What To Do When You Don't Know What to Do:
Speak with a knowledgeable bankruptcy lawyer! You have options:
You can file a Chapter 7. This is what most people think of when you mention bankruptcy. Bankruptcy is federal law and all state law actions (like foreclosures and garnishments) are stopped.
If you want to keep your house, think about filing a Chapter 13 (even if you have recently filed a Chapter 7). This is a payment plan which can last for up to 5 years. You can pay back your missed mortgage payments over that time and they can't add any additional interest. Another Chapter 13 feature is that it is often possible to “strip off” a 2nd or 3rd mortgage. Also, if your vehicle is “upside down” you can put it in the plan and only pay what it is actually worth.
Either Chapter will allow you to get rid of judgment liens on your home. Also, IRS and CDR income taxes are dischargeable in both chapters if they were due more than 3 years ago, the tax returns have been filed for at least 2 years and the taxes were assessed at least 240 days prior. If those 3 factors exist, the taxes are gone!
Nothing prevents you from pursuing a mortgage modification during the process. Most lenders now have a loan modification or a loss mitigation department. You are free to negotiate with them and they can't take any action against you while the bankruptcy stay is in effect.
Debt settlement is sometimes a good option, but beware of unlicensed companies who take your money and run. Know the tax consequences of this option.
I have more than 30 years experience and am licensed in all Colorado State and Federal Courts. I handle Chapter 7 and Chapter 13 cases, whether business or consumer, debt settlement cases and I give everyone a FREE consultation with no obligation. I am a federally designated Debt Relief Agency and help people by utilizing the bankruptcy laws (among other options). I accept cases statewide.
5 Ways to Deal with Taxes When You Can't Pay:
No one likes to owe the IRS. It can lien and levy on your assets without even getting a judgment or court order! You have options:
Installment agreement: This is a monthly payment plan for paying off the IRS based on your ability to pay. Interest and penalties will still accrue.
Partial payment installment agreement: This is a a fairly new debt management program where you have a long term payment plan to pay off the IRS at a reduced dollar amount.
Offer in Compromise: This is a program where you can settle your tax debts for less than what you owe. It usually requires making a lump sum or short term payment plan to pay off the IRS at a reduced dollar amount. The new rules have been greatly relaxed under the Fresh Start program and it's much easier to get an offer accepted than in the past.
Not Currently Collectible Status: This is a program where the IRS voluntarily agrees not to collect on the tax debt for a specific time period when it determines that the tax payer cannot pay anything. Interest and penalties will still accrue.
Filing Bankruptcy: This option can discharge your tax debts under the rules of a Chapter 7 or Chapter 13 bankruptcy petitions. The taxes must be due more than 3 years ago, the returns must be filed for at least two years and the taxes must be assessed for at least 240 days. Even if taxes are not dischargeable, Chapter 13 allows one to pay them off over 5 years without additional penalties or interest. Sometimes we will put people in an installment agreement until the taxes are old enough to discharge.
I deal with most aspects of real estate transactions, whether residential or commercial. I was a licensed Colorado broker for 11 years. Buying real estate, especially if it is to be your residence, is probably the biggest investment you will ever make. The real estate brokers focus on closing the transaction – they don't get paid if it does not close and so they may not be entirely objective. If you are paying commissions of thousands of dollars, doesn't it make sense to spend a few hundred for an expert evaluation of the contract, title policy or other legal issues?
This is especially true when the sale of a business is involved. Asset sale or entity sale, consultant agreements, security agreements, non-disclosure and non-compete agreements may all be involved.
Leases can be short and vague or lengthy and complicated. Whether you need the landlord or tenant perspective, it pays to have a knowledgable attorney advise you before signing.
Title issues can also arise. You need to know what issues are covered by your title insurance policy and how to best insulate yourself from risk.
Finally, mortgage financing is also a complicated area. You need to know exactly what you are agreeing to. I have read the fine print and can explain it to you. Do you know what the yield spread is to the mortgage broker? If you don't, you should.
WILLS & PROBATE
The Good, the Bad and the Ugly
I also handle probate matters. It's never a happy occasion as we are dealing with the affairs of someone who was loved and will be missed. But the task must be undertaken. How often do you hear “Avoid probate at all costs!” It usually comes from a guy trying to sell you a trust of some sort. It's also often bad advice. Colorado, like many other states, has adopted the Uniform Probate Code or UPC. Gone are the days of estates being “tied up for years in probate” and the lawyer charging a percentage of the estate to do the work.
The UPC is a very streamlined process. An estate can be opened and administered by the Personal Representative (also known as an Executor). The forms can be filed online, the court issues Letters Testamentary (if there is a will) or Letters of Administration (if no will) and the PR is then free to administer the assets of the deceased with full legal authority. Notices must be given and published, creditors claims must be paid, fiduciary tax returns may need to be filed, real estate listed and sold, etc. All this can be done without ever seeing a courtroom. The court is there only if needed should a dispute arise.
By the way, transferring assets to a trust (or other entity) can be a very bad idea. A creditor can void the trust transfer up to 4 years afterward under the Uniform Fraudulent Transfer Act, while a bankruptcy trustee can go back 10 years! Also, if you transfer your family home into a trust, you may lose the homestead exemption of $250,000.00 (or $350,000 if you are over 60). Get a second and third opinion before paying for “asset protection” trusts.