June 26, 2017

Time Barred Debt; or, Debt that Lives on Past its Expiration Date.

If debt were milk, this milk would be rotten. I am speaking about old debt, or time-barred debt.  This article addresses time-barred debt, how to respond to time-barred debt, and how bankruptcy may play into the analysis.

[Read more…]

Bankruptcy Hearing – What If I Cannot Attend on the Date the Hearing is Set For?

Every time a bankruptcy is filed, a corresponding bankruptcy hearing is set.  This hearing is commonly called the “Meeting of Creditors” hearing, or the 341(a) hearing (which is the section of the bankruptcy code that establishes this mandatory hearing requirement).  At this hearing, a bankruptcy trustee will ask a series of questions (as described in an earlier post) of the debtor, and creditors have a chance to ask the debtor (the person who has filed bankruptcy) questions under oath, as well.  Creditors, however, largely do not appear at this bankruptcy hearing, although they have the legal right to do so. [Read more…]

Debt Settlement – Why This May Not be A Good Option for You

Debt settlement is one option to consider when trying to resolve debt issues. However, sometimes this option may not the wisest option to choose. It will be a good idea to meet with a bankruptcy lawyer to weigh all your options first, including debt settlement or bankruptcy.

There is an entire industry focused on debt buying and debt collecting. Often, a credit card account or other account, may be sold off to a third party, known as a “junk debt buyer.” The junk debt buyer may offer the debtor a discount to paying off the debt; and sometimes these discounts are rather steep. In some cases, settling a debt in such cases may prove beneficial. However, many of these cases are rife with problems, which may include: [Read more…]

Should I Wait to File Bankruptcy Until After I Receive My Tax Refund?

This article is posted in a strange part of the year (August), but this question comes up usually starting around October:  “Should I wait to file bankruptcy until after I receive my tax refund?” Or a variation of this question: “If I file bankruptcy right now, will I lose a portion of my 2014 tax refund?”   [Read more…]

The Pitfalls of Receiving an Inheritance Shortly After You File Bankruptcy

Inheritance, including life insurance proceeds, and bankruptcy can prove to be a very serious issue if not planned for correctly. An individual, depending on timing, may have to surrender a portion or all of an inheritance or life insurance proceeds as a result of filing bankruptcy. This article discusses inheritance in the context of bankruptcy, and the potential issues that may arise.
[Read more…]

Where Do I File Bankruptcy If I Just Moved To Oregon?

From time to time, I come across the issue of someone who recently moved to Oregon, and is considering bankruptcy. They come to my office, and I conduct my usual free bankruptcy consultation. I soon learn that the person has only been in Oregon but a few months, or for even less time. This raises a few issues regarding “venue,” or the proper place where a bankruptcy ought to be filed. This post discusses venue in the context of bankruptcy. [Read more…]

5 Mistakes to Avoid Before You File Bankruptcy

There are many mistakes for consumers to avoid before filing bankruptcy. The following list is what I consider some of the top mistakes to avoid before filing bankruptcy.

1. Not Being Honest With Your Attorney: Disclose everything to your attorney; [Read more…]

What Can You Do When You Accidentally Miss a Creditor in Bankruptcy?

Infrequently, a client will come to me after they receive their bankruptcy discharge with a debt that the client forgot to include in their bankruptcy. At the time the client filed the bankruptcy, the debt was not listed on their credit reports nor had the client received a bill for the debt to the best of their knowledge. Often, this type of missed debt is a medical bill from a small medical provider.

What can the client do? They received their discharge, and forgot to list a creditor. There is still hope! If the bankruptcy trustee determined that the client’s bankruptcy was a “no asset” case, meaning there was no property to liquidate and pay a dividend to creditors with, then a missed creditor is also discharged by operation of law. In Re Beezley is the court case in the 9th Circuit (Oregon is included in this Circuit) that sets forth that an unlisted creditor in a “no asset” case is still discharged, provided that the creditor was not fraudulently omitted from the bankruptcy.

However, if there are assets to be administered through the bankruptcy by the trustee, rendering an “asset case,” a consumer who missed listing a creditor and receives a discharge will still be liable for the debt to that creditor. This is based on the fact that the creditor may have received a distribution of funds from the bankruptcy had the creditor been listed in the bankruptcy.

The vast majority of chapter 7 bankruptcies are “no asset” cases, and probably twice a year a client will come to me with an old medical bill that they had forgotten to include in their bankruptcy. If the case was a “no asset” case, I will send a letter to the creditor informing the creditor that the debt was discharged by operation of law pursuant to In Re Beezely.

The idea and goal, however, is to capture all creditors in your bankruptcy when you file.

If you are interested in learning more about bankruptcy, please call today for your free in-office consultation in Eugene.

I look forward to hearing from you.

Sincerely,

Tom Butcher
Attorney at Law
116 State Highway 99 N #101
Eugene, OR 97402
541 762-1967 telephone
541 762-1968 facsimile

Potential Tax Consequences of Settling Debt Outside of Bankruptcy

Settling debt for less than what is owed on the debt can create tax liability. This article discusses this issue, and how bankruptcy and even insolvency may resolve this issue.

