Lexington Law Blog

CAUTION: Tax Refund

The temptation to use your tax refund to get that one creditor that is hounding you off of your back is understandable. However, if that does not solve your entire debt crisis, you may be wasting those funds. Paying off a single creditor would be like diverting the first boulder of an avalanche.  If you pay a single creditor more than $600 in the 90 days prior to filing a bankruptcy, that is considered a preferential transfer. Many people do this with that tax refund trying to make things better. But, the trustee can seize it and then neither that ...
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Predictable Litigation Results

The results from litigating always fall into one of two outcomes: either one party wins and the other loses or both parties lose. This is because litigation is an adversarial process where parties seek to beat one another. And, both parties may lose if neither gets the entire outcome they wanted. There is always a loser in litigation. The only possibility for an outcome where both parties win is when they mediate the issues. In mediation, there is no possibility of both parties losing, or of only one party winning. They either both win by reaching an agreement or they ...
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When Business Owners Should File Bankruptcy

A few days ago I posted To File or Not to File talking about my decision making process when I consult with a client. When a client is filing because of business debt then there are other considerations. A business owner may opt for a personal bankruptcy because they cannot obtain a discharge of debt if their business filed a Chapter 7 and because Chapter 11s are incredibly expensive. So, I must decide if the owner debtor can filed a personal Chapter 7 even if their personal household income is healthy. Some jurisdictions use a "totality of the circumstances approach that looks ...
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To File or Not to File: Attorney decision making

When you meet with an attorney to discuss your debt and the options for relief from the weight of that debt, he or she should engage in a decision making process. Some attorneys tend to keep that process to themselves (this is more of a style thing for the lawyer), and others, like myself, try to explain and educate the client. While I cannot lay out every twist and turn that the discussion may take with any particular situation, I will put forth a few basics. I typically start with an overview of the debt which includes the numbers of ...
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Deadlines for Filing Prepetition Tax Returns in Chapter 13 Cases

It is good practice for a Debtor's attorney's to always obtain all four years of returns prior to filing to avoid a hiccup. I often run into the challenge of my client not retaining copies ot their tax returns. This can be quickly remedied by having your client go onto irs.gov and apply for "Tax Transcripts" for the years in question. This Tax Transcript is not to be confused with an Account Transcript. The Account Transcript provides various codes and dates of events over time for a given tax year. These codes can allow an attorney to determine what taxes ...
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Delinquent Property Tax Claims in Chapter 13 Cases

In my practice, I have found it important to do just as this post advises: review claims filed carefully to make sure interest accrues only as allowed by law and for the attorney fees added in. Statue also guides the amounts that can be charged in attorney fees. Furthermore, it is incredibly valuable to make sure the Debtor gets a copy of ALL active liens on their property just prior to filing the Chapter 13. And, after the bankruptcy is filed, to make sure the claims are filed on all of those liens. It just makes things nice and clean ...
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Lessons Learned the Hard Way

As an attorney primarily serving debtors, many of whom are in Chapter 13 bankruptcies, these "Lessons Learned" are quite valuable. As for the first case described, that may not be the end of the road for those debtors. Depending on how severely their income was restricted and if/when they may have received a discharge in a prior bankruptcy, a subsequent Chapter 7 may give them a fresh start. However, if they could not afford the Chapter 13, they would need to surrender the motorcycle in the Chapter 7. As for the second case discussed, I find that it is very, ...
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Miscellaneous Hot Topics in the EDKY

Most of the items in this Chapter 13 Trustee's blog post pertains mainly to your Chapter 13 attorney. However, the section about obtaining a new car while in your Chapter 13 is very pertinent to you as a Debtor. This is no longer a streamlined process. Now, you will have to have a more in-depth communication with you attorney. Also, you will need to plan on spending more time shopping around for the least expensive car that will meet your needs and a reasonable interest rate. You may think you are limited to the buy here/pay here type of car ...
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Troutman & Napier, PLLC