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Bankruptcy Law Blog

How tax debt is handled in bankruptcy

Florida residents who file for bankruptcy may have some of their tax debt discharged. This outcome is far more likely for those who file for Chapter 7 bankruptcy, and the tax debt must be at least three years old. While income taxes may be discharged, payroll taxes as well as penalties for fraud must still be paid. However, penalties on tax debts that are discharged are eligible to be discharged as well.

A valid return must have been filed by the taxpayer for the particular that has no information on it meant to defraud the IRS. It also has to have been filed at least two years before the date on which bankruptcy was filed for. A taxpayer must not take any steps that could be construed as willful tax evasion. For instance, an individual who changes his or her Social Security number or submits a blank return may be committing tax evasion. Withdrawing money from a bank and attempting to hide it may also constitute tax evasion.

How the CARD act impacts consumer lending

The Credit CARD Act was passed in 2009 in response to allegations of consumer abuse within the credit card industry. It was designed to provide greater protections to those who used credit cards or are applying for one in Florida or anywhere else in America. Specifically, the legislation said that banks were not allowed to raise interest rates within one year of a new account being opened with a few exceptions.

If a credit card issuer does plan to raise a borrower's interest rate after one year, the borrower must be notified at least 45 days in advance. Furthermore, the rate increase applies only to new purchases. Within that 45-day period, cardholders have the right to cancel their agreements without it counting as a default. Credit card issuers may not force a consumer to pay off his or her full balance upon cancellation.

Defending a student loan default

When a borrower of a student loan falls behind on the payments and remains delinquent for a period of nine months, the student loan enters default. Because the Department of Education can then take steps to collect the debt, borrowers in Miami-Dade County and elsewhere across the country who are facing the consequences of a student loan default may be interested in knowing how the situation might best be navigated moving forward.

The best possible course of action may be dependent upon the process that the Department of Education has chosen to use in order to collect the debt. A number of avenues are available to the department, which could include revoking the borrower's professional license, suing the borrower, or taking a portion of the borrower's Social Security benefits as allowed by law.

The truth about debt negotiation

Debt negotiation companies offer help to people in Florida who are having trouble getting out of debt. While these companies can often help debtors to negotiate settlements with their creditors, there are downsides to using debt negotiation as a solution to debt problems. One of the downsides to debt negotiation is that the process usually cannot begin until the debtor is delinquent on their bills.

Debt negotiation usually takes about 24 to 48 months and results in an average debt reduction of about 50 percent. The total amount that a debtor will have to pay to settle their debts does not include the fees that they will owe to the debt negotiation company. New laws do not allow debt negotiation companies to ask for upfront fees before a debt has been settled or reduced.

Holiday shopping and credit card mistakes

Many people in Florida use credit cards to pay for holiday shopping. When a person has a big family to buy presents for, it can be tempting to use credit cards to pay for expensive gifts. However, credit cards can be dangerous around the holidays, especially for people who don't make a lot of money or don't live on a strict budget.

Stores often advertise enticing credit card deals around the holidays to get customers to buy big-ticket items. One of the credit card deals that stores typically offer is deferred interest. A deferred interest credit card can work out great if the cardholder pays it off before the promotional period ends. However, a person could end up in massive debt if they allow interest on a store credit card to kick in.

How Chapter 13 bankruptcy affects child and spousal support

Many Florida residents who file for Chapter 13 bankruptcy protection have outstanding child support and alimony debts. These financial obligations will not be canceled as a result of a bankruptcy, though the outstanding debts may not have to be paid in full. After a debtor completes the Chapter 13 bankruptcy process, obligations to make future child and spousal support payments will remain in effect.

A revision to the Bankruptcy Code in 2005 made domestic support obligations a priority for repayment in Chapter 13 bankruptcy plans. Domestic support obligations cannot be discharged in bankruptcy, and a debtor who fails to make timely domestic support payments could have their Chapter 13 case dismissed. When a person's unpaid child or spousal support debt has been assigned to a government agency, the debtor must meet certain criteria before any portion of the debts can be discharged.

An alarming number of South Florida homeowners still face foreclosure. What can you do to make sure you are not one of them?

Recent information indicates that, through October of 2016, approximately 1 in every 830 homeowners in Miami-Dade County was facing foreclosure. In Broward County, it's about 1 in every 620. If you are struggling to keep up with your mortgage payments, you don't have to become one of these statistics.

There are a number of effective strategies that can be employed that will stop the foreclosure process and help you save your home. Many of these options are protected under state and federal law, and there is nothing your lender can do to stop you from exercising them.

How to deal with debt collection agencies

Florida residents who have been contacted by a threatening debt collection agency about a bill they believe they do not owe, or one that is much more than they owe, might be wondering what they should do. While many people think paying off the bill will solve the problem, there are other solutions.

Debt collection agencies obtain information about consumer debts pertaining to their utilities, medical expenses and credit cards, for example, by purchasing them at discount from the companies where the debts originated. Then, to make a profit, the collection agencies try to solicit the full payment from the debtor.

Bankrupt dentist allowed to transfer condo before petition

Not every Florida resident who files for Chapter 13 bankruptcy will qualify. Some debtors will have to file for Chapter 7 bankruptcy because they do not earn enough income to fulfill the obligations in a Chapter 13 repayment plan. The Bankruptcy Appellate Panel for the 9th Circuit heard a case involving a dentist who had two Chapter 13 cases dismissed before he filed for Chapter 7 bankruptcy.

After the dentist filed for Chapter 13 bankruptcy for the first time, he transferred a condominium he owned into a trust using a quitclaim deed. His first and second Chapter 13 bankruptcy petitions were dismissed. The debtor then filed a Chapter 7 bankruptcy petition more than 12 months after the transfer of his condominium.

Converting bankruptcy chapters

When individuals or couples in Florida find themselves overwhelmed with debt, they often consider bankruptcy. While this option is not for everyone, it can offer people in financial trouble the opportunity to receive a fresh financial start and stop creditor harassment.

Consumer bankruptcy in the United States is generally offered under one of two plans: Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, the debtor turns over his or her non-exempt assets to be sold with the proceeds going to creditors. The debtor's remaining debts are then discharged.

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