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Michigan Bankruptcy Blog

Archive for March, 2012

“I” Is for Internal Revenue Service (IRS) Tax Debt in Bankruptcy

Posted by Peter Behrmann, Esq. On March 30th

“I” Is for Internal Revenue Service (IRS) Tax Debt in Bankruptcy

Debt owed to the Internal Revenue Service and the State of Michigan can be discharged in bankruptcy in certain situations!

One of the most common misconceptions about personal income tax debt owed to the IRS is that is cannot be discharged in bankruptcy. 

 However, IRS tax debt can be discharged in a chapter 7 or a chapter 13 Bankruptcy if the following five part rule is met:

  1. The due date for filing a tax return is at least three years before you filed bankruptcy.  This means that as of April 16th of this year any taxes owed from 2008 backwards could be completely discharged in bankruptcy.
  2. The tax return was filed at least two years prior to you filing bankruptcy.  This means if you were filing bankruptcy on April 16th of this year to discharge 2008 taxes, you would have had to file your 2008 taxes before April 15th of 2010.
  3. The tax assessment is at least 240 days old.   Under normal situations, this is not an issue, because most taxes are assessed when filed, or soon thereafter.  This would be an issue if you were recently audited and just received an assessment, or have been attempting to do an offer in compromise with the IRS then you might have to wait the required 240 days before you could discharge your tax debt in bankruptcy.
  4. The tax return is not fraudulent.  Just like in bankruptcy normally, debts created by fraud are not dischargeable in bankruptcy. 
  5. The taxpayer is not guilty of tax evasion.  Basically, you cannot be intentionally trying to avoid your tax liability, and then file bankruptcy. 

Keep in mind that these rules only apply to personal income tax debt.  These rules do not apply to trust fund tax debt (Sales tax, payroll taxes, etc) as these are not dischargeable in bankruptcy.  Further, if the IRS has filed a tax lien on your property the filing of your bankruptcy will not remove the tax lien, it will just remove your personal liability on the debt owed to the IRS, meaning you will still have to pay off the tax lien in order to sell your property in the future. 

In certain situations where you are not eligible to discharge tax debt in Chapter 7 Bankruptcy, a Chapter 13 repayment plan may better treat your situation.  In a Chapter 13 bankruptcy, we can treat your recent tax debt to the IRS and the State of Michigan in a repayment plan where the tax debt is paid back at 0% interest over a three to five year period.  This is often a much better choice then directly paying the IRS, because they continue to incur interest and late fees that they are prohibited from doing when you file a Chapter 13 Bankruptcy.

 

Photo Credit:  Leo Reynolds

 

Peter Behrmann is a Michigan bankruptcy attorney.  From my Livonia, Michigan location, I represent clients throughout Metro Detroit and beyond, including Garden City, Wayne, Westland, Redford, Dearborn, Taylor, Ann Arbor, Belleville, Northville, Novi, Farmington, Farmington Hills, Plymouth, Canton, and the Counties of Wayne, Oakland, Livingston, and Washtenaw. My practice is limited to helping consumers like you file Chapter 7 and Chapter 13 Bankruptcy.

 

Other Bankruptcy Attorneys Blogging on the Letter “I”

“H” is for Household Median Income

Posted by Peter Behrmann, Esq. On March 19th

“H” is for Household Median Income

 

Household median income is an important part of any bankruptcy analysis.  During your free consultation at my Livonia, Michigan Bankruptcy Law Office, I always figure out what your household income is to determine how your income relates to the Household median income for the state of Michigan.

 

The following are the current household median income figures for the state or Michigan.

 

Michigan Household of 1$43,677 Household of 2$50,079 Household of 3$58,467 Household of 4$70,237

 

 *Add $7,500 for each individual in excess of 4.

 

Your household income is important in both a Chapter 7 and a Chapter 13 Bankruptcy

 

In a Chapter 7 Bankruptcy, your household income is the first test in figuring out if you are even eligible for Chapter 7 relief.  For example, a single guy making $65,000 per year is most likely not eligible for Chapter 7.  However, a married couple with three children making $65,000 per year should be eligible for Chapter 7 Bankruptcy relief.

 

In a Chapter 13 Bankruptcy, your household income is the first test in figuring out if you Chapter 13 payment plan will be 36 or 60 months.  For example, a single guy making $65,000 per year would be in a Chapter 13 Bankruptcy for 60 months.  However, a married couple with three children making $65,000 per year could complete a Chapter 13 in just 36 months.

 

Like anything in Bankruptcy the above are not bright line rules, there are exceptions and this is just one of the reasons you should consider using a law firm like ours that practices exclusively in the field of Chapter 7 and Chapter 13 Bankruptcy. 

