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Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

What Bankruptcy Does to Your Credit Score

Posted on December 5, 2018by Admin

A common concern people have when filing for bankruptcy is the effect it will leave on their credit score and their ability to access credit, again. While bankruptcy does affect your credit score, it is sometimes the last resort to rebuild your credit and your financial future. In fact, it is oftentimes easier to reestablish your credit after filing for bankruptcy, because you are essentially given a “clean slate.”

It helps to sort through the myths and facts before making that final decision, and if you do choose to file for bankruptcy, this does not mean all hope is loss. There are proven ways to rebuild your credit score after bankruptcy, and our clients are proof!

My credit score said on all three reports 775, I couldn’t believe that I had such a great score before 10 years. Tim for me was the best move I have made for my situation. I have no regrets, I am glad the past is the past. – Bill T.

Hi Tim- I just wanted to send a quick note and thank you and your team for handling my bankruptcy case. It is only a month or two after discharge, and my credit scores are already in the upper 600’s. – C.S.

The effects of bankruptcy on a person’s credit score depends on the score the filer had before filing for bankruptcy. If you have a higher credit score, the effect the bankruptcy will have will be more noticeable. However, if you have a lower credit score to begin with, the change may not be as much after filing for bankruptcy.

According to data from FICO, for individuals who had credit scores of 780 or more, the average amount of decrease is around 240, with a resulting credit score of 540. If the filer had a fair credit score of around 680, the decrease is on average 150 points, resulting in a score of 530. Both scores end up at roughly the same point, but the drop that the filer sees in getting to that score is noticeably different.

The good news is the American credit scoring system allows consumers to rebuild their credit score quite quickly after filing for bankruptcy. Even with a credit score at 550, you can still get back to a respectable score within one to two years through demonstrating good financial habits.

These habits include monitoring your credit report on a regular basis, ensuring that any accounts that are at a zero balance. Many financial experts recommend using a secured credit card to use for purchases to rebuild credit. After some time has passed and you have successfully used the secured card for a period, you may be able to slowly take on new credit, although it is never recommended that you have more than one account opened within a six-month period.

Rebuilding your credit is important for many reasons, the main one being it will allow you to be able to borrow in the future. Many filers worry that they will never be in the financial situation to purchase a home or qualify for another loan- these are all bankruptcy myths. Stick to a budget and a sound financial plan following bankruptcy, and you will be back on your feet before you know it.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Foreclosures

Foreclosure Rescue Scam Targets Hispanic Homeowners in Florida

Posted on December 3, 2018by Admin

A Florida law firm has been accused of running a predatory loan scheme, specifically targeting Hispanic homeowners struggling to pay their mortgage.

A lawsuit was filed last week by the Department of Justice, naming the Advocate Law Groups of Florida, Jon Lindeman and Ephigenia Lindeman as parties accused of violating the Fair Housing Act (FHA). The lawsuit states that the Lindemans violated the FHA by intentionally discriminating against Hispanic homeowners through a predatory mortgage loan modification and foreclosure rescue services scheme, which the lawsuit states ran between 2009 and 2015.

Over the course of these six years, the firm and the Lindemans are accused of using Spanish-language advertisements to target Hispanic homeowners, claiming that the firm could cut their mortgage payments in half. If a Hispanic individual followed up on these advertisements and came in for a consultation, the firm is accused of then promising to lower their mortgage payments in exchange for payment of upfront fees, which could be in the thousands of dollars, in addition to monthly fees.

Once the Hispanic clients made these payments, the firm told them to stop making their monthly mortgage payments and to cease communications with their mortgage lenders. The firm would also follow-up with a packet of documents the borrowers needed to read to understand the process, but these documents were written in English only, with no translation. The borrowers were told that these documents were sent to their bank on their behalf, and they contained statements that included an offer to the bank to return the homeowner’s residence in exchange for a rescission or cancellation of the mortgage without the borrower’s consent. This resulted in many of their clients losing their homes to foreclosure.

These clients who paid high retainers and fees to the firm, in exchange the law firm did very little on their behalf to get loan modifications or reduce their monthly mortgage payments.

