The accident happened in a split second, but it left you with a lifetime of pain and debt that you could never repay. Once everything begins to sink in, you begin to question what you will do. Will you lose your home? Will you have to go bankrupt? These questions and more can be answered by a reliable bankruptcy attorney. If you are not at a devastating point in your life, you are in an even better position to find a bankruptcy attorney that you can trust to be on hand should you have some a life-changing experience. If you are lying in bed reading this, then you are at a point where it is urgent that you find the help right now.

You may wonder what a bankruptcy attorney will even help you with. These law professionals have been trained to know the law and details surrounding going bankrupt. They can help you not to lose the belongings you love, and they can help you make it through the debt that is pulling you down.

If you do not have such a lawyer on hand, start now with a simple internet search. You will most likely come up with a large number of bankruptcy attorney entries. All of these will not be equal in their trustworthiness or their experience. You will need to take some time to do research. One way that you can research is by asking around to those you know to see if they have one that they trust. This may be a simple, quick fix. If you come up with nothing from that, then take the time to go to each website for each bankruptcy attorney.

There are several areas that you should consider as you open the individual websites. The first thing you should consider is whether the website looks professional. The professionalism of the website can mean several things. If it is not professional it could mean, that they do not care about the little things, perhaps they are arrogant enough to think people will just love them even with an unprofessional site. That is not a good sign. It could also mean that they cannot afford a webmaster to create and keep up a professional website. This is not a good thing either, because hopefully if a law professional is getting business he or she should be able to afford a website that has a professional appearance. So definitely look for a professional website. As you look through the website past the professionalism, look for an area that has information about their education and experience. It is important to know why they believe they are good at what they do. You should then make a call to the attorneys who come to the top of the list. Make sure that they are in business, and that their webpage is indeed accurate.

After looking through a variety of websites, you will have likely narrowed your way down to a select few. From those select few, it is a good idea to search for reviews on the internet for each specific law professional to see if anyone who has hired them has anything good or bad to say. You will not regret these simple steps to help secure your future.

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If you are facing debt and you need to file for the discharge of much of that burden, there is no question that you need to set up a consultation with a bankruptcy lawyer to figure out where to go from here. For many people, there is no other reasonable choice. However, don’t jump straight into Chapter 7 or Chapter 13 if you don’t have to. Though it provides a safety net for those who will otherwise spend their entire lives trying to pay back impossible sums, it also takes a serious toll on your credit record. Choosing to file means accepting the fact that your credit will be more or less ruined for the next seven years. If your credit is already ruined beyond repair, this may not matter. If it is still salvageable, however, there may be a better way out.

One way you can pay back your debts is by selling off some of your property. Books, electronics, real estate, jewelry. Anything you don’t have much use for anymore (or sometimes, even if you do) could be sold to acquire some extra funds. You might be surprised, if you really look, at how much stuff you have that could go into a payback fund. Of course, if all you have are some old DVDs that will sell for a dollar apiece, it may not be worth all of the hassle. Make a judgment call and see if any of your belongings could be sold for debt payback capital.

Something else you should always try is talking to your creditors. Many credit card companies, finance institutions, and mortgage lenders are willing to work with their customers within reason. If you can make a few phone calls and avoid having to go see a bankruptcy lawyer, this might very well be worth it. Times are tough and a lot of people are out of work or working for wages that would have been unthinkable just a few years ago. These lenders understand the deal and they would like nothing more than to get paid back in some form or another.

Make a budget. Seriously, this is one of the main things that people who often find themselves drowning in debt have never bothered to do. They don’t understand that their expenditure/income ratio is way out of whack. If you sit down and figure this out for yourself, you may be able to cut back on your budget to the point where you no longer need to consider seeing a bankruptcy lawyer. Here is something to think about: as part of getting your debt legally discharged, one of your obligations will be to take a course in financial responsibility. One of the things this class will teach you is how to budget so that you are spending less than you earn. It’s called living within your means; or better yet, living below your means. This allows you to put away savings, rather than digging an enormous debt hole.

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You may think it is natural to have a lot of credit card debt and other bills. That’s because it is not uncommon for many Americans to juggle multiple credit cards, mortgage loans, auto loans and other debt on middle class incomes. It can become easy to buy into the notion that “you’ll always have a car loan” or “you have to borrow money to get ahead,” among other myths.

Take a look at these 5 warning signs to see if you have too much debt:

1. You think about your credit card debt and other bills constantly. Do you have trouble focusing on your job or other tasks because debt woes are always at the forefront of your mind? Getting help with debt can help relieve some of the stress and allow you to make progress on a debt reduction plan. Look for a reputable debt counseling firm that can help.
2. It’s getting more difficult to make the minimum monthly payment on your bills. Being unable to make the minimum payments will result in late fees and probably an interest rate increase to the default rate. It will also keep you from making much progress in paying off your balance.
3. You are frequently late with bill payments. Part of what goes into determining your credit score is whether or not you are on time with monthly payments. Pay close attention to the deadlines for getting your payments to creditors. Being even an hour late will have negative repercussions.
4. You have just about maxxed out credit cards. Are you using credit to buy groceries, gas and other necessities because your income just doesn’t stretch? Wracking up credit card debt this way is a losing proposition no matter how you look at it.
5. You are afraid to total up your debt. Knowledge is power, so equip yourself with the information you need to make progress on a debt reduction plan. As shocking as your debt total may be, you need to know it to get moving in the right direction.

Get help with debt

Once you admit that you have a debt problem, commit to get help. Depending upon your situation a debt consolidation or debt settlement could help. Talk with a debt counselor to rind the right approach to your money woes.