 

Photo Credit  TooFarNorth

Peter Behrmann is a Michigan bankruptcy attorney.  From my Livonia, Michigan location, I represent clients throughout Metro Detroit and beyond, including Garden City, Wayne, Westland, Redford, Dearborn, Taylor, Ann Arbor, Belleville, Northville, Novi, Farmington, Farmington Hills, Plymouth, Canton, and the Counties of Wayne, Oakland, Livingston, and Washtenaw. My practice is limited to helping consumers like you file Chapter 7 and Chapter 13 Bankruptcy.

 

Other Bankruptcy Attorneys Blogging on the Letter “H”

“G” is for Guaranty in Bankruptcy

Posted by Peter Behrmann, Esq. On March 12th

Personal Guaranty, Chapter 7, Chapter 13 Livonia MichiganA Guaranty is a creditor that is often forgotten about when people file bankruptcy.  Regardless, the bankruptcy code is very clear that you have to list ALL of your creditors when you file bankruptcy.  One of the first things you will receive when you visit my Livonia Bankruptcy Office is a list of disclosures that I am required to supply you with under the bankruptcy code.  The Bankruptcy Code is very clear; you must list all of creditors, including Guarantees.

I think the number one reason people forget about their Guaranty debt, is because it is usually not the debt that’s currently forcing them to visit me.  Sometimes the debt they guaranteed is not even on their credit report, they may not receive monthly bills on the Guaranty and to them they do not really feel they owe the debt.  I hear it all the time, “That’s not my car loan, it is my sisters, I just co-signed for it.”  Nonetheless, it is very important that we discover these debts and list them in your bankruptcy for your protection.

 

Let’s look at the definition of Guaranty.  A Guaranty is a formal pledge to pay another person’s debt, or to perform another person’s obligation in the case of default.  Further, a Guaranty is serving as security for a pledge to pay a debt.

 

Some examples of Guaranty’s that need to be listed in your bankruptcy are:

  • Serving as a co-signer on a car loan for a friend or family member
  • Serving as a co-signer on any other debt for someone else
  • Guaranty’s on debts for a business
  • Guaranty’s of your family members student loans.

 

The next questions I here:  What is going to happen to my sister’s car if I file for bankruptcy?

Well if your sister purchased the car and you co-signed on the purchase, your bankruptcy is simply going to eliminate the potential Guaranty liability if your sister was to not make her car payment on time.  Your sister can still maintain and keep her car, so long as she continues to make the payments as they come due.   You’re simply no longer on the hook if she was ever to default on the obligation.

 

As you can see Guaranty debts are just as important as any other debts you have when your file bankruptcy.  The best advice I can give you it to make your bankruptcy attorney 100% aware of any and all debts you have, including co-signed and Guaranty obligations you have. 

 

I offer a one-hour in-depth consultation at no cost to explain the options you have to obtain a fresh start Call 734-779-9999 today!

 

Peter Behrmann is a Michigan Bankruptcy Lawyer.  From my Livonia, Michigan location, I represent clients throughout Metro Detroit and beyond, including Garden City, Wayne, Westland, Redford, Dearborn, Taylor, Ann Arbor, Belleville, Northville, Novi, Farmington, Farmington Hills, Plymouth, Canton, and the Counties of Wayne, Oakland, Livingston, and Washtenaw. My practice is limited to helping consumers like you file Chapter 7 and Chapter 13 Bankruptcy.

Photo Credit: TooFarNorth

 

Other Bankruptcy Attorneys Blogging on the Letter “G”:

  • Garbage In, Garbage Out – Wisconsin Bankruptcy Lawyer, Bret Nason
  • Garnishment – New York Bankruptcy Lawyer, Jay S.Fleischman
  • Garnishment – Maui Bankruptcy Attorney, Stuart Ing     
  • Garnishment – Philadelphia Suburban Bankruptcy Lawyer, Chris Carr MBA
  • Garnishment – Daniel J. Winter, Chicago Bankruptcy Lawyer       
  • Gee!!! – Philadelphia Bankruptcy Lawyer, Ray Kempinski              
  • General Unsecured Creditor – Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell       
  • Gifts – Los Angeles bankruptcy attorney, Mark J. Markus              
  • Goals – Colorado Springs Bankruptcy Attorney Bob Doig
  • Good Faith – Taylor, Michigan Bankruptcy Attorney, Christopher McAvoy             
  • Good Faith – Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein 
  • Good Manners – Cleveland Area Bankruptcy Lawyer, Bill Balena
  • Good to me – San Francisco Bankruptcy Attorney, Jeena Cho     
  • Guaranty – Northern California Bankruptcy Lawyer, Cathy Moran
  • Guilt – Jacksonville Bankruptcy Attorney, Monica D. Shepard      
  • Gumshoe – Marin County Bankruptcy Attorney, Catherine Eranthe         
  • Guilt – Detroit Michigan Bankruptcy Attorney     

“F” is for Free Bankruptcy Consultation

Posted by Peter Behrmann, Esq. On March 6th

Free Livonia Michigan Bankruptcy Consultation Chapter 7 & 13Free Consultation

I provide every new bankruptcy client with a free initial consultation that is completely confidential.  I will review your specific situation and recommend a solution that I feel will work for you.  Sometimes, my solution is Chapter 7 or Chapter 13 Bankruptcy, sometimes my solution is Credit Consolidation, Short Sale, or doing an offer and compromise on your debt. Regardless, of your issues the free consultation allows me to not only explain the bankruptcy process to you, but allows me to get a complete understanding of your situation and develop a plan to get you out of debt!