It was not until three former clients of the firm filed complaints with the Department of Housing and Urban Development (HUD). HUD investigated the matter and then referred the issue to the DOJ.

The clients allege that they were targeted specifically because of their ethnic backgrounds then taken advantage of because of their lack of understanding of the English language. Had they understood the documents, they claim they would not have lost their homes and gone through the immense stress that followed with this scheme.

Click here to read more on this story.

Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure, please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Can Student Loan Lenders or the IRS Garnish Your Social Security?

Posted on November 30, 2018by Admin

If you are facing collection actions by your student loan lender or by the IRS, one of the first questions you may have is how far can they go to secure payment? Beyond the incessant calls and collection letters, can they garnish your social security?

Social Security income and retirement income are protected from garnishment under federal law by most collectors. However, does this protection include student loan creditors and the IRS? The IRS and public student loan lenders are authorized to garnish a portion of a senior’s Social Security income, this amount being capped at 15 percent of that person’s income. If the collection efforts are on behalf of state tax collectors or a private student loan entity, they cannot garnish Social Security of seniors’ retirement income. Before garnishing a senior’s Social Security income, the IRS or public student loan collector is required to notify the senior in advance via U.S. mail.

When it comes to pensions or Veteran’s Affair’s benefits, the IRS or public student loan collectors do not normally garnish these forms of income, so these benefits are, in fact, protected.

Once you have been notified that your Social Security income will be garnished, you do have options. The collection from these benefits from lower-income seniors can be stopped or at least the payments reduced significantly.

Seniors who are on the lower-income spectrum can apply and be approved for a Currently Not Collectible (CNC) status for past-due IRS taxes. These individuals must fall within a certain level of income, which is normally under 200 percent of the poverty line in most states. If they qualify, they will not have to pay for past IRS taxes, meaning their Social Security incomes will be protected from garnishment. It is important that seniors investigate whether they do qualify before paying. Many of them falsely assume that they have no choice but to pay. It helps to talk to a credit counselor or a bankruptcy attorney who can advise the individual on what his or her rights are.

When it comes to public student loans, lower-income individuals, including senior citizens, can attempt to qualify for an income-based repayment plan to help prevent the garnishment of their Social Security income. They may not be able to completely avoid the garnishment altogether, but they can at least reduce the amount being paid in accordance with their incomes. The process is somewhat more complicated than the IRS process, but it can be accomplished with proper guidance. If you can qualify for an income-based repayment plan, this savings can be just what you need to stay afloat financially.

Federal law explicitly states that Social Security benefits are exempt and such funds are protected in bankruptcy. If you are filing for Chapter 7 bankruptcy in Florida, you can use Florida bankruptcy exemptions to protect your property, your social security, retirement savings and more.

Click here to read more.

Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Going into the holiday season with debt? Proven ways to keep your finances in order.

Posted on November 29, 2018by Admin

The holidays are upon us, and so is the biggest shopping season of the year. U.S. shoppers have already spent $1.75 billion online, up 28.6 percent from 2017. Many people rely heavily on credit cards to make these purchases, and before they know it, their balances quickly spiral out of control. Here are some helpful tips to keep credit card spending under control and help you maintain your finances during the holiday season.

The first of these tips is to know your debt situation before you begin shopping. If you are already in debt, the thought of going even deeper into debt can be daunting. It helps to make a few rules first with yourself before beginning your shopping. The first of these rules is to set limits on your buying. Put together a list of everyone you will be purchasing gifts for before shopping. Set a limit on how much you will be spending for each person on your list.

If you have a large family, focus your efforts on the children first and suggest a holiday gift exchange or Secret Santa program for the adults. Keep in mind that it is not how much you spend on each person but the thought you put into the gift that counts. Consider making something if you cannot spend a great deal of money or give the gift of time or fun experiences for family members.

If you still want to purchase an item for your family members, you do not necessarily need to go with luxury items for gifts. Many stores have discount sections with gifts that are thoughtful and creative, and there is nothing wrong with shopping at a discount store for items. You can use these items as standalone gifts but also as craft supplies to make something unique and personal for your loved one. Many drugstores have a special holiday section that offers inexpensive gifts.

