Making Sense of Personal Bankruptcy Exemptions

Declaring personal bankruptcy is often the right choice for those who are unable to pay their creditors because of certain circumstances in their life, such as medical bills, job loss, or a divorce. If you are thinking of declaring personal bankruptcy for these reasons, you may be wondering what it will cost you. Will you lose everything in the process?

Luckily, much of your property is exempt from being taken and sold during your bankruptcy proceedings. There are two types of exemptions: federal and state. While some states will only allow debtors to use state exemptions, other will let you choose whether state or federal exemptions will benefit you the most.

Before you decide to declare personal bankruptcy, you will need a bankruptcy attorney and a correct understanding of what exemptions actually are.

What Are The Different Types of Personal Bankruptcy Exemptions?

There are many different types of exemptions you may come across when declaring personal bankruptcy. Here are just a few.

• Homestead Exemption- The most common type of bankruptcy exemption is the homestead exemption. This exemption applies to the home where you live principally, and does not apply to second homes and vacation homes. Your specific state will determine how much this exemption is. For instance, in Alabama, the maximum claimed value of your homestead can not be more than $50,000. In Texas, though, there is no limit at all. Although your home may be exempt from your bankruptcy, this does not mean you are not still responsible for making your mortgage payments. Read the rest of this entry »

So, you are thinking of declaring personal bankruptcy and are married. You have heard the conspiracies surrounding bankruptcy and divorce, and are becoming a little worried over how your debt will affect your marriage. You want to know whether these rumors are true, and whether declaring personal bankruptcy really does lead to divorce.

Declaring personal bankruptcy and divorce seem to go hand in hand these days, and, like the classic chicken or the egg scenario, it is often confusing which comes first.

Declaring Personal Bankruptcy and Divorce

According to www.divorcerate.org, half of all marriages in America end in divorce. This number is quite staggering, and only becomes worse in second and third marriages. Many times, these divorces often occur at the same time as the bankruptcy cases. According to the www.examiner.com, 32% of Americans file personal bankruptcy every year. There are two reasons for this.

• Bankruptcy Leads To Divorce- Declaring personal bankruptcy can be stressful for couples. As you and your spouse review all of your debt, this review may shed a light on communication and financial problems you never knew you had. You may argue over the stupidity of buying that second home while your spouse continues to justify the expenditure. Many times, a marriage is a balanced concept: one spouse is a spender while the other is a saver, verifying the phrase ‘opposites attract.’ During bankruptcy, this creates the perfect storm of marital and financial problems, often ending in divorce. Read the rest of this entry »

Understanding Personal Bankruptcy

Once you have met with your bankruptcy attorney and made the decision to declare personal bankruptcy, it is important for you to understand the process thoroughly. If you are looking for a step-by-step guide through chapter 7 bankruptcy, you have come to the right place. We can help you understand what will occur throughout this process.

Step-by-Step Process When You Declare Personal Bankruptcy

• Credit Counseling- Ever since the changes in the personal bankruptcy code, those who wish to declare personal bankruptcy must first undergo credit counseling courses. These courses must be approved by the government, and a certificate of completion must be presented to the court afterwards. During these courses, a credit counseling will help you determine whether bankruptcy is your best option, or if you could benefit from debt negotiation or other alternatives to personal bankruptcy.

• Automatic Stay- Once you have decided to declare personal bankruptcy and gone through your credit counseling courses, an automatic stay will be placed in effect by the court. This prevents your creditors from contacting you for collection while your bankruptcy is underway.

• Meeting of The Creditors- This meeting is required for all bankruptcy cases. During this time, you will meet with all of your creditors and swear under oath that all of the information in your bankruptcy petition is correct. Read the rest of this entry »

Surprising Information Regarding Personal Bankruptcy

If you are not currently a legal resident of the United States, you may be wondering whether or not you can declare personal bankruptcy. The simple answer to this question is yes. Before you take steps toward bankruptcy though, make sure you understand what is expected of you and what complications may arise during the process.

Declare Personal Bankruptcy In Spite of Your Immigration Status

While it may be surprising, the bankruptcy code does not state that illegal immigrants can not declare personal bankruptcy. In fact, no reference to citizenship is made at all. The code simply states that an individual who wishes to declare personal bankruptcy must be a debtor with residence or property in the United States.

