How to Pay for Your Bankruptcy.

Posted on May 6, 2012 by admin

I am often asked: how a person is to come up with the funds to file bankruptcy? Of course, when you have reached this point, coming up with the legal and filing fees is often difficult. Difficult? Yes….. But also worthwhile and very possible.

The first thing to realize is that you can and should stop paying on dischargeable debt, like credit cards. Once you have made the decision to file, paying these creditors, for debts that will go away in your bankruptcy case, is a waste and you should of course save that money for the bankruptcy.

Secondly, although lawyers are prevented from encouraging people to incur debt to secure bankruptcy fees, it is legal and possible to do so. You can borrow the money from uncle Fred, list him as a creditor, and repay the money after the case is filed if necessary. You can also get gifts from friends and or family members and use those funds to pay for a bankruptcy.

Where necessary, a bankruptcy is a beautiful thing, and well worth the expense. The 2005 revisions to bankruptcy law made things a bit more involved for a bankruptcy lawyer, so competent lawyers will be charging more than in the past. The thing to keep in mind is that cheap lawyers are cheap for a reason, and they can end up being very expensive in the long run.

I heard a story recently which shows the futility of hiring a cheap lawyer to do your bankruptcy. A couple who lived in a home with no equity and who also owned a rental home with $50,000 of equity recently filed their bankruptcy case. Because they hired a cheap lawyer, one who has hundreds of cases going at a time and who does not do a good job on them, they were not told one crucial thing in their case. They were not told to move into the rental home before filing. That would’ve allowed them to keep the home in bankruptcy, and they could’ve moved back to their “regular” home later. It was a $50,000 mistake, born of greed and unprofessionalism on the lawyer’s part, and a desire to “save money” on the clients’ part.

In summary, meet a few bankruptcy lawyers before you make a decision, a quality lawyer will tailor the price to your situation and can help you arrange things so that the expense of the bankruptcy is manageable. I also routinely adjust fees downward for my brave clients that are battling chronic illnesses. I can be reached at (303) 670-4242. http://www.gausslaw.com

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Discharging Taxes in Bankruptcy

Posted on April 27, 2012 by admin

This area of the bankruptcy code is very complex and there are exceptions to every rule involved. Trust fund or 941 taxes are not dischargeable, only SOME income taxes are dischargeable. There are five basic tests to meet in order for income taxes to be dischargeable in bankruptcy, as follows:

1. The taxes became due more than three years before the bankrutpcy filing. For example, if Ted files his year 2000 tax returns on February 14, 2001, and he owes $5000, the $5000 becomes dischargeable on April 15, 2004 which is three years from the date the year 2000 taxes became due.

2. If the original tax return was filed late, the return must have been filed more than two years before the bankruptcy filing. For example, if Susan files her 2001 tax return on Oct. 20, 2002 and owes $10,000, the $10,000 becomes dischargeable on Ocgtober 20, 2004.

3.  The taxes must have been assessed more than 240 days prior to  the bankruptcy filing.

4. The tax return must not be fraudulent.

5.  The taxpayer must not be engaged in an effort to avoid taxes.

Obtaining a tax transcript can be helpful to your lawyer when he or she is making these determinations about taxes and bankruptcy. Even if you cannot discaharge taxes in bankruptcy, having your act together with taxes and knowing what you owe can help you qualitfy for a chapter 7 bankruptcy, which is generally easier than chapter 13 bankruptcy.

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Obamacare Faces Constitutional Challenge

Posted on March 7, 2012 by admin
The Supreme Court will hear almost 6 hours of oral argument on the issue of whether or not the Patient Protection and Affordable Care Act/ ‘Obamacare’ violates the interstate commerce provisions of the US Constitution, beginning on March 26, 2012.
The law will impose an annual penalty of $95, or up to 1% of income, whichever is greater, on persons who don’t secure coverage. The fine will rise to 2.5% or $695 by 2016. There are exemptions to the penalty for religious beliefs and in cases of financial hardship. This provision of the law is scheduled to go into effect Jan 1, 2014. Because the ever rising cost of medical care plays a big role in many of my bankruptcy client’s lives, often forcing them into bankruptcy, I am trying to study the provisions of Obamacare with an eye toward advising my clients.
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