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When a debtor calculates a Chapter 7 means test analysis he is entitled to deduct from income transportation expenses associated with ownership of a car. All Florida debtors can deduct from income a general transportation expense which is approximately $250. There is another deduction associated with the expense of owning a car known as the “ownership expense.” The ownership expense is calculated using the debtor’s car payment and a fixed allowance of about $500. Based upon a recent court ruling, debtors who own a car free and clear of any liens are not eligible to take any ownership expense despite the obvious costs associated with owning a car in Florida. The car ownership deduction is limited to people with car debt.

This past week I provided legal services to a woman who is a bankruptcy paralegal in a high-volume bankruptcy office located in Illinois. We discussed how her office handles car expenses in the means test. The attorney she works for recommends that prospective debtors who own cars outright get a very small car loan in order that the debtor qualifies for the car ownership allowance.

In Florida, for example, debtors get a $1,000 base car exemption. Most debtors today also qualify for a $4,000 wildcard exemption which can be applied to protect car equity. Assume a debtor in Florida owned outright a car worth less than his applicable exemption limit. Using the advice provided by the Illinois attorney, the debtor would get a very small car loan prior to filing bankruptcy, if and as necessary, to help him qualify for the means test. The small loan would not significantly affect his monthly household budget. If the debtor’s car was worth more than the allowable exemption the trustee would demand payment of non-exempt equity.

There are a some pitfalls with this plan. To name a few, the debtor must be prepared to explain what he did with the money borrowed on the car. Using the borrowed money to pay his bankruptcy attorney, or pay priority debts such as tax debt, may be acceptable. Second, bankruptcy attorneys are not supposed to encourage their clients to incur debt prior to filing bankruptcy. Issues aside, my client’s suggestion is an inventive way for some clients with free and clear cars to improve their means test results.

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Many people who wanted to file Chapter 13 found that they were ineligible because their debts exceeded the Chapter 13 debt limits of approximately $1 million of secured debt or approximately $360,000 of unsecured debt. The debt limits have affected more people in the past few years because inflated real estate values during the boom resulted in many debtors having large mortgages which exceeded the secured debt ceiling. I have had several clients who could not qualify for Chapter 7 and who were willing to pay their creditors what they could afford in Chapter 13, but who were excluded from Chapter 13 by the debt ceilings. These people either had to file an expensive Chapter 11 case or forgo bankruptcy protection completely.

One unresolved question about Chapter 13 debt ceiling is whether joint married debtors could stack their ceilings. For example, if stacking were permitted, joint married debtors could have up to $2 million joint debt in a Chapter 13. Joint Chapter 7 debtors can stack their exemptions.

This past week one of the Orlando bankruptcy judges issued an opinion which hold that joint married debtors may in some cases stack the debt ceilings of Chapter 13 eligibility. The opinion explained that a joint bankruptcy is actually the combination of separate bankruptcy estates. In a joint Chapter 13 filing each of the joint debtors must individually meet Chapter 13 debt requirements.

The opinion’s effect on Chapter 13 depends upon whether joint bankruptcy debtors have separate debts or joint and several liability. For example, if the husband was individually liable for a $1.5 million mortgage and the wife individually liable for a $500,000 mortgage the couple could not file a joint Chapter 13 bankruptcy because the husband, individually, exceeded the applicable secured debt ceiling. If the husband is individually liable for a $900,000 mortgage and the wife is individually liable for a $900,000 mortgage they could file a joint Chapter 13 case even though their combined secured debts exceeded the secured debt ceiling.

It is unclear based on this opinion what happens if a husband and wife are jointly liable for a $1.8 million mortgage. If each spouse is allocated half of the $1.8 million mortgage then they could file a joint Chapter 13 case. If both spouses are accountable for the full $1.8 mortgage then neither spouse is eligible for Chapter 13 bankruptcy, and therefore, the joint petition fails.

Consider that in Chapter 7 bankruptcy married debtors as assumed each to own a 50% interest in personal property, and they can apply their full individual exemptions to their 50% property interest. Debtors who jointly own $2,000 of property each can exempt their $1,000 half ownership using their separate $1,000 personal property exemption. In re Scholz, 6:10-08446.

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Debt settlements with credit card companies and other creditors have become more common as people look for debt solutions. Having a creditor approve a debt settlement plan can allow you to completely wipe out credit card debt and make a fresh financial start. But with the deadline for filing income taxes looming, it’s important to understand how a debt settlement may affect your taxes.

What is debt settlement?

Debt settlement usually occurs when a creditor agrees to accept a lower payoff than what you actually owe to them. For instance, if you owe $15,000 in credit card debt but are able to make a lump sum payment of $9,000 from savings or a windfall you receive, your creditor may agree to forgive the remaining debt and you would not have to pay it. Most creditors won’t even begin to discuss debt settlement until you are behind on payments by at least two months and sometimes longer.

Forgiving credit card debt

Even though you would no longer be responsible for paying back the amount of any debt that was forgiven, you could be looking at a tax bill from the Internal Revenue Service (IRS). That’s because unforgiven debt of $600 and up is considered to be income that can be taxed. Your creditor would mail you a 1099-C form that shows how much debt was forgiven and it would be used when filing a tax return. If you have not received a 1099-C from a creditor that forgave some of your debt last year, contact them to request the form.

Not all debt that is forgiven by creditors is necessarily taxable. That’s why if you are unsure about your situation it is best to consult with a tax adviser who can help sort everything out.

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