meaning many companies are filing debt-related lawsuits with “insufficient records, faulty documents and questionable claims.”

“Some companies are doing this more responsibly than others,” Dr. DeRitis told the Times-Tribune. “There are cases of fraud where unscrupulous debt collectors put charges on people’s accounts.”

Allegheny County Judge R. Stanton Wettick, who has presided over “hundreds of cases in which banks sold delinquent credit card accounts to debt buyers who filed litigation to recover the money,” told the Times-Tribune that sometimes the affidavits do not appear to be signed by the right people. The story noted that debt collectors frequently prevail in court because many defendants in credit card suits never contest the action. “If 100 get filed, 75 turn into default judgments,” Judge Wettick told the Times-Tribune.

However, the Times-Tribune also pointed out that because default judgments enable debt collectors to freeze a consumer’s bank account or garnish wages to recover obligations, more consumers are now challenging the evidence. “For a lot of companies now, if someone shows up and contests it, it may not be worth their while to pursue it,” Judge Wettick told the Times-Tribune.

If you are being harassed by debt collectors about your credit card debt , filing Chapter 7 or Chapter 13 bankruptcy will end those phone calls. You may be able erase your credit card bills and other unsecured debt by filing Chapter 7 bankruptcy , or you could pay back a fraction of what you owe through a Chapter 13 plan. Contact our firm at (866) 930-7482 or complete the form on this page to have our Chicago bankruptcy lawyers determine which plan would work best for you.

Benjamin Brand Services – Chicago bankruptcy attorneys

‘Rich Dad, Poor Dad’ Author Files for Chapter 7 Bankruptcy

This video shows Robert Kiyosaki’s appearance on Oprah Winfrey’s talk show in 2000 following the publication of his successful financial self-help book, “Rich Dad, Poor Dad.” On October 12, 2012, Business Insider reported that Kiyosaki filed for Chapter 7 bankruptcy protection after losing a nearly $24 million court judgment to The Learning Annex, a private adult education school based in New York.

Business Insider described The Learning Annex as being “one of Kiyosaki’s earliest backers,” but the personal finance guru never paid Annex its rightful share after it arranged “the speaking engagements and platform that led to his massive success.”

“I took Kiyosaki’s brand and made it bigger. The deal was I would get a percentage, and he reneged,” Bill Zanker, The Learning Annex’s founder and chairman, told the New York Post. “We had a signed letter of intent. The Learning Annex is the greatest promoter….Oprah believed in him, and Will Smith believed in him, but he didn’t keep his promise to us.”

As Business Insider noted, Kiyosaki “probably won’t feel the pinch in his wallet” since “Forbes pegs his net worth around a cool $80 million.” However, we highlight famous bankruptcies like Kiyosaki’s to illustrate that many successful individuals experience financial hardships. If you are overwhelmed with debt because of late mortgage payments or astronomical medical bills, it is important for you to understand that you are not alone.

The good news is that filing Chapter 7 or Chapter 13 bankruptcy can help you get a fresh start. Contact our firm at (866) 930-7482 or complete the form on this page to let our Chicago bankruptcy lawyers see how we can help.

Benjamin Brand Services – Chicago bankruptcy attorneys

Survey Shows Happy Holidays Ahead for Seasonal Workers

This September 2012 video from WPRI-TV and a story published in the Chicago Tribune on October 16, 2012, shared two observations: there will be more seasonal or holiday employment opportunities this year than in years past, but the time to be looking for these jobs is right now.

According to the Tribune, an annual holiday hiring survey by Snagajob, the nation’s largest hourly employment network, found that 63 percent of year-end hiring managers intend to add seasonal workers this year. That is up 12 points from last year and the highest percentage since before the recession started in 2007. Many of the nation’s largest retailers will be hiring tens of thousands of holiday workers, with “a 10 percent increase from last year for many,” according to the Tribune.

There is more good news, though. The Tribune reported that that the pay for these seasonal jobs is likely to be “a tad better,” increasing from an average of $10.60 an hour last year to $10.70 this year. Additionally, about half of the seasonal positions are expected to offer full-time hours. According to the Tribune, that is the highest share in the survey’s five-year history. The Tribune also noted that you can help your odds of getting a job by being willing to work nights and weekends.

Money becomes tight for thousands of individuals during the holidays, and the stress can be even more overwhelming for families that are already struggling to pay their bills. You should know that filing Chapter 13 bankruptcy could help you avoid foreclosure so you do not have to worry about where you will be celebrating Christmas. By filing Chapter 7 bankruptcy , you could erase unsecured debt like credit card bills.

However, timing is critical and it could be in your best interest to take action before making a bad situation worse by accumulating more holiday debt before filing. Our Chicago bankruptcy lawyers can help you determine when is the best time to file when you contact our firm at (866) 930-7482 or fill out the form on this page to let our Chicago firm review your case.

Benjamin Brand Services – Chicago bankruptcy attorneys

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