Frank H. Coxwell, PC

10-things-150x150I have listed some of the mistakes people make right before they file bankruptcy. People do these things because of mistaken information they got from someone else. Talk with your bankruptcy lawyer and ask questions. Your lawyer can protect you and your property as long as you tell them everything up front. Disclose all financial information to your attorney and prevent future surprises. You don’t want to end up losing the things you were trying to protect and save. If you have questions about the reasons why we don’t want you to do these things right before you file bankruptcy, call us. Once you hear the explanation, everything will make sense . Some of these thing you can do, you just need to wait for the right time.

  1. Don’t pay money to family or friends and don’t pay back loans to family members or friends.
  2. Don’t file if you are about to receive an inheritance, personal injury settlement, or large sum of money.

7-or-13-e1525536681230A chapter 13 bankruptcy can do everything a chapter 7 can do and more. A chapter 13 has  extra tools for special debts. A chapter 13 takes 3-5 years to complete and costs more than a Chapter 7 in the long run. Which one you should file depends on what you are trying to hold on to and save.

A chapter 13 has special powers which allow you to deal with foreclosure, tax debts, child support, and student loans better. You can catch up the payments on a home or car in a chapter 13 over 3, 4, or 5 years. A chapter 7 only lasts about 4 to 5 months from start to finish. It will only delay a foreclosure and put off student loan and tax problems. Chapter 7 will not help catch up the back notes on a mortgage. In a chapter 13 you can catch up the back notes over a longer period of time, lower the notes and the interest rate on vehicles and loans.

When to use a Chapter 13

breakup-with-bank-150x150No matter how much you love your bank, there are a lot of good reasons to leave them if you are going to file bankruptcy.  If you don’t want to leave them, you might want to keep your money somewhere else temporarily.

Reason #1 Frozen Bank Accounts

Several nationwide banks, like Wells Fargo, Bank of America, and Chase, freeze bank accounts with significant balances when they get a bankruptcy notice. This would apply to all bank accounts with your Social Security number attached. It doesn’t matter if you need the money to pay bills, or if the money is exempt, the account is frozen and you can’t get your money. Any money going into the account will be frozen.  The bank will claim they are helping the Chapter 7 trustee. The account can be released, but not always quickly or easily.

protection-150x150Here are 4 steps you can take to avoid a having your tax refund taken for a Student Loan default:

  • Get your student loans out of default. After nine months of nonpayment your student loans go in to default status. Making the minimum payments on time will keep you out of default.
  • Ask for a deferment or forbearance. If you can’t pay your loans on time, ask for a deferment. A deferment can postpone payments for up to three years. Depending on your loans, interest may or may not continue to accrue if you’re in deferment. You can also request a forbearance, which pauses your loan payments for up to one year. A forbearance has different eligibility rules and interest continues to add up during the forbearance period.

tax-time-e1523477928357If your tax refund has already been taken you need to request an Offset Refund.

If you think your tax refund may be been taken in the future, you need to request an Offset Refund to protect your tax refund from being taken.

You can request an refund whether your tax refund has been taken from you or not. There is no time limit to make the request, but you should move as soon as you can to protect your IRS Tax Refund.

Yes! First of all, you can buy anything for cash, no permission is needed – but – you need written permission from the court to get a new loan or new credit while you are in a chapter 13 bankruptcy. The court wants to make sure you are not doing something that will jeopardize your ability to complete your chapter 13 Plan.

buying-a-car-300x1661. Find a dealer or car lot that is willing to sell you a vehicle and can get you financed.

Before anything is finalized, I will need the details of the sale; the year, make, and model of the vehicle, the selling price, the amount of the monthly payment, the interest rate, and the total cost. You (or the dealership) can email or fax this information to me.

If you are in a chapter 13 bankruptcy and are paying for an older vehicle, sometimes the vehicle (or one of them) that you are paying for just isn’t worth keeping anymore. It may have completely stopped running or require repairs to continue running that are more expensive than the vehicle is even worth.  You have options.  You may be able to drop it from your bankruptcy case, lower your bankruptcy payment, and walk away from the vehicle that is no longer worth keeping.

1. Send me an emcar-died-300x158ail or fax telling me you want to surrender the vehicle and drop it from the chapter 13 plan, and tell me which vehicle.

2. I will file a motion with the court to modify your plan and to remove the vehicle from your plan and reduce the monthly payment. This will take thirty days (30) from the date the motion is filed.

If you are in a bankruptcy chapter 13 case and are involved in a car accident, it is so important for you to follow the proper steps required by the Bankruptcy Court. It doesn’t matter if your vehicle was totaled or not, there are steps we must take to handle things properly.

Let the insurancwrecked-car-300x175e company know you are in a chapter 13 bankruptcy and tell them any settlement for the damage to the vehicle must be paid to the chapter 13 trustee.  Do not cash or deposit any settlement money or checks you receive. All money must be paid to the chapter 13 trustee.

If you hire an attorney to represent you for injuries you received in the accident, the attorney must be approved by the bankruptcy court. If you need a lawyer to represent you, call my office, I can refer you to an attorney.

irs-taking-money-150x150If you get an income tax refund, money is being taken from your paycheck that you could use right now.  If you get an income tax refund, you are letting the government hold and use your money for a year without paying you interest. If you get an income tax refund, you are letting the government hold money that can be seized by other government agencies and some creditors.

Check your tax withholding so you are even at the end of the year. You don’t want to get a refund and you don’t want to owe additional taxes.

Review the amount of taxes withheld being withheld from your pay check. Everyone’s situation changes. A yearly review can help you avoid having too much or too little federal income tax taken from your paychecks. You want to have the correct amount taken out so you can be at a zero balance at the end of the year. The ideal situation is, no taxes owed and no refund due.

mortgage-interest-paid-tax-credit-150x150Is your Chapter 13 plan paying mortgage payments that were delinquent when you filed bankruptcy?  Is your Chapter 13 plan paying the current mortgage payments through the bankruptcy?  If so, you are missing out on your mortgage interest tax deduction.

Your mortgage company often won’t send the IRS or the trustee the Mortgage Interest statement each year for what you paid through the plan.

So you don’t have any proof that mortgage interest was paid, and neither does the IRS.

Here is how you can claim the credit for mortgage interest: Continue reading