Archive for February, 2013

In Bankruptcy it Matters if Your House is Not Your Residence When You File

Saturday, February 16th, 2013

article by admin from Bankruptcy Law

Your house – the place where you have lived in the past and plan to live in again – may not be your residence when you file a bankruptcy petition. Does it matter? In several ways it might matter a great deal.

It may be that when you filed your bankruptcy petition you listed your address as where you lived at the time you filed, which was someplace other than your house address. This might come up in a variety of situations:

*You have separated from your spouse. You have left the home, but plan to return just as soon as your spouse leaves. Or you are in a trial separation and have decided to live apart for a while and then try to reconcile.

*You have been forced to leave the home for a while – military deployment, or have taken a temporary job in another city.

*Your home has been flooded or damaged in a fire and is unlivable until it is fully repaired.

*You left your home because it was in foreclosure, but now have filed a Chapter 13 bankruptcy case to stop the foreclosure and save the house, and will be moving back in soon.

*You couldn’t afford the mortgage payments so you rented out the house and moved into a rental apartment. Now you have found a better paying job and plan on moving back to the house as soon as the tenants lease is over.

The important question is going to be – even though you did not live in the house when you filed your bankruptcy, can you still call it your “residence”. This leads to the next, all important question – can you take a homestead exemption in the property?

The homestead exemption allows you to protect some or all of the equity you have in the property. Your equity is the difference between what the home is worth and what you owe on it. The homestead exemption is only available to protect the equity in your “residence”. So if it is not your residence, you cannot protect the equity.

If there are any judgments against you when you file your bankruptcy petition, those judgments will have attached as liens against the property. If the judgment liens are against your “residence”, you can make a motion in bankruptcy court to remove them if they impair the homestead exemption. If the property is not your residence, you cannot remove the judgment liens.

What if a married, but separated couple, with judgments against each of them, file a joint bankruptcy petition, but at the time only one lived in the home? It may be that only the spouse living in the home at the time of the filing can successfully remove his/her judgment liens against the property, but the spouse living elsewhere, cannot remove the liens against him/her. But maybe, if the non residing spouse plans to move back in, he/she can still claim it as their residence. If that is the case, he/she can protect their portion of the equity in the home, and can remove any liens in their name against the house.

If you think this situation may apply to you, be sure to fully discuss it with your bankruptcy attorney.

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.

Income taxes can be discharged in bankruptcy

Friday, February 1st, 2013

news article by admin

IRS LogoAhh, the New Year is always such a special time. No, not because of The Super Bowl – because it’s tax season! So, tax season is a good time to review the dis-chargeability of income taxes in bankruptcy.

While this analysis is a good rule of thumb, reviewing your specific tax situation with an experienced bankruptcy attorney is an absolute necessity to ensure the timing of your bankruptcy filing discharges the greatest amount of unpaid income taxes.

A federal or state income tax is dis-chargeable if all of the following conditions exist:

1. THE THREE-YEAR RULE. The tax became due, taking into account any extensions allowed, more than 3 years prior to the filing. Federal income taxes are due on the first business day after April 14th (usually April 15th) of the year following the tax year, unless taxpayer files an extension. If an extension is filed, Federal income taxes are due October 15th of the year following the tax year.

For example, 2009 taxes became due on April 15, 2010. This means 2009 taxes become dis-chargeable on April 16, 2013, unless the debtor filed an extension to file the 2009 tax return, in which case the taxes become dis-chargeable October 16, 2013.

2. THE TWO-YEAR RULE. The taxpayer must have filed a tax return for the tax year(s) in question more than two years before the filing date of the bankruptcy.

So, in the example above, even if the return is for a tax year more than three years old, the debtor must have filed that return more than two years before the bankruptcy is actually filed. The debtor should confirm with the Internal Revenue Service the filing exact date of any return in question.

3. THE 240-DAY RULE. The tax claim was assessed more than 240 days preceding the filing date of the bankruptcy.

This is another potential landmine. The Internal Revenue Service often reviews or audits taxpayer returns and assesses taxes well after the tax year. Once again, if the debtor has been the subject of an IRS audit, or if the debtor has, within the last year, received any correspondence about an older tax return, the debtor must clarify with the IRS the actual assessment date for the older tax.

OFFER IN COMPROMISE. If the debtor made an Offer in Compromise (OIC) regarding this older tax year, the OIC tolls (or extends) the 240 day period by the number of days the OIC overlapped with the assessment plus an additional 30 days. See why you need to talk to an experienced lawyer?

4. Finally, NO TAX IS DIS-CHARGEABLE if the tax return was fraudulent or if the taxpayer engaged in activity deemed to be a willful attempt to defeat or evade the tax.

Furthermore, if the IRS or state taxing authority properly perfected a tax lien by recording the lien in the county in which you reside or where you own real property, an additional analysis must take place to determine whether the tax lien can be avoided in bankruptcy.

Seasoned bankruptcy lawyers frequently engage in this analysis, especially in the first three months of the calendar year because there could be an unpaid tax that is on the verge of becoming dis-chargeable.

Make sure your unpaid taxes are on the forefront of your mind when you consult with a lawyer about bankruptcy. Be prepared to address these rules, and you’ll create a pre-bankruptcy strategy that can best meet your need to discharge older taxes.

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.