Archives for October 2017

Happy Halloween!

Happy Halloween!

Do You Qualify for Chapter 13 Bankruptcy Protection?

There’s a common misconception that, if you fail to meet the means test to file for protection under Chapter 7 of the bankruptcy laws, you can always file for debtor’s reorganization under Chapter 13, obtaining the benefit of the automatic stay and setting up new payment arrangements with your creditors. To the contrary, there are certain minimum requirements you must meet to be eligible for Chapter 13 bankruptcy protection.

You Must Be an Individual

Chapter 13 is not available to businesses of any kind. Even if you were running your business as a sole proprietor, you cannot seek protection under Chapter 13. All business reorganizations under the bankruptcy laws are under Chapter 11 (with extremely limited exceptions). If you own a business, but are not seeking to protect the business, you can qualify for Chapter 13 with respect to any business debts for which you are personally liable.

You Must Have Enough Income

This is essentially the flipside of the means test under Chapter 7. A Chapter 13 is a reorganization plan, where you make new agreements to repay your creditors. The bankruptcy trustee and the bankruptcy court won’t approve your plan if you can’t show that you’ll be able to make the proposed payments.

Your Debts Must Be Manageable, Based on Your Disposable Income

There’s a ceiling on the amount of debt that can be restructured through a Chapter 13 petition. Currently, you won’t qualify if your secured debt exceeds $1,184,200 or your unsecured debt is more than $394,725.

You Must Be Current on All Income Tax Filings

To qualify, you must verify that you have filed all state and federal tax returns for the last four years.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we provide a free initial consultation to every client. To set up a meeting, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey

File your tax returns before the IRS does a tax assessment, or you could lose your right to discharge taxes

Income taxes may sometimes be discharged in a personal bankruptcy without full payment of the tax. For example, this might be true if the return is timely filed and more than three years have gone by since the last due date for the return, or if the return were filed late and more than 2 years have gone by. But, waiting too long can have dire results as Thomas Giacchi found out the hard way.

Mr. Giacchi did not file his 2000-2002 federal tax returns until after the IRS had estimated and assessed his taxes for those years, without his help. Only then did he file late returns, which showed he owed less than what the IRS estimated. He filed a Chapter 7 bankruptcy more than 3 years after his returns were filed and got a discharge. He then went back to bankruptcy court and filed suit asking the bankruptcy court to rule that his taxes for those years were discharge. He lost, and on appeal the Third Circuit Court of Appeals agreed.

The problem for Mr. Giacchi is that for a bankruptcy discharge he had to have filed a return that represented “an honest and reasonable effort to comply with the tax law”. Following other circuit courts of appeal, the Third Circuit held that filing a return after the IRS had already gone to the trouble of calculating his tax did not meet this test. Under the tax laws, “the purpose of a tax return is for the taxpayer to provide information to the government regarding the amount of tax due”  and once the IRS has to calculate the tax due without this assistance, a later tax return is no longer an “honest and reasonable attempt to comply”

If only Mr. Giacchi had filed sooner, he might have been able to discharge the old tax liabilities.

A word to the wise: file before the IRS catches up to you.

While we are not tax attorneys or qualified to give tax advice, we recommend not ignoring tax obligations.

[IRS CIRCULAR 230 DISCLOSURE:  Pursuant to Treasury Regulations, any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used or relied upon by you or any other person, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any tax advice addressed herein]

Defending Collections Lawsuits on Credit Cards

Worried couple reading credit card bill sitting on a couch

It can happen to just about anyone. Things are going well, you’ve got a great job, so you feel confident putting a few extra items on a credit card. Before you know it, you have a hefty balance, but it’s okay, you’ll just pay it off over a few months. Then disaster strikes…you get laid off or sick and suddenly, you’re being hounded by credit card companies. Maybe you’ve even been served with a complaint. What’s your best course of action when you have to defend a collections lawsuit on a credit card debt?

The first thing you need to do is retain legal counsel. Don’t try to defend a lawsuit by yourself. It may seem like you are saving money, but it can cost you a lot more in the long run.

Next, collect all records you have related to the debt—any receipts, any records of payment. Your attorney will want as much accurate information as possible. In addition, request that the collection agency or its legal counsel produce all records they have. There’s a good chance that they have little to nothing, as most credit card collections are conducted by companies or people who have purchased the debts at a fraction of their face value. They may have little or no documentation other than the alleged amount of the debt.

If you haven’t hired an attorney yet and you’ve been served with a complaint, make certain you file a response to the complaint. The technical term for this is an “answer” to the complaint.

Send it to the court by certified mail and send a copy to the law firm and/or the collection agency that had you served. If you have been served with a complaint, though, it’s probably time to step back and look at the broad picture—is this a single problem or do you have far-reaching financial problems? Often, it’s better to attempt to negotiate a payment plan than to litigate. You may actually end up paying less through a negotiated settlement and you won’t have legal or court costs.

Contact Neuner & Ventura, LLP

We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey

Recognized Quality & Experience