Archive for November, 2011

How to File for Bankruptcy to Avoid Paying a Student Loan

Friday, November 18th, 2011

Article eHow Money

Updated Feb. 17, 2011

Student loans have a special status under bankruptcy law. If any portion of your student loan debt came from a government or non-profit source–and virtually all of them do–you will be stuck repaying your student loans even if you declare bankruptcy. The only exception is if you are able to successfully argue to the Bankruptcy Court that forcing you to repay the loans would cause ‘undue hardship’ on your  financial  future.

1 )  In 1998, Congress enacted changes to the U.S. Bankruptcy Code that made student loans non-dischargeable in bankruptcy, unless the debtor is successful in claiming that repaying the loans would lead to substantial hardship. In October, 2005, the law was extended to include private student loans as well. Here are some steps to determine if your student loans have a chance of being discharged under the new Bankruptcy Code.

2)  If your debts are overwhelming and you are not certain where to turn, find an experienced bankruptcy lawyer to discuss your options.

3)  If you file for bankruptcy and you owe money to a bank or other financial entity for student loans, but under no circumstances could you afford to repay them, file an undue hardship petition with the bankruptcy court.

4)  Show that you have made good faith efforts to repay your loans. Keep copies of cancelled checks, receipts and letters of communication you might have sent to your student loan creditors as you attempted to repay the loans.

5)  Your Attorney will need to convince the U.S. Bankruptcy Court you cannot repay your student loans and maintain a minimal standard of living.

6)  Demonstrate that these unacceptable conditions would persist if you were forced to repay your student loans, and that despite your best efforts, you cannot fix the situation. While having a low-paying job may be a persistent condition in your situation, it is not considered unfixable, unless extraneous circumstances exist. What that means is that if you are purposely working at a fast-food restaurant or holding similar employment just so you can claim undue hardship, the excuse won’t impress the Court, unless you have legitimate reasons for this situation.

If you would like more information on our practice, please consult our website at:
or call (727) 254-1704.

The Three Year Rule for Getting Rid of Income Taxes in Bankruptcy

Tuesday, November 1st, 2011

Article from Bankruptcy Law Network

November 1, 2011

Everyone knows that you can’t  discharge  income taxes in bankruptcy. Right? No, not right at all. This misconception about bankruptcy law illustrates just why you shouldn’t substitute cocktail party gossip for the advice of a good lawyer. Especially when the question involves discharging income taxes in a consumer bankruptcy case.

Generally, income taxes are discharged in a  chapter 7 or  chapter 13  bankruptcy case when the tax is four years old or more.

First, the tax must be owed for a year where three years have passed since the tax return was due. Most of the time, the return was due on April 15.

Second, the return must have been filed more than two years ago. Obviously, this rule applies only to late filers.

Third, the tax must not have been assessed with the last 240 days. This rule applies where the return didn’t accurately show all the tax that was owed, and the IRS just finished assessing additional taxes after discovering your mistake.

Fourth, if you wilfully attempted to evade or defeat payment, it can’t be discharged. Courts have ruled that simple non-payment, without anything more, is not enough to show that you tried to evade or defeat payment of the tax.

Sections 523 and 507 of the bankruptcy code do impose some additional requirements, but what has been written above is enough for most people to know. If you filed your tax return on time, and if the return was accurate, and if it’s been more than three years since the return was due at the latest (usually April 15 of a given year), then your taxes are going to be discharged if you  file for bankruptcy, unless a specific exception in the law applies to you. It’s that simple.

If you owe income tax that you can’t pay, here is what you now know you should do: first, try to avoid listening to legal advice about bankruptcy from well-meaning friends at cocktail parties, and second, get yourself to a bankruptcy lawyer to find out for sure if your income taxes are dischargeable in bankruptcy.

Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg and the Tampa Bay area.

If you would like more information on our practice, please consult our website at:
or call (727) 254-1704.