Credit Card Debt Guide

Before the Tax Code reforms of 2005, the difference in debts discharged between a Chapter 13 Bankruptcy, or Wage Earner Plan, and those discharged by a Chapter 7, or straight Bankruptcy, was significant. Now, however, that difference has been minimized. Not all debts are discharged with a Chapter 7 bankruptcy filing as was once mostly the case. Bankruptcy Lawyers in Erie can counsel you on which of your debts are eligible for discharge.
Although circumstances may vary from filer to filer, the following debts will generally not be discharged:
• Child support and alimony due (including past due amounts)
• Student loans (unless the court has determined that repayment of the debt will create “undue hardship” to the debtor and his or her dependents).
• Debts created from being found guilty of driving while intoxicated or damages incurred due to an accident cause by drunk driving.
• Other debts not listed in the bankruptcy petition.
• Debts owed creditors not listed in the bankruptcy petition.
• Court fees owed.
• Federal, state and local taxes.
• Restitution, fines and penalties charged by the government.
• Debts not dischargeable from a previous bankruptcy due to debtor fraud.
During the bankruptcy, creditors will be given the chance to dispute the discharge of some debts. Lawyers Practicing Bankruptcy in Erie will be at this creditor’s meeting with you to offer guidance and to speak on your behalf.
If creditors protest the proceeding and can demonstrate their claim falls into one of the following categories, these debts will also not be discharged:
• Debts created by willful and malicious actions(such as assaulting someone)
• Debts created by deception. These categories include balances on credit cards charged up within 90 days of the court filing for luxury goods and services.
• Cash advances more than $750 obtained within 70 days of filing the bankruptcy petition will also not be discharged.
• Debts from a divorce settlement or other court decree which the debtor is able to pay but nonpayment harms the recipient more than it benefits the debtor.
• Debts created from embezzlement, theft or a violation of some trust, or fiduciary duty.

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bankruptcy lawyers in Evergreen Park have the experience and expertise to advise you on tax debt and bankruptcy. Most tax debt cannot be discharged with a bankruptcy, either Chapter 7 or Chapter 13, in spite of the tantalizing advertisements to such an end filling television and radio today. In a Chapter 13 filing, you will continue to owe these debts at the end of the bankruptcy and the payments will be part of your repayment plan. Only Chapter 7 can wipe out tax debt and only then if the debts meet particular criteria:
A tax return was filed on the debt – The tax debt you wish to discharge must have had the appropriate returns filed at least two years before filing a bankruptcy petition.
The taxes owed are income taxes – trustee taxes (payroll taxes), penalties and other types of taxes are not eligible to be discharged.
The tax debt is at least three years old – the debt you wish to discharge must have been owed for at least three years before the bankruptcy was filed.
No fraud or intentional evasion – if you filed a fraudulent income tax return or other wise committed fraud, such as willfully evading paying income taxes, bankruptcy will not discharge any debt associated with this.
The 240 day rule – the IRS must have assessed this income tax debt at least 240 days before the bankruptcy package is filed or the debt must not have been already assessed by the IRS. If the IRS stopped the collection of this debt because of an offer in compromise or a previous bankruptcy filing, this time limit may be extended. lawyers in Evergreen Park who practice Bankruptcy can help you validate all IRS debt before filing.
Unfortunately, any recorded federal tax liens will stay on your record even if the taxes themselves are discharged and your obligation to pay them absolved. The bankruptcy does prevent the IRS from collections procedures on the discharged taxes; however, if you intend to sell the property on which the lien is recorded, you will still have to pay off the lien. Evergreen Park bankruptcy lawyers are prepared to assist you with any IRS tax debt problems associated with bankruptcy.

