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Law Offices of Steven R. Dolson, PLLC

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Tax Debts and Bankruptcy: Growing tax debt can cause severe emotional and financial stress. Owing money to anyone can be stressful, more so if you owe it to the IRS — even without the heightened scrutiny that certain groups have been reportedly experiencing recently. Provided your tax debts qualify, bankruptcy can often help eliminate federal and state income tax obligations. In order to have your tax debt qualify for bankruptcy relief, the bankruptcy code has several rules that determine whether your tax debt is included in the bankruptcy estate.

Conditions under which tax debt qualifies for inclusion in the bankruptcy estate

- The 3-Year Rule. The tax debt must stem from a tax return that was due at least three years before the filing of your bankruptcy case
- The 2-Year Rule. In addition to the 3-year rule, you must have filed your tax return at least two years before you filed for bankruptcy
- The 240-Day Rule. In order to qualify, the IRS must also have assessed your taxes at least 240 days (eight months) before you file for bankruptcy relief

In addition to the above conditions, only income taxes are dischargeable. Other taxes, such as payroll and real estate taxes, and tax penalties are not eligible for discharge. Additionally, any taxes that the debtor willfully or fraudulently attempted to avoid paying - including income taxes - are non-dischargeable.

Treatment of tax debts under Chapter 7 and Chapter 13

If your tax debts meet all of the above-mentioned conditions, you can eliminate outstanding tax debt by filing either a Chapter 7 or Chapter 13 bankruptcy. The treatment of the tax debts vary depending on the case. In a Chapter 7 case, the tax debts are generally eliminated. In a Chapter 13 case, qualifying tax debt can be included in the repayment plan as an unsecured debt (like credit card debt), and the IRS is paid in the same lower priority as other unsecured debtors. The monthly payments to the IRS are normally lower in Chapter 13 when compared to an IRS installment agreement. If your tax debt is ultimately non-dischargeable, your tax debt is considered a priority debt — you must pay it in full.

A skilled upstate New York bankruptcy law firm can help you eliminate your tax debt or settle for less than the full monies due. If you are tired of struggling with excessive debt, contact The Law Offices of Steven R. Dolson, PLLC in upstate New York to learn about all of your debt relief options.

#NYBankruptcyLawFirm #Chapter13Bankruptcy #TaxDebts
Think you can write off all your taxes in bankruptcy? Think again. Only certain tax debts qualify for inclusion in the bankruptcy estate.
Tax Debts and Bankruptcy
Tax Debts and Bankruptcy
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The Pros and Cons of Chapter 7 Bankruptcy: If you want to file for Chapter 7 liquidation bankruptcy, you need to calculate your financial means by analyzing your income, assets and debts. If you lack a stable and sufficient income to be placed on a Chapter 13 reduced payment plan, you usually qualify for Chapter 7.

Chapter 7 provides a debtor with particular benefits at the outset, in the middle of and at end of the bankruptcy case, including:

Faster process. The average time from Chapter 7 filing to discharge is around six months, much less than a Chapter 13 repayment plan, which usually runs from three to five years

Safe harbor from collections. The Automatic Stay puts an immediate, initial stop to creditors’ attempts to garnish your salary or foreclose upon your home. The Stay does not provide total immunity, though. Secured creditors may be able to have it lifted

Your disposable income is untouched. You can discharge unsecured debts without having your disposable income (what is left after deducting basic living expenses) tied up for three to five years, as in a Chapter 13 bankruptcy

State and federal property exemptions. Under New York law and federal law, some property and assets are exempted from seizure by creditors

New York recently amended the law to allow you to choose — not mix and match — between the federal and state exemptions. At the end of the Chapter 7 bankruptcy, debtors have often eliminated most or all of their dischargeable debts. However, not all of your debts are deemed satisfied (“dischargeable”).

Student loans, tax debts incurred three years prior to bankruptcy, luxury consumer debts incurred from two to three months before your bankruptcy filing, alimony and child support obligations are not dischargeable. Filing for Chapter 7 liquidation bankruptcy does place your house, a valuable asset that can be sold to satisfy other debts, at the risk of liquidation. Mortgage debts, absent a home sale, are not generally dischargeable after bankruptcy.

The Law Offices of Steven R. Dolson, PLLC is an established consumer bankruptcy firm helping debtors in upstate New York. We personally guide debtors through their bankruptcy and help improve their financial situations. Contact us today at one of our conveniently located six upstate offices for a free initial consultation.

#NYBankruptcyLawyers #Chapter7Bankruptcy #ConsumerBankruptcy
While Chapter 7 bankruptcy is faster and gives you safe harbor from collections, it also places you at risk of losing your home and other possessions.
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The Automatic Stay and Foreclosure Defense
New York debtors with distressed property often seek safety from foreclosure via bankruptcy proceedings. Upon the filing of either a Chapter 13 or 7 bankruptcy petition, the Automatic Stay (the “Stay”) immediately orders creditors to stop all collection, lien and garnishment actions, and temporarily stops foreclosure proceedings. This gives a debtor a chance to cure their default and to keep their property, after a period of timely payments. In the short term, a debtor may discharge or restructure their other debts without dealing with harassment from multiple creditors, and, if the debtor decides to sell their property, to buy time to find new housing.