Laws Surrounding Personal Bankruptcy

However, declaring personal bankruptcy as an illegal immigrant isn’t as simple as it is for a US citizen. There are a couple of factors you must consider before declaring personal bankruptcy.

• Every debtor who decides to declare personal bankruptcy must provide proof of permanent residency or proof of ownership of property.

• Identification must be provided to the court during a bankruptcy case. For individuals who do not have a social security number, an individual tax identification number, or ITIN, is needed. An ITIN can be obtained by anyone who lives and works in the United States, regardless of citizenship status.

• It is used by individuals who can not legally obtain a social security number, but wish to pay taxes to avoid trouble with the IRS.

• If an illegal immigrant decides to declare personal bankruptcy and has been using a fake or stolen social security number, this number can not be included in the bankruptcy proceedings. Any debt incurred under this social security number may not be able to be discharged.

The Threat of Deportation For Those Who Declare Personal Bankruptcy

Bankruptcy itself is not a crime, and therefore can not result in the deportation of an illegal immigrant. However, illegal actions before and during your bankruptcy case may result in deportation. For this reason, many illegal aliens are hesitant to declare personal bankruptcy. With help from an immigration lawyer and a bankruptcy lawyer, though, you should be able to file bankruptcy and continue your residency in the US, whether you have applied for citizenship already or not.

Here are some steps you should take to make sure your bankruptcy is a success.

• Be honest. Even if you have been using a fake or stolen social security number, it is important to be honest with your attorney and the court. Even though you may not be able to eradicate the debt you accumulated under this number, using it on your bankruptcy petition constitutes fraud and can result in jail time and deportation.

• Act as if you are a responsible citizen of the United States, even if you aren’t. Crimes of “moral turpitude” will result in deportation. This means you should not write fraudulent checks, should pay your taxes, and avoid filing fraudulent bankruptcy petitions.

• Transferring assets or money to another individual prior to filing bankruptcy is frowned upon and could result in a dismissal of your bankruptcy case. Unless you are paying for regular living expenses, avoid this situation altogether.

If you are having financial difficulties and wish to declare personal bankruptcy, don’t let your citizenship status stop you. According to the bankruptcy code, anyone can declare personal bankruptcy as long as they own property or live in the United States.

Tax Problems? They Can Affect Your Personal Bankruptcy as Well

So, you have decided to declare personal bankruptcy through chapter 13 and everything seems to be going well. It appears you have everything in order. There may be one little hitch though: you didn’t file a previous year’s tax return. How will this affect your case when you decide to declare personal bankruptcy?

Unfilled Tax Returns Can Stop You When You Choose To Declare Personal Bankruptcy

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So, you have decided to declare personal bankruptcy through chapter 13 and everything seems to be going great. It appears you have everything in order. There may be one little hitch though: you didn’t file a previous year’s tax return. How will this affect your case when you decide to declare personal bankruptcy?

Unfilled Tax Returns Can Stop You When You Choose To Declare Personal Bankruptcy

It isn’t unusual to not have to file a tax return. According to the IRS Publication 501, single individuals under the age of 65 who make less than $9,350 a year are not obligated to file taxes. This publication also states when other individuals are not legally obligate to file. However, this doesn’t mean they shouldn’t. There are certain benefits to filing taxes outlined by the IRS at www.irs.gov, such as earned income credit, American opportunity credit, or additional child tax credit.

If you decide not to file your taxes, however, this may affect you when you declare personal bankruptcy. The IRS and your state department of revenue are both usually included in the list of creditors who must be notified when you declare personal bankruptcy. Once these offices are notified, they may decide to file a claim for estimated liability.

An estimated liability claim amount usually depends on how much money you earned in previous years, when you did file tax returns. For instance, if you only earned a little over $2,000 in 2009, but filed a tax return in 2008 stating you earned $47,000, the IRS will assume you made the same amount in 2009. Unfortunately, this is not always the case. You may have been fired from your job or laid off. However, this is the assumption the IRS will make, and they will also include any interest, tax liability, and penalties in the estimated liability claim.

Without the proof of a tax return showing you earned no income in 2009, the trustee for your bankruptcy case will either:

• Require a written statement from you stating you were not legally obligated to file your taxes for that year due to a low gross income.
• Dismiss the bankruptcy case due to the fact that your debt to the IRS and the state revenue department is not known.
• Hold off on the creditors meeting for up to 120 days. Your lawyer may have to request this if it is not done automatically. During the 120 days, you must ensure you have filed your tax returns for the past four years.
• Convert the case to a chapter 7 bankruptcy case, depending on the amount of money you are perceived to owe from the estimated liability claim and the best interest of both you and the creditors.

