A common question that people have about bankruptcy is whether they will be able to “wipe out” (referred to in bankruptcy terminology as “discharge”) certain taxes owed to the Federal and State governments if they file bankruptcy.

If you file a Chapter 7 bankruptcy case, then your income taxes can only be wiped out if all of the following are true:

1. the due date for the tax return for the tax year in question must be more than three years ago,
2. the tax return for the tax year in question must have been filed on time (if the tax return was not filed on time, then it must have been filed more than two years ago), and
3. the tax must have been assessed against you by either the Federal or State government at least 240 days (eight months) ago.

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The bankruptcy “means test” is the method used to determine whether you are likely to succeed in filing a Chapter 7 bankruptcy case. Chapter 7 bankruptcy is usually preferred because it allows you to receive a “fresh start” without having to pay any money back to your creditors.

The first step in determining whether you are likely to succeed in filing a Chapter 7 bankruptcy case is to see whether your average monthly income (determined by averaging your income over the last six months) is more or less than the median income for a household of your size. If your income is less than the median income, then the means test won’t affect your ability to succeed in filing a Chapter 7 bankruptcy case. The table below shows Wisconsin’s median income figures for households of 1-4 people. Your household size is generally determined by how many family members live with you. Continue reading →

Some clients are surprised to learn that, after filing bankruptcy, they are actually in better shape to buy a home than they were before. They wonder, “How is this possible with my credit?” By taking care of debt through Chapter 7 or Chapter 13, it shows that a person is serious about getting their debt problems under control. It also frees a person from onerous credit card debt and other bills that make it impossible to save up for a down payment. While there are some restrictions immediately following a bankruptcy, within two years most people are able to at least examine the possibility of buying a house. Continue reading →

Debt negotiation involves negotiating with your creditors to reduce your debt level. If your debts are out of control, negotiation services can help you get out of debt quicker. If you are considering negotiating your debts, it is important that you get help from a qualified attorney.

Creditors are much more willing to negotiate with a professional; therefore, a lawyer can convince your creditors to decrease the balance on your bill. Some of the types of debt that can be settled include medical bills, unsecured loans and credit card bills. In some cases, it is possible to negotiate your mortgage loan or auto loan. Continue reading →

Credit cards can help you through the tough times. They can give you a way to score rewards while shopping. They can provide you with a way to spend money without carrying cash. All that said, however, it’s easy to get in over your head. Millions of Americans have found themselves in too much personal debt. They are scrambling for a way out of the minimum-payment rat race.

Going through debt negotiation with an experienced lawyer can be an excellent way to procure more favorable terms. Talking directly with your credit card company can work as well. If you choose to do so, however, here are 3 terms they are unlikely to negotiate. Continue reading →