What to expect at your Free Consultation:

At this consultation, I first go through and get a complete list of your debts, including:

  • Mortgages
  • Vehicle Loans
  • Credit Cards
  • Medical Bills
  • Student Loans
  • Tax Debt (PROPERTY, IRS, STATE and CITY)
  • Pay Day Loans
  • Personal Loans (Even Personal Loans from Family Members)
  • Utility Bills
  • Lawsuits and Judgments
  • Any other debts of any kind you have

I will then take you through your potential assets, including:

  • Real-estate
  • Vehicles (Boats, Trailers, Snowmobiles, etc)
  • Cash
  • Bank Accounts
  • Potential Lawsuits
  • People who owe you money
  • Stocks, bonds, mutual funds, 401Ks and IRA’s
  • Life Insurance
  • Any other assets of any kind you have

Next, I will take you through all of your income and expenses, including:

  • Income from employment
  • Income from self-employment
  • Income from social security, or other retirement income
  • Expenses needed for your basic living
  • Expenses needed for your business or self-employment
  • Any other Income or Expenses of any kind that you have

Lastly, after I have a complete understanding of your financial situation I will take you through an educational packet which I will provide you with at your free consultation.  My educational packet will provide you with:

  • The difference between the different kinds of bankruptcy
  • The Bankruptcy Process, and what to expect when filing bankruptcy
  • My advice on what you should do IF you are going to file bankruptcy
  • My advice on what kind of bankruptcy you should, or should not do
  • A written quote on what your total bankruptcy will cost you, including all court costs, credit counseling fees
  • A written payment plan to make your bankruptcy affordable to you

At the end of the free consultation, I will review any last questions you have and it’s your choice what to do next.  Some people decide to get started on the spot, some people wait a day or two to get started, and some clients come back three years later to finally get started.  Regardless, I believe the consultation should be no pressure, you need to make the decision, with my advice, when is the best time for you to file bankruptcy.  During the free consultation I will simply advise you if bankruptcy is a viable option or if other options may be available for you, you will then be able to make the decision when you want begin the process of receiving your fresh start!

 

I offer a one-hour in-depth consultation at no cost to explain the options you have to obtain a fresh start Call 734-779-9999 today!

 

Peter Behrmann is a Michigan Bankruptcy Lawyer.  From my Livonia, Michigan location, I represent clients throughout Metro Detroit and beyond, including Garden City, Wayne, Westland, Redford, Dearborn, Taylor, Ann Arbor, Belleville, Northville, Novi, Farmington, Farmington Hills, Plymouth, Canton, and the Counties of Wayne, Oakland, Livingston, and Washtenaw. My practice is limited to helping consumers like you file Chapter 7 and Chapter 13 Bankruptcy.

Photo Credit:  TooFarNorth

 

Other Bankruptcy Attorneys Blogging on the Letter “F”:

  • Failure Begets Success – Philadelphia Suburban Bankruptcy Lawyer, Chris Carr
  • Family Farmer/Fisherman – Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell           
  • Financial Fatigue – Cleveland Area Bankruptcy Lawyer, Bill Balena       
  • First – Northern California Bankruptcy Lawyer, Cathy Moran
  • Foreclosure – Colorado Springs Bankruptcy Attorney Bob Doig   
  • Foreclosure  – Kauai Bankruptcy Attorney, Stuart Ing          
  • Foreclosure  – Jacksonville Bankruptcy Attorney, Monica D. Shepard           
  • Forgiveness of Debt  – Los Angeles Bankruptcy Attorney, Mark J. Markus   
  • Forms – Jacksonville, Florida Bankruptcy Attorney, J. Dinkins G. Grange      
  • Fraud  – Philadelphia Bankruptcy Attorney, Kim Coleman     
  • Fraudulent Transfer – Downriver, Michigan Bankruptcy Attorney, Christopher McAvoy           
  • Fraudulent Transfer – San Francisco Bankruptcy Attorney, Jeena Cho 
  • Free Consultation – Wisconsin Bankruptcy Lawyer, Bret Nason   
  • Fresh Start – Marin County Bankruptcy Attorney, Catherine Eranthe       
  • Fresh Start – Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein           
  • Fresh start – Daniel J. Winter, Chicago Bankruptcy Lawyer           
  • Future Flow Agreement – New York Bankruptcy Lawyer, Jay S. Fleischman             
  • Bankruptcy Attorney Fees – Michigan Bankruptcy Attorney Kurt OKeefe  