Sometimes you may also have money available to use without even knowing it. If you do have a credit card, check into whether you have credit card rewards that will allow you to purchase gifts using those points. You should also look into using store rewards programs when purchasing your gifts to get special bonuses, as well, for after the holidays. Use caution if you decide to utilize store credit cards, the risks oftentimes outweigh the rewards.

Sometimes using a credit card to make a purchase is unavoidable. If possible, try using a credit card with a zero percent APR on any of these purchases. Make sure you pay off the balance during the introductory period before being hit with penalties on these purchases. Most of these timeframes are anywhere from 12 to 20 months. Be sure to keep the purchases down to an amount that is manageable to pay off in the end.

After the holidays, consider doing a balance transfer on purchases made during the holiday season to a card with a zero percent introductory APR. Many credit card companies have special offers in January based on the assumption that consumers will spend more than they can handle over the holidays. Another option to pay off debt is a consolidation loan through your bank or financial institution.

Click here to read more.

Bankruptcy Law, Credit, Credit Card Debt, Timothy Kingcade Posts

Repayment Trick to Help Pay Down Credit Card Debt Faster

Posted on November 26, 2018by Admin

If you are struggling with credit card debt, you are not alone. As of September 2018, the Federal Reserve reported that Americans have more than 1 trillion dollars in revolving debt, which includes debt like credit cards. Many people are only able to make the monthly minimum payment on their credit cards each month. However, a new repayment trick is helping consumers get out of credit card debt faster.

The study produced by researchers at several universities, including Harvard Business School, University of Pittsburgh, the Ohio State University, and the Yale School of Management, show that a repayment by purchase method of paying off credit card debt can be even more successful when it comes to getting the balance down to zero.

This method is also known as a form of budget reckoning where you, as the account holder, review your credit card statement as soon as it is received to evaluate where most of your purchases are made. Rather than make one small payment based on the minimum payment quoted or even just a random lump sum, these researchers believe that by paying off certain expenses, you are more likely to make headway when it comes to paying off the balance.

The research recommends that you look at specific line items and see which items can be paid off each month. For example, instead of making a payment of a random amount, such as $100, add together the number of meals charged that month and pay that amount to cover all the food items purchased that month. You could also target a certain expense, such as a clothing purchase or a travel expense.

By paying off a specific item or type of expense, you are holding yourself accountable for what you spend every month. In addition, researchers argue that the cardholder feels more of a sense of accomplishment after paying off a specific item rather than throwing a minimum amount towards a large balance.

American Express offers a similar plan called “Pay It Plan It,” which lets cardholders split up large purchases of more than $100 to repay them over time. A fixed monthly fee comes with the use of this program.

We offer some important tips for eliminating credit card debt. Some utilize the snowball method whereby they focus all their efforts in paying a higher interest card down, focusing on one card at a time. Another method is through the “island” approach where the consumer has two credit cards: one which is paid in full every month and the other card, which is a promotional no-interest or low-interest rate for big purchases, allowing the person to finance those large purchases over time. Keeping to a strict budget is important if you are planning on using this approach.

Please click here to read more…

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Robocall Harassment Suit Results in $9 Million Judgment

Posted on November 20, 2018by Admin

Robocalls seem to have become a common nuisance for many Americans. While it may seem like you have no choice but to deal with these annoying phone calls, for many who were dealing with robocalls from a debt-collection company in California, they have received justice in a recent settlement.

The settlement involves IQor Holdings and its subsidiary, Allied Interstate. Allied Interstate is alleged to have harassed consumers in 18 California counties with thousands of robocalls. The lawsuit was originally filed by the Riverside County District Attorney’s Office. Later, Santa Clara, San Diego and Los Angeles counties joined, and these counties were then followed by Solano, Sonoma, Santa Cruz and San Mateo counties.

Out of this $9 million, $1 million will go towards covering the government’s attorney’s fees and legal expenses. The rest of the settlement will be divided appropriately between the counties listed in the lawsuit. The largest four counties will each receive $1.6 million, and the rest will be divided among the other counties.

