Child Support Is Not Dischargeable

Child support is NOT dischargeable in any type of bankruptcy. The welfare of minor children is of primary importance throughout the state and federal court system.

But you still can get some benefit from declaring bankruptcy. Although you cannot erase child support payments, if you file for Chapter 7 protection and most of your other debts are erased, your budget will include new extra cash, which will make it easier for you to make your scheduled support payments on time.

Even choosing a Chapter 13 wage earner plan will lower your monthly payments to creditors, leaving you with more available cash to meet your support commitments.

Hiding From Debt Won't Make It Go Away.

Ignoring or evading your financial troubles will only make them worse. Nobody-ever-forgets-a-debt. Especially not creditors. If you are facing legal action do not procrastinate.

Often, even when people are in danger of foreclosure or car repossession, or are being sued, or are having their wages garnished – even then, they do not want to think about filing bankruptcy. It is very painful to think of filing bankruptcy – especially before the person understands bankruptcy.

In most cases, once bankruptcy options are explained by an experienced attorney, people are greatly relieved to find that their problems can be resolved after all. Do not wait until after your house is foreclosed, your car is repossessed, or your wages are being garnished. Find out what bankruptcy relief is available to you sooner rather than later.

What Happens When You Can't Repay Your Tax Debt?

It is possible to eliminate your federal income taxes in Chapter 7 bankruptcy if all of the following conditions are met:

• Your tax debt is from income taxes. Any taxes other than income, such as payroll taxes or fraud penalties, will not be eliminated by bankruptcy. 
• You didn't defraud the system. If you filed a fraudulent tax return, or tried to avoid paying taxes in any way, bankruptcy won't discharge your debt. 
• Your income tax debt must be at least three years old. It must be three years from the date the tax return was due to be eligible for bankruptcy. 
• You must file the tax return. The tax return debt you wish to discharge must be filed at least two years before filing for bankruptcy. 
• You must meet the "240 day rule." Your income tax debt must have been determined by the IRS a minimum of 240 days before you file for bankruptcy, or must not have been assessed yet. This time limit can be extended if collection activity was suspended because of an "offer in compromise" or a prior bankruptcy filing. 

Previous bankruptcy cases or offers in compromise can stop the running of these time periods. If you meet the requirements mentioned above, you may qualify to have your income tax debt eliminated in Chapter 7 bankruptcy. It is important to know that filing for bankruptcy will not eliminate any tax liens. Filing for Chapter 7 bankruptcy will only help prevent you from getting a tax lien in the first place.

Contact Minnesota Bankruptcy Attorney Gregory Wald at 952-921-5802 if you have tax debt that you would like eliminated through bankruptcy.

Tax Debt Relief And Bankruptcy

If you have an income tax debt, and are filing for bankruptcy, that may be eligible for discharge under Chapter 7 or Chapter 13 of the Bankruptcy Code.

The difference between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy is that Chapter 7 allows for a full discharge of permitted debts while Chapter 13 issues a payment plan to repay some debts, with the rest of the permitted debts being discharged. Keep in mind, not all tax debts are able to be discharged in bankruptcy, but taxes that are eligible to be discharged in a Chapter 7 are also eligible for discharge in Chapter 13. When you file for bankruptcy, your tax debts must meet a certain standard in order to be discharged.

The criteria for income tax debt to be discharged are:

• All tax debt must be from income taxes 
• The tax debt must be part of a tax return that was due at least three years prior to the taxpayer filing for bankruptcy. The due date includes any extensions. 
• The tax return has to have been filed at least two before the taxpayer files for bankruptcy. This date starts when the return was actually filed. 
• The tax assessment that the IRS sent you has to be at least 240 days old. 
• The tax return cannot be fraudulent. 
• The taxpayer cannot be guilty of tax evasion. 

Some of the tax debt that is not dischargeable is for taxes for which no returns have been filed. While the IRS routinely assesses taxes on un-filed returns, these tax liabilities cannot be discharged until the taxpayer files a return for the year in question. The return must be filed by the taxpayer. A commissioner-filed return does not qualify.

If you file for Chapter 13 bankruptcy, money owed to the IRS that does not meet the qualifications to be discharged can be repaid through a payment plan that lasts anywhere between three and five years without penalties or continuing interest. (Although in some cases interest and penalties must be paid if there is a tax lien). One of the benefits of filing a Chapter 13 bankruptcy is if the IRS rejected your previous payment plan, this is a way to get them to accept one.

It is recommended that you speak with your attorney regarding this matter before deciding between filing Chapter 7 or Chapter 13 to get rid of or aid with the burden of tax debt.

Gregory J. Wald, Attorney at Law
1500 Northland Plaza
3800 American Boulevard West
Bloomington, MN 55431
Telephone: 952-921-5802
Toll Free: 1-866-747-1130
Fax: 952-831-1346
BankruptcyMinn.com
Gwald314@msn.com

Co-signers and Bankruptcy

Bankruptcy provides a fresh start for many, but what happens when some of your secured debt, such as a vehicle, has a co-signer? If you are planning on filing for Chapter 7 bankruptcy, and in doing so surrendering secured property, you should understand that the protection of bankruptcy only covers the person filing, not the co-signing party.