Take Care of Your Taxes Before You Declare Personal Bankruptcy

Before you choose to declare personal bankruptcy, make sure all of your taxes are taken care of. Even if you do not make enough money during the year to file taxes, file anyway. This will ensure you have a tax return to show the court should you decide to declare personal bankruptcy in the future. Also, filing your taxes allows you to enjoy many of the government benefits set up specifically for low income individuals, such as the earned income credit.

For more information on declaring personal bankruptcy, continue to follow our website.

After the bankruptcy reform of 2005, declaring personal bankruptcy became a little more difficult for the average individual. For instance, credit counseling became obligatory. If you are interested in declaring personal bankruptcy, you may want to consider the new harsh reality of credit counseling and how it can affect your bankruptcy case.

Declaring Personal Bankruptcy – Do You Know the Law?

When the new laws were set into place in 2005, it became mandatory for most individuals to obtain a certificate of credit counseling from an approved credit counseling agency. This certificate must be obtained 180 days prior to declaring personal bankruptcy or within five days after the individual has filed. The certificate must then be submitted to the personal bankruptcy court.

Lists of approved credit counseling programs are provided by the government and can be found for each state at www.justice.gov. According to the Federal Trade Commission (FTC), the counseling generally costs about fifty dollars, and last for an hour to an hour and a half. Read the rest of this entry »

Understanding Personal Bankruptcy and Student Loans

The battle between student loans and credit cards relating to declaring personal bankruptcy rages on, and these days, student loans are winning. According to an article by USA today, the student loan debt in the United States is more than $850 billion, while credit card debt is at $828 billion. While there may not be a significant difference between the two, it does give us a little understand as to why so many graduates are being forced into declaring personal bankruptcy.

Declaring Personal Bankruptcy and Student Loans

As you know, if you consider declaring personal bankruptcy for student loans, you must prove they are causing you undue hardship. With a failing job market, high interest rates, and already high tuitions, though, this usually isn’t too difficult. According to USA Today, a student with a $30,000 debt can expect to pay about 6.8% interest. This means their monthly payment for the next ten years would be about $350. For some, this is an entire rent or mortgage payment. Read the rest of this entry »

Is it Time for Personal Bankruptcy or to Check Your Credit Report?

Would it surprise you to find out that declaring personal bankruptcy is not always necessary? Many individuals who think about declaring personal bankruptcy may not even have to do so, because their credit reports have errors on them. These errors can prevent them from successfully obtaining loans, increase interest rates on already established credit, and make them susceptible to penalties and fees. Before you decide declaring personal bankruptcy is the best solution for you, consider the following.

Medical Bills Play a Big Role When Declaring Personal Bankruptcy

One of the most common credit report errors that individuals come across is medical bill errors. These are often caused by bills the individual didn’t even know existed. If you have recently been the hospital, you know what kind of debt you can rack up quickly. And all of this debt is sent in separate statement for the doctor, anesthesiologist, the pharmacist, the ambulance, the hospital, and so much more. It is likely you will receive about ten bills for just one hospital stay. So, what happens if you only receive nine of them? Read the rest of this entry »

Declaring Personal Bankruptcy & Your Business

With the current economy, more and more individuals with small businesses are facing declaring personal bankruptcy. Individuals which to get rid of personal credit card debt personal loans, but don’t want to involve the credit and loans associated with their small business. Is declaring personal bankruptcy without the involvement of the business possible for these individuals?

How Declaring Personal Bankruptcy may be a Problem for the Self-Employed

While act of declaring personal bankruptcy when you own a small business may seem like a simple solution, it can often be a big problem. If the business is a proprietorship, it may not be possible to separate your personal debts from the business’s debts. A proprietorship does not distinguish between the owner and the business. An example would be ‘Sarah’s House of Flowers.’ By law, this type of small business is considered to be a single entity and all debts are considered to be personal.

When you are declaring personal bankruptcy with a proprietorship, any assets that are not considered to be exempt could be seized and sold to help pay off your debt. Even customer lists, contracts, and pending agreement with customers can be sold for a profit and may be seized. Read the rest of this entry »