Allied Interstate refused to admit any wrongdoing and insisted in a statement that the calls mentioned in the lawsuit involved calls dating back to 2011 and that technology had evolved based on interpretations of the law. The company maintained that the calls were within legal requirements and that their new policies have been adjusted in accordance with the law.

However, this case was the eleventh one filed against the company in over ten years. Before the most recent settlement, the largest payout was $1.75 million, paid to the Federal Trade Commission. In 2017, the company also paid $500,000 in a settlement brought by five other states.

The company is also required to provide training to its employees about regulations regarding debt collection calls. In addition, the company is required to keep records of calls and complaints and conduct third-party annual audits for the next five years.

This lawsuit does not represent an isolated instance. Callers are contacted every day from robocalls. According to data from YouMail, a robocall blocking service, in the month of August 2018, consumers were bombarded with over 148.8 million automated messages daily. These figures break down further to 1.6 calls every second for an average of 13 calls per person per month. Many people get even more than these numbers indicate.

You do have rights if you are one of the Americans being harassed by repeated robocalls. One can hope that this lawsuit will send a warning to other companies doing the same, but in the event it does not, these calls should be reported to the FTC and your local law enforcement.

Please click here to read more.

Bankruptcy Law, Credit, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

New FICO Program Aims to Help Consumers Improve Credit Scores

Posted on November 15, 2018by Admin

Consumers are always looking for new ways to improve their credit scores. Lenders and other financial institutions use these scores to determine whether a consumer is a risk when it comes to receiving a loan or credit so it is important that the scores reflect a consumer’s positive financial behavior. Currently, several different credit scores are available to financial institutions and lenders based on consumer behavior, but now there is one more as FICO launches its “opt-in” credit score.

FICO is the largest and arguably best-known company that provides software to calculate a person’s credit score. Originally known as Fair, Issac and Company, FICO has now become a fixture for consumer lending in the U.S, and a consumer’s FICO score is often seen as a major factor in determining a consumer’s fiscal responsibility.

The traditional way of improving a credit score has been for the consumer to exercise good financial behavior, such as paying bills on time, keeping a low balance on their credit card accounts, and avoiding spending over their given card’s limit. While this behavior is still encouraged, FICO is offering a new way to incorporate good financial data into a consumer’s FICO credit score.

This new score is being referred to as the Ultra FICO Score. It is a product created in partnership with two other financial institutions, Finicity and Experian, and allows the consumer to give these companies permission to have electronic access to certain financial information that will help boost their credit scores. This access can include data from the consumer’s bank accounts to show how long these accounts have been open, provide proof that the consumer has savings and show frequency of activity in these accounts.

For consumers who have credit scores in the upper 500s to lower 600s, it is hoped that the Ultra FICO program will help these individuals rebuild their credit, especially if they are struggling after a significant crisis in their lives. This program is expected to launch at the start of 2019. However, the access to the pilot program will be limited until approximately mid-2019.

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

When Filing for Bankruptcy is the Best Option for Medical Debt

Posted on November 14, 2018by Admin

It only takes one medical crisis to set you back thousands of dollars. In fact, medical debt is the number one reason people file for bankruptcy. Bankruptcy is a part of the U.S. Constitution built to help people in financial crisis. So how do you know when it’s the right time to file bankruptcy?

The following factors are indicators that you should consider filing for bankruptcy, or at least sit down with an experienced bankruptcy attorney to discuss your options in more detail.

If your debt amount is more than 40 percent of your income. The higher the debt-to-income ratio a person has, the less likely it is he or she will earn enough money to ever pay back the debt;
If you are using debt, such as credit cards or unsecured personal loans, to pay for other debts;
If your debts include items that can be liquidated in bankruptcy, such as medical debt, credit cards or personal loans;
You are using payday loans to help cover necessities before your next paycheck. This is oftentimes a sign your expenses are exceeding your income;
If you are forgoing necessities such as healthcare, prescriptions, or food;
If the collection calls have reached a breaking point;
If you have been threatened with a lawsuit, are being sued by a creditor or your wages are being garnished.