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Once a debtor has qualified to file Chapter 13 or Chapter 7 bankruptcy under the new bankruptcy laws, his or her property and assets fall under the supervision of the bankruptcy court. At the time of filing, Erie bankruptcy lawyers will classify your property as exempt or non exempt. The “exempt” status of an asset means that the debtor can keep that asset.
Exempt property is defined differently from state to state, but generally it is property that cannot be seized by creditors or the bankruptcy court. lawyers in Erie who practice bankruptcy will know these statues for Pennsylvania. Most states exempt such things as health aids, like contact lenses and walkers. Things of a personal nature, such as toothbrushes and hair dryers, are considered “personal effects” and are considered exempt in most states. Ordinary furniture and clothing is usually considered exempt without the court attaching a value.
States can also set limits on the amounts of exempt property that can be claimed. For example, the value of clothing, furniture or a car is exempt up to a set limit. Any equity in these assets over that limit is considered nonexempt and the court can ask that this equity be made available to creditors in cash.
In most states, the following assets are typically considered exempt:
• Unpaid wages
• Some of the equity in a residence.
• Some of the equity in a vehicle.
• Life insurance value
• Tools of a trade or profession, usually up to a set amount
• Reasonable necessary clothing
• Reasonably necessary furniture
• Household appliances
• Jewelry, up to a set amount (usually a few hundred dollars)
• Pensions
• Public benefits
By the time a debtor reaches the point of filing bankruptcy, especially Chapter 7, most of their assets are either exempt or worthless to the court. In this case, even though property may be nonexempt, the trustee may elect to “abandon” the property, meaning that the debtor may keep it, unless is it collateral for a debt. Also, if property is determined by the trustee to be too cumbersome to sell, the trustee may abandon this property as well. Erie bankruptcy lawyers can offer further advice if needed.

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We can borrow money from lenders, but the lenders would want to ensure that we have high credit worthiness. Repayment of the loan is an important factor the lender always considers before approving the loan request. Credit bureaus have been set up for the flow of information about borrowers to lenders. Past credit data is studied by these bureaus and every person is given a credit score. The risk attached to extending a loan to that person is indicated by the credit score figure. When the credit score is high, the lender can know that it is relatively safe to issue the loan. Planning to apply for a loan – get informed about these 3 free credit scores.

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You’ve made the decision to declare bankruptcy. You’ve educated yourself on the two types - Chapter 13 and Chapter 7 – and, with the help of Duluth bankruptcy lawyers, made the decision which type to use. What information will your attorney need to complete your bankruptcy petition to present to the bankruptcy court?
Here’s a short checklist of information he or she will ask for:
• W-2s, check stubs, or other proof of wages, such as 1099s for the last three years.
• Tax returns for the last three years.
• Bank statements for the last year.
• Most recent bills from every creditor. EVERY CREDITOR. Leave no one out, no matter the reason!
• All correspondence from creditors, including threatening letters.
• All of YOUR correspondence with creditors.
• Most current payment stubs for vehicle loans, student loans, etc.
• Most recent credit card bills with the most up to date balances possible.
• Any other bills from the previous year.
• Copies of your divorce decree, child support documents or any other court orders that demand payment from you.
• Copies of any previous bankruptcy filings.
• Files from any former attorneys other than lawyers in Duluth who practice bankruptcy.
• All insurance policies. This includes life, health, auto, etc.
• Your mortgage documents and any documentation for second mortgages or line of credit or equity loans.
• All other promissory notes you have signed.
• Copies of your lease or rental agreement.
• Documentation relating to any investments or stock portfolios.
• Any vehicle titles, including boats, RVs, etc.
• Cancelled checks for any other debt you cannot categorize.
• Any documentation relating to anyone owing you money. This includes things such as royalties, rent monies payable, residuals for intellectual properties, etc.
• Documentation relating to any lawsuits that have been served on you.
• Evidence of any agreements with the IRS for taxes in arrears.
• If you are in arrears on student loans, include any information that might affect your ability to discharge these debts such as a recent disability or lay off.
• Any documentation relating to how you got in this predicament in the first place such as layoff notices, proof of disability, death certificate for a spouse, child or other family member that involved you financially.
• A record of your major assets and their present value.
By having all this information readily available, you will expedite this difficult process by making it easy for Duluth bankruptcy lawyers to properly fill out and file your petition.

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