“E” is for Exemptions in Bankruptcy

Posted by Peter Behrmann, Esq. On March 5th

Michigan Bankruruptcy Exemptions in Chapter 7 BankruptcyBankruptcy Exemptions Overview:

Bankruptcy offers you a fresh start if you’re overwhelmed by debt.  When you go through bankruptcy most of your debts are discharged quickly in a Chapter 7, or you pay them back with a payment you can afford in a Chapter 13.  However, when you file bankruptcy you may not be able to keep everything you own if is not covered by a bankruptcy exemption.  Basically, the Bankruptcy Code provides you with a list of property you will be able to protect and keep with exemptions when you file bankruptcy.  If the assets you own fit into a proper exemption, you will keep the asset when you file bankruptcy.  If the assets you own are not covered by an exemption, the bankruptcy trustee could liquidate the asset for the benefit of your creditors.

 

Bankruptcy Exemptions Choices:

 

For most people who file bankruptcy in Michigan, we have two choices of exemptions, state or federal.  For the most part, the state exemptions are a poor decision in Michigan.   I almost always use the federal exemptions for my clients. 

 

The Federal Bankruptcy Exemptions:

The federal exemptions allow my clients to keep the following assets:

  • $21,625 worth of equity in your primary home ($43,250 for a home owned jointly by a husband and wife)
  • $3,450 of equity in a vehicle
  • $11,525 of household goods and furnishings
  • $1,450 worth of Jewelry
  • $1,150 of any property (Cash, equity in a car over the exemption above, etc.)  plus up to $10,825 of any unused amount of the exemption for equity in your home
  • $2,175 in assets needed for your work or profession
  • Term Life insurance policies
  • $11,525 in cash value in Whole life insurance policies
  • Professionally prescribed health aids
  • Social security benefit, unemployment compensation, or a local public assistance benefit, veterans’ benefit, disability, illness, or unemployment benefit, alimony, support, or separate maintenance payments
  • Some payments under a stock bonus, pension, profit-sharing, annuity, or similar plans
  • IRA and 401k retirement funds

*This list is not a complete list, a complete list of the Federal Exemptions are available here.

As you can see the exemptions available are pretty generous.  I once filed a bankruptcy for a married couple with $20,000.00 in a bank account and they were able to keep every cent.  The best advice I can give you is to make your bankruptcy attorney aware of every asset you own so it can be protected by the proper exemption.

 

Chapter 7, Chapter 13 Bankruptcy is all I do!

 

Peter Behrmann is a Michigan bankruptcy attorney. From my Livonia, Michigan location, I represent clients throughout Metro Detroit and beyond, including Garden City, Wayne, Westland, Redford, Dearborn, Taylor, Ann Arbor, Belleville, Northville, Novi, Farmington, Farmington Hills, Plymouth, Canton, and the Counties of Wayne, Oakland, Livingston, and Washtenaw. My practice is limited to helping consumers like you file Chapter 7 and Chapter 13 Bankruptcy.

 

Photo Credit:  TooFarNorth

 

Other Bankruptcy Attorneys Blogging on the Letter “E”:

 

  • Early Preparation – Jacksonville Bankruptcy Lawyer, Monica D. Shepard
  • Eligibility – Philadelphia Bankruptcy Attorney, Kimberly Coleman
  • Emergency Filing – Colorado Springs Bankruptcy Attorney Bob Doig
  • Emergency Fund – San Francisco Bankruptcy Attorney, Jeena Cho
  • Equitable Distribution -Miami Bankruptcy lawyer, Dorota Trzeciecka
  • Equity – Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein
  • Equity – Marin County Bankruptcy Attorney, Catherine Eranthe
  • Euphoria – Cleveland Area Bankruptcy Lawyer Bill Balena
  • Everything – Daniel J. Winter, Chicago Bankruptcy Attorney
  • Eviction – Philadelphia Suburban Bankruptcy Lawyer, Chris Carr
  • Examination – Los Angeles Bankruptcy Attorney, Mark J. Markus
  • Exceptions to Discharge – Wisconsin Bankruptcy Lawyer, Bret Nason
  • Executory Contract – New York Bankruptcy Lawyer, Jay S. Fleischman
  • Exemptions -Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
  • Exemptions – Northern California Bankruptcy Lawyer, Cathy Moran Exemptions – Hilo Bankruptcy Attorney, Stuart Ing          
  • Exemptions – Downriver, Michigan Bankruptcy Attorney, Christopher McAvoy
  • Exemptions – Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein
  • Emotion – Los Angeles Bankruptcy Law Monitor, Christine A. Wilton