How is Medical Debt Handled in Bankruptcy?

In bankruptcy, medical debt is treated the same as credit card debt. Medical bills are listed as general unsecured debt and can be easily wiped out in a Chapter 7 bankruptcy filing. Making the decision to file for bankruptcy is never an easy one. It can be difficult to get past some of the myths associated with filing for bankruptcy. Sometimes by waiting, an individual facing a lot of debt can find himself or herself in an even worse situation. Filing for bankruptcy can help protect valuable assets, including your home, pension, IRA and social security. It will put an end to wage garnishment and any lawsuit being filed to collect on the debt, thanks to the protections of the automatic stay.

Those who have experienced illness or injury and found themselves overwhelmed with medical debt should contact an experienced Miami bankruptcy attorney. In bankruptcy, medical bills are considered general unsecured debts just like credit cards. This means that medical bills do not receive priority treatment and can easily be discharged in bankruptcy. Bankruptcy laws were created to help people resolve overwhelming debt and gain a fresh financial start. Bankruptcy attorney Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Uncategorized

Avoid these Student Loan Repayment Mistakes

Posted on November 12, 2018by Admin

Repaying student loan debt can be a daunting process. It can seem like the end is never in sight. Student loan borrowers and those who co-signed these loans are not alone in the struggle. The amount of student loan debt has increased by $110 billion in the last 16 months to a total of $1.41 trillion nationwide. With the higher balances’ students are graduating with every year, that feeling of discouragement is understandable. Here are some of the biggest student loan repayment mistakes to avoid.

Know how much you owe.

It is important that you know what this amount is so that you can plan repayment accordingly. You should know what the interest rate is, as well as how much the monthly payment will be so that you can prepare a budget to keep up with payments. It is also equally as important to keep an eye on that balance as you pay it off.

Structure your repayment plan upon graduation, if not before.

Once you know how much you owe, the next step is to develop a strategy to repay the loans. Financial experts even recommend students work on a repayment strategy while they are still in school. It can be tempting to avoid the inevitable, especially with the grace period most student borrowers get after they graduate. However, the best plan of action is to get ready for the payment plan and make sure your budget accounts for these monthly payments. This way when the borrower begins payments upon the expiration of the grace period, he or she is ready.

Know all your repayment options.

It is also important to know what repayment options are available. One mistake many borrowers make is to not properly research their options for paying back their loans. If you have federal student loans, several different repayment plans may be available for you, and you can pick which plan works best for your life situation.

Change the due date to accommodate YOU.

Many borrowers are unaware of the fact that they can adjust a payment due date if it does not work with their income flow. For instance, if you only get paid once a month at the end of every month, it may be wise to change the payment date to mid-month to allow for income to come in to make the payment on time.

Keep all balance and payment information up to date.

One common mistake that many borrowers also make is to not keep their contact information updated with the lender. This information includes your email address, telephone number and mailing address. Most lenders send bills electronically, but even if the lender sends the bill in paper form to the borrower’s home, it is up to the borrower to make sure the lender has his or her current information. Not receiving the bill is not a valid excuse for missing a payment, as it is the borrower’s responsibility to update his or her information with the lender if anything changes.

Do not be fooled by student loan forbearance.

Another mistake many borrowers make is utilizing the forbearance option too frequently during repayment. It is oftentimes something student loan lenders push, as it can add thousands of dollars to the loan balance, due to the interest continuing to accrue. Forbearance allows the borrower to temporarily suspend their payments during times of financial difficulty. While the option can be helpful if the borrower loses his or her job, it is only meant to be a short-term solution and should only be used if absolutely necessary.

Beware of student loan debt relief scams.

Unfortunately, many borrowers fall prey to scams that are out there, preying on individuals who are looking for the quick fix to help them with their student loan debt. These fraudulent offers often come in the form of an unsolicited phone call, email or letter, where a company tries to offer student loan forgiveness or a way to reduce the borrower’s total debt. Do your research and do not take an offer at face value. These companies are not out to help you. If something sounds too good to be true, it likely is.