Chapter 7
In a Chapter 7 filing, a trustee is designated to liquidate your assets to pay off your creditors. The Stay enables you to sell your property, often on better terms than what you could otherwise receive in a foreclosure sale. If the equity in your home is worth more than the mortgage liens against it, you may net some of the sale proceeds. In addition, New York law may exempt $75,000 to $150,000 of your home equity from creditors except from your mortgage lender, depending upon where your property is located.

Chapter 13
In a Chapter 13 filing, your assets are not liquidated to pay off your debts, but rather your debts are reduced and rescheduled, so that you can pay them off over time under a payment plan. You might qualify for Chapter 13 if you have a sufficient and steady income to pay your basic expenses, like food and utilities, in addition to your (reduced) creditor payments. Often, if you follow your Chapter 13 reorganization plan, your prior mortgage loan default is considered cured.

The Automatic Stay is not absolute, and may not protect repeat bankruptcy filers who the court assumes are filing multiple times in bad faith. Lenders can also lift the stay by convincing the court they are entitled to foreclosure under the circumstances. In some cases, the lender and borrower can modify the stay by agreement – and the borrower can keep the property if they pay their mortgage payments on time.

The Law Offices of Steven R. Dolson, PLLC, a respected bankruptcy firm assisting consumer debtors in upstate New York, help you navigate smoothly through the complexities of bankruptcy. We guide our clients step-by-step and help them get back on their feet.
The Automatic Stay and Foreclosure Defense
New York debtors with distressed property often seek safety from foreclosure via bankruptcy proceedings. Upon the filing of either a Chapter 13 or 7 bankruptcy petition, the Automatic Stay (the “Stay”) immediately orders creditors to stop all collection, lien and garnishment actions, and temporarily stops foreclosure proceedings. This gives a debtor a chance to cure their default and to keep their property, after a period of timely payments.
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What is SSI?
SSI is a benefit for disabled people who have little or no income to pay for basic necessities. To qualify, your disability must be severe enough that you are unable to work. Additionally, you must have less than $2,000 in assets if you are single or less than $3,000 in assets if you are married.

Meeting the income and asset limits
In most cases, a young adult with autism will be considered a household of one. As a separate household, only the young person’s income and resources will count towards the limits. This will be true even if the young person lives with family members. Although living with family will not affect eligibility, it may affect the amount of the benefit.

Meeting the disability requirement
As an adult, an autistic person must met the medical criteria of a disability and be unable to engage in substantial gainful employment. In other words, because of autism, the young person cannot earn more than $1,040 a month working.

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Experts estimate that as many as half a million children with autism will enter adulthood over the next decade. For these maturing children and their families, the transition to adulthood can bring new challenges as well as new opportunities. Many families are particularly concerned about the financial challenges of autism. For adults with autism, Supplemental Security Income (SSI) provides a possible source of financial support. - See more at:
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To qualify for SSD benefits, you must have a medically determinable impairment that lasts for at least a year.

For a back injury, proving that you have a medically determinable impairment requires that you submit medical evidence. Persuasive evidence of a disabling back injury includes:
1) X-rays and MRIs
2) Records of physical examination
3) Lists of symptoms and functional limitations
4) Laboratory tests
5) Treatment histories
6) Doctor’s analysis of your conditions

Social Security considers your evidence of disability in several ways. First, they consider whether your symptoms match the impairments in their listings. Next, they evaluate how your functional limitations affect your ability to work. Throughout the process, Social Security will also look to your credibility. In disability applications based on back injuries, your credibility is particularly important because the ultimate finding rests on your subjective reports of back pain.

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Back problems are the leading reason that people apply for Social Security Disability (SSD) benefits. With so many people filing applications listing back injuries, Social Security has developed very stringent standards for reviewing disabilities based on back problems. Even if you are experiencing excruciating back pain every day, Social Security still might deny your application for benefits. - See more at:
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In New York State, the next stage of review after an initial denial of benefits is a hearing in front of a judge. This is helpful for some applicants because it means they can get their claim fully adjudicated faster.

If you want to appeal your SSD decision to a judge, you must act quickly. You must file a request of an appeal within 60 days of receiving your decision letter denying benefits. There are three ways to file for an appeal. You can apply online, by mailing using preprinted forms or by writing a letter stating that you wish to appeal. It doesn’t matter which of the three options you use to request your appeal, but you must do it within 60 days. There are no exceptions to missing the deadline.

If you missed the 60-day period to file an appeal, the only way to pursue benefits is by filing a new application. A Social Security attorney can help you file a new application together with a request that your old claim be reopened. If Social Security agrees to reopen your claim and you eventually receive benefits, your backpay will be calculated from your original application. However, Social Security will generally only reopen an old claim within a year of the denial. Don’t risk losing your rights to backpay disability benefits.

