In 2005 the bankruptcy code was changed to make it difficult for above median income earners to file Chapter 7 bankruptcy and discharge their debts.  In Texas, the median income for a 2 person family is $30,502.  If a debtor with a 2 person family earns more than $30,502 they may be forced to file Chapter 13 bankruptcy, although there are exceptions.  The change was made to the bankruptcy code because it was presumed that above median income debtors who file …

Tags: Chapter 7 Bankruptcy median income

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… bankruptcy.  When taking the “means test” the debtor will be asked to disclose all of their income for the previous six months prior to filing bankruptcy.  It is important that the debtor answers the income questions honestly and accurately. Please avoid the temptation to justify hiding income or conveniently “forgetting” about that side job you held for a few weeks.  You will need to report all income or face possible dismissal of your bankruptcy case if it is discovered that you …

Tags: Bankruptcy bankruptcy law Income

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… by the U.S. Department of Education.  For-profit colleges claim that the high numbers of low-income students attending their institutions are inflating their default rates.  So does being a low-income student increase your chances of defaulting on your student loans?

It’s important to note that student loans are nearly impossible to discharge in bankruptcy.  Therefore, if it is true that low-income students are at a higher risk of defaulting on their student loans, lower-income …

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… case:

In the Chapter 7 bankruptcy case involving debtors claimed their state and federal income tax refunds as exempt under vari­ous state law provisions. However, the bankruptcy trustee objected to the exemptions claiming that the funds lost their exemption status once they were withheld and paid to the government before being returned to the debtors via a tax refund.

The funds in question were payments from the Ohio Public Employee Retirement System and unemployment …

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… reform in 2005, all debtors filing bankruptcy are required to calculate their average monthly income. The average monthly income is calculated using the income earned during the six months before filing bankruptcy.  For example, if you filed bankruptcy in October, you would need to calculate your average monthly income for the period of April through September.  For debtors who work as W-2 employees and receive regular paychecks, this can be achieved easily.  But for the self-employed, …

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Most debtors hear the phrase “debt to income ratio” and they aren’t sure what it means exactly. In a nutshell, a debtor’s debt to income ratio is the percentage of debt they have in ratio to their income.  This debt to income ratio is used by credit card companies, mortgage lenders, car financers and others to determine whether you are a safe risk.  If you have too much debt in comparison to your income, they may not want …

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… court ruled that the Chapter 13 debtor’s bankruptcy estate was entitled to half of the joint income tax refunds received by the debtor and his nonfiling wife.

The details of the bankruptcy case:

“The Massachusetts Department of Revenue (MDOR) filed a proof of claim in the amount of $64,172 including $14,936 for joint income tax liabilities of the Chapter 13 debtor and his nonfiling wife. Because the debtor’s wife did not join in the Chapter 13 petition, statutory interest and …

Category: Chapter 13 Bankruptcy , Lawsuits , Tax - Debt Garnishments

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All debtors who are considering bankruptcy must calculate their current monthly income beforehand which will help the bankruptcy court determine whether a debtor qualifies for Chapter 7 bankruptcy or if they need to take the means test to determine their ability to repay their debts. Current monthly income is a term that is deceptive because it does not necessarily reflect the income a debtor is earning at the time of his/her bankruptcy filing. Current monthly income is …

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According to an article in the Star-Telegram, the new income contingent repayment plan for federal student loans is now available.  Under the new plan, borrowers can repay their student loans based on their income and the balance will be forgiven after 25 years.

The article said:

“The income-based repayment plan applies to the Federal Family Education Loan, and to Direct Loan borrowers on all Stafford and graduate PLUS loans. Monthly …

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Debtors who file for Chapter 13 bankruptcy are placed on a payment plan based on their income and expenses. If that income increases, the plan may change; but if it is only a small temporary increase it is unlikely the Chapter 13 bankruptcy would be affected.  Let’s take a closer look:

Debtors in Chapter 13 bankruptcy must pay their secured and priority creditors first.  After those creditors are paid, the debtor in Chapter 13 bankruptcy must pay between 0% and 100% of …

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According to an article in the Star-Telegram, Congress made permanent a tax law that allows Texas residents to deduct state and local sales taxes from their federal income tax returns.

The article said: In 2004, Congress approved the provision allowing taxpayers who itemize to deduct either their state income tax or their state and local sales tax expenses, and it has been extended on a one- or two-year basis ever since. It was due to expire after the 2009 tax …

Category: Tax - Debt Garnishments

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It’s April 15th and many taxpayers still haven’t filed their income taxes, are you one of them? If so, you may be tempted to rush around to any tax preparer to file at the last minute or even a few days late, but beware of unscrupulous tax preparers who may file false information on your return.

An article in the Dallas Morning News, offers a story that should serve as a warning when choosing your tax preparer.

The article said: Joyce Marie …

Category: Tax - Debt Garnishments

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