Lets say that your sweet Granny Ann helped you to get a new car by co-signing on the loan with you. After a few years you realize that your auto loan payments are just too high and you are drowning in debt. When you decide to file for Chapter 7, even though you have surrendered the vehicle, sweet Granny Ann is still legally responsible for the remaining balance. However, if sweet Granny Ann also decides to file for Chapter 7 bankruptcy, she could then discharge her own legal responsibility for the remaining balance.

This is the reason that most married couples are urged to file a joint petition. However, if a married couple does not have any joint debt then it may not be necessary to file bankruptcy together. In Minnesota, you are not automatically liable for all of your spouse's debts, but you are responsible for your spouse's debts incurred during the marriage for necessities of life, including medical bills.

In a scenario where the person filing for bankruptcy is the co-signer on a debt, lets say it’s sweet Granny Ann and she co-signed with you on your car, she must still list the vehicle and debt in her bankruptcy. She would be able to explain on her schedule that the vehicle actually belongs to her grandchild and that her grandchild makes all of the payments. This typically does not affect the contract between the grandchild and the lender, this would just eliminate Granny Ann’s duty as a co-signer.

There are many complex circumstances and legal issues that can effect co-signers when filing for bankruptcy. Contact Minnesota bankruptcy Attorney Gregory J. Wald today if you have questions about this matter or would like to set up a consultation.

The Difference Between Secured and Unsecured Debt

The type of debt you have plays an important role in what happens if you default on a loan.

Secured Debt is any debt that is backed by some sort of physical property, such as a car loan or a mortgage. The car loan is secured by the car itself and the mortgage is secured by the home.

In the event you fall behind on your payments on a secured debt, your creditor has the right to take back the property (repossess), sell it and apply the proceeds to the debt that you owe. Additionally, you may still have a balance owed even after the sale of the item is applied to the debt.

Dealing with your secured debt in bankruptcy can be done one of two ways. The first way is by filing for Chapter 7 bankruptcy and returning the item so that you no longer have to make payments on it. The other option is to restructure your payments by filing for Chapter 13 bankruptcy and keeping the item. Either way, with any secured debt the creditor gets something in return.

Unsecured Debt is typically a debt you incur to obtain goods and services. It can be medical debt, a student loan, a credit card or a personal loan. Essentially, there is no collateral tied to the debt. With this type of debt the creditor won't be able to repossess the item you purchased but they are able to take legal action or garnish your wages to recover a balance owed.

Filing for bankruptcy can ease the burden of both secured and unsecured debt. Filing for bankruptcy may even help you keep your car, stop wage garnishments, and remove some or all of your debt. Contact Minnesota Bankruptcy Attorney Gregory Wald for more detailed information specific to your situation.

Don't Let The Holidays Jeopardize Your Bankruptcy

If your New Year's resolution is to file for bankruptcy, there are some steps you should take to prevent your debt from not being discharged.

One of the greatest mistakes that people make during the holidays is over spending. It's very easy to become wrapped up in the season of giving, however your trustee won't appreciate the sentiment if you're gifting your assets to friends and relatives. Once you file for bankruptcy the trustee will look for any assets that were transferred, whether it was money or property. You risk your bankruptcy case being dismissed if it's perceived that any assets were gifted to defraud the bankruptcy system.

If bankruptcy is on the horizon, chop up those credit cards. Even if you have available credit you should refrain from using it. When you file for bankruptcy the credit card companies will review the past 90 days to see if you used your credit cards without making an effort to pay for the items bought. If you purchased holiday gifts with your credit cards and made no attempt to pay off the debt, that debt may be considered non-dischargeable. The same goes for taking out a cash advance within 70 days of your bankruptcy. It can also be presumed to be non-dischargeable if no attempt was made to repay the loan.

Filing for bankruptcy is complex. Before making any holiday purchases that could jeopardize your bankruptcy dischargeablity, have a consultation with Minnesota Bankruptcy Attorney Gregory Wald.

The Benefits of Chapter 13 Bankruptcy

Chapter 13 bankruptcy allows people with an income the option of creating a plan to repay part, or all of their debt when they are experiencing hardship. This is why it’s known as the “Wage Earner’s Plan.” When filing for Chapter 13, the debtor has agreed to a repayment plan of their debts over a course of three-to-five years.

In the instance that you have filled for Chapter 13 Bankruptcy and are still experiencing financial hardship, you have options. The worse thing you can do would be to stop making payments to your trustee. Once payments stop being made, you can expect your bankruptcy case to be dismissed without discharge. This means that all of the debt and harassing phone calls from creditors that you received before you filed for bankruptcy will once again be back.

Rather than stopping your payments, speak to your Minnesota bankruptcy attorney about a Hardship Discharge. A Hardship Discharge wipes debts clean even though the repayment plan has not been completed.

This option is only available if:

• The debtor’s failure to complete their payment plan was due to circumstances beyond their control. 
• The creditors have received at least as much as they would have in a Chapter 7 liquidation case.
• Modification of the plan is not possible. As an example, you could have an injury or illness that prevents sufficient employment that would fund a modified plan. 

Hardship Discharges are a lot more limited than a typical Chapter 13 discharge and it does not apply to debts that are non-dischargeable. Do not ignore your financial situation any longer. Contact Minnesota Bankruptcy Attorney Gregory Wald, he will give you all of your options. Live free from worry by removing the burden of debt.