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If you applied for Social Security Disability (SSD) benefits and your application was denied, do not give up hope. The Social Security Administration rejects a large number of claims at the first stage of the application process. In many years, the government rejects over 60 percent of applications at the first stage of review. Many of the claims that were initially rejected are eventually granted. - See more at:
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Working can disqualify you from receiving SSDI, but only if you make more than a certain amount of money. This is because you cannot receive SSDI if you are able to do substantial gainful activity. Substantial gainful activity means that you are able to earn more than $1,040 a month doing any kind of work. If you are blind, the amount is $1,740.

If you are making just a few dollars a month with occasional babysitting, you shouldn’t worry about your benefits changing. But if you begin to make more money, you may be interested in testing your ability to work with a trial work month.

The trial work program is a way of seeing if you are able to return to work while still receiving benefits. If you are feeling well enough to work and make more than $750 a month, that month will be considered a trial month. Once you have completed nine trial months, you can still receive SSDI for the next three years if your monthly earning from work falls below $1,040.

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Many people who receive Social Security Disability Insurance (SSDI) like to help out family members and friends by doing odd jobs around the house or in the neighborhood. Helping with tasks like babysitting or cooking can be enjoyable and social. It can also be a good way to earn extra money. But if you are making money doing odd jobs, you may worry that your income could disqualify you from receiving disability benefits. - See more at:
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Sinbad chose to file for Chapter 13 bankruptcy, which is usually the preference of people who have some assets. Chapter 13 is sometimes called “wage earner bankruptcy” because it allows people who have a regular income to develop a plan to repay all or some of their debts over a few years.

Advantages of Chapter 13
The biggest advantage of Chapter 13 bankruptcy is that it offers the opportunity to save your home from foreclosure. When you first file for bankruptcy, an automatic stay will take effect, halting a foreclosure proceeding. If you can make up your missed payments and also make all new payments over the course of your repayment plan, you will be able to save your home.

Qualifying for Chapter 13
To qualify for Chapter 13 bankruptcy, you must have an income and be able to show that you will be able to make the payments under your repayment plan. Your debts also must be within the established limits. Currently, to file under Chapter 13, you must have less than $383,175 in unsecured debt and $1,149,525 in secured debt. Finally, you must show that you have filed your federal and state tax returns in each of the last four years. If you have missed some years, you can file back returns to get current.

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The comedian and former sitcom star Sinbad filed for bankruptcy for the second time in less than five years. In his current filing, the actor reports $16,000 per month in income and $131,000 in assets, but $11 million in debt. Of this massive debt, $8 million is back taxes. - See more at:
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Credit cards are a great tool to help you rebuild your credit after a bankruptcy. Charging modest amounts to your credit card and paying off the balance shows lenders that you are a good credit risk. Credit cards also often give you certain protections on purchases, like insurance and the ability to dispute an incorrect charge.

But these advantages are only worthwhile if you don’t charge more than you can afford to pay off. To avoid overspending, follow these tips for responsible credit card use:
1) Pay your balance in full every month — Credit cards charge very high interest rates. But if you pay your balance on time, you won't ever pay interest charges.
2) Limit the number of credit cards you carry — Carrying just one or two cards can help you stay on budget.
3) Track your spending throughout the month by reviewing your charges online — Many credit cards have easy-to-use online tools that break down your spending by category.
4) Check your statement at the end of every month to make sure there aren’t any incorrect charges — Fraudulent and accidental charges are more common than you may think.

Especially if you follow the first rule and always pay your balance, charging can be a smart financial choice. You can improve your credit, while also getting consumer protections. Additionally, many credit cards offer rewards like cash-back and travel points.

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Many financially savvy consumers steer clear of credit cards to avoid accumulating high-interest debt. While this is a good strategy for some people, it also has downsides. Credit cards have benefits that you don’t get when you use debit cards or cash. - See more at:
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If you are serious about getting out of debt, you should consider contacting a bankruptcy attorney to learn about your debt relief options. Once you make that decision, it is important to be open and honest with your bankruptcy attorney so that he or she can assist you in getting the maximum debt relief possible.

As you prepare for the first meeting with your bankruptcy lawyer, be prepared to share information about:
1) Your current income
2) Your assets
3) Your existing debts
4) Your child support, alimony or maintenance obligations
5) Any judgments against you
6) Previous foreclosures or repossessions
7) Inheritance or insurance benefits that you may receive in the future

You should also be prepared to discuss any special circumstances in your personal life. Events like the birth of a child, divorce or illness of a family member are significant to bankruptcy planning.

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One of the most difficult challenges for people going through bankruptcy is talking honestly and frankly about their finances. Some people feel embarrassed about their financial troubles. Other people simply want to ignore the problem because it seems too big to handle. However, keeping your financial issues to yourself prevents you from getting the help you need to stop the cycle of debt. - See more at:
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