Please click here to read more.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

IRS Tax Lien? Chapter 13 Bankruptcy Can Help

Posted on November 9, 2018by Admin

If you are facing an IRS tax lien, you may wonder what your options are to discharge the debt. For many individuals, the most common method to get rid of a tax debt is through a Chapter 13 bankruptcy. Chapter 13 bankruptcy offers unique debt solutions not available in a Chapter 7 bankruptcy. Through a Chapter 13 bankruptcy, clients are required to restructure their debt and create a repayment plan that is better designed to fit their ability to pay. The money will go towards the debts that matter the most, like your mortgage, car loan, support obligations, taxes, etc. The remaining debts, such as your credit cards, medical bills and utility bills will only get a fraction of what is owed.

Chapter 13 bankruptcy allows you to:

keep all property;
avoid foreclosure and vehicle repossession;
pay the fair market value for a car, and;
stop lawsuits, wage garnishments, and bank levies.

Tax debt that is secured by an IRS tax lien, the personal liability on that debt may also be discharged, although the lien will be treated differently. It depends largely on the timing of the bankruptcy case, as well as the classification of the debt when it comes to whether the tax debt can be discharged.

What Is the Status of the Tax Debt?

The first question to ask yourself is what the timing or status of the tax debt is? Your IRS tax account transcripts will be able to provide this information, including the date of the filing of the tax return, the date the tax was assessed and whether any events have occurred that could have stopped time periods for the debt, as well as whether any liens have been recorded against the property the taxpayer owns. If the IRS has secured a lien on the taxpayer’s land, county land records should be able to pull this information up, as well.

IRS Lien as a Secured Debt

If the IRS has properly secured a tax lien on your property, this means the debt is a secured one for purposes of bankruptcy. The taxpayer’s personal tax debt may be able to be discharged, but the lien will remain on the property. What this means is if you are not able to pay off the entire amount owed on the lien, with interest, during the Chapter 13 bankruptcy case or repayment plan, the IRS retains the right to seize the property once bankruptcy is finalized to receive payment on the debt.

Can Tax Debt Be Unsecured?

Tax debt can also be unsecured and discharged, but for this to happen, certain requirements must be met, including:

The due date for the most recent tax return must be more than three years before the filing for bankruptcy;
The tax return must have been filed at least two years prior to the bankruptcy filing;
The tax claim must have been assessed at least 240 days before filing for bankruptcy;
The tax return must also be from a non-fraudulent filing; and
The taxpayer must not have engaged to willfully evade or defeat the tax debt.

If all these requirements are met and the debt is not otherwise secured by a lien, it will be classified as an unsecured debt. This classification is ideal for debtors who are looking to discharge the debt completely.

During a repayment plan through Chapter 13, these unsecured debts are normally paid at a pro rata distribution, which means they are paid after secured and priority debts are paid first. Anything that is not paid at the end of the repayment period is then discharged.

List All Tax Debts

When filing for bankruptcy, it is important you list all your tax debts, including tax authorities to whom you owe the debt. That authority has 180 days to then file a proof of claim where they indicate what the tax debt is it that you owe. If the taxing authority does not file an official proof of claim, the claim may be discharged without any payment. This situation is rare, but it occasionally does occur.

Incurring Debts Post-Filing

Life does not stop simply because you have filed for bankruptcy. If you do incur additional tax debt after filing for Chapter 13 bankruptcy, that debt may then be added to your case as a post-petition debt. That debt will then be lumped in and paid back as part of your Chapter 13 repayment plan.

Not all bankruptcies are the same. It is important to understand the difference between Chapter 7 and Chapter 13 bankruptcy when considering your options. It is equally important to have a Miami bankruptcy lawyer on your side that will take the time to help you find the best plan to work for you.

If you are facing an IRS tax lien, we can help. Have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources:

https://www.irs.gov/businesses/small-businesses-self-employed/declaring-bankruptcy

https://www.alllaw.com/articles/nolo/bankruptcy/tax-debts-chapter-13-bankruptcy.html

https://www.thebankruptcysite.org/resources/bankruptcy/chapter-13/tax-debts-chapter-13-bankruptcy