By settling debt for a fraction of what you owe may open the door to tax liability. For example, you settle a debt for $5,000 that has a face value of $12,000. By settling this debt, for $5,000, the creditor will cancel the remaining $7,000 owed. This cancelled debt then becomes taxable income to you and a 1099c is issued for $7,000. This $7,000 is added to your tax base for the tax year the debt was cancelled, and you must pay taxes on this $7,000. Many times, the cancelled debt is much larger than $7,000, and in some instances, may reach into the tens of thousands of dollars. As long as the cancelled debt is over $600, the creditor may send you a 1099c (and send a copy to the IRS as well), and this will become taxable income.

Bankruptcy, however, solves this issue, provided you file a bankruptcy prior to the cancellation of the debt. If you file bankruptcy, the debt will be discharged, not cancelled. The creditor will not be allowed to cancel the debt at this point, as it was included in the bankruptcy filing.

What if the debt is cancelled and a 1099c issued before you have an opportunity to file bankruptcy? Or, how can you deal with future cancelled debt if you choose not to file bankruptcy? Insolvency. If you can show that you were insolvent on the day that the debt was cancelled, causing the 1099c to be issued, then this cancelled debt income is waivable. Insolvency basically means that your liabilities exceed your assets. And to show that you are insolvent, IRS Form 982 must be completed and submitted with your Federal tax return. Upon receipt of IRS Form 982, the IRS will determine if you were insolvent and if the cancelled debt income thereby is waivable. Often, I will have clients who have cancelled debt income meet with a CPA to prepare the tax return and IRS Form 982.

If you are facing cancelled debt income (1099c income) or are interested in bankruptcy, please contact me today to schedule your free in-office bankruptcy consultation in Eugene.

Federal & State Bankruptcy Exemptions: Household Goods & Furnishings

As discussed in the last post, exemptions are laws that protect your property when you file for bankruptcy relief. Most people get to keep all of their property when they file a chapter 7 bankruptcy because of the protections afforded by exemptions.  This post will extend the discussion of bankruptcy exemptions, and highlight one particular exemption: the exemption that protects household goods and furnishings.

Broadly speaking, household goods and furnishings are just that: items found in the household, including appliances, plates and flatware, electronics, furniture, clothes, books, pets, musical instruments, and so on.  And as mentioned in previous posts, Oregon has two bankruptcy exemption schemes, or sets of laws that protect your property when you file for bankruptcy relief.  These exemption schemes are: the Federal Exemption scheme and the Oregon Exemption scheme.  A person who files either a chapter 7 or a chapter 13 bankruptcy must elect to use either Federal exemptions or Oregon Exemptions in his or her bankruptcy, but cannot mix-and-match exemption schemes.  The two exemptions that protect household goods are discussed below:

1.  Federal Exemption:

The Federal Exemption that protects household goods, furnishings, and the like, allows a person to protect $12,250 in the aggregate on such goods, with the limit of $575 per any one item.  Now, if you jointly file with your spouse, this $12,250 in the aggregate amount increases to $24,250 in the aggregate amount.  In addition, a person may use the Federal wild card exemptions to protect an additional $12,725 per individual bankruptcy filer on top of any exemptions used to protect household goods. In theory, this could allow a married couple who file bankruptcy together to protect up to $49,950 in household goods and furnishings, given the right set of circumstances!

2.  Oregon Exemption:

The Oregon exemption that protects household furniture, household items, utensils, radios,  TVs and other like items, only amounts to $3,000, and provides far less protection that using Federal Exemptions.

Federal exemptions, as with many cases, wins out in terms of protecting a person’s household goods and furnishings.  The amount that can be protected using Federal exemptions easily dwarfs the amount that can be protected using Oregon exemptions.

If you are interested in learning more about chapter 7  bankruptcy and chapter 13 bankruptcy and how exemptions may be used to protect your property when you file for bankruptcy relief, please contact me today to schedule your free in-office bankruptcy consultation in Eugene.

I look forward to hearing from you.

 

Sincerely,

 

Tom Butcher
Attorney at Law
116 Highway 99 N #101
Eugene, Oregon 97402
541 762-1967 tele
tomkbutcher@gmail.com

 

Pursuant to 11 U.S. Code § 528: "I am a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code."

CAUTION: This website is to provide visitors with basic information about my law office, and information about how to contact me. Every situation is different, and no information on this website is legal advice on any specific question. You should not act on any of the information without first conferring with an attorney licensed in your jurisdiction. No attorney-client relationship or privilege is formed by visiting this site or by unsolicited email. Therefore, initial emails should not contain any confidential information. I may already represent parties adverse to you and cannot advise or represent you until we check for conflicts. I am licensed only in Oregon and offer my services only to those doing business in Oregon, unless I am associated with local counsel in accordance with other states' laws. The applicable laws may have changed after the information on this website was published. While effort is made to keep the information current, you should not presume that all information is up to date. You must confer with an attorney to be sure you have current information.

ContactUs.com