What about joint tax filings where only one spouse files for bankruptcy relief?

Over the past few weeks we discussed what may be taxable, how to eliminate taxes, and what happens to tax refunds in a bankruptcy. This post is going to address instances where a couple files a joint tax return, but only one spouse files for bankruptcy relief. First, let me remind you that it is possible for one spouse to file bankruptcy while the other does not. I will go into detail on how that works in a later Read More

Tax Refunds and Bankruptcy

Every year as we prepare our taxes we hope that we’re entitled to tax refunds. Most people view tax refunds as a bonus and get excited that they’re receiving money from the government. It’s not that simple. A tax refund is essentially the government paying you back for money you lent them over the past year. Sadly, you do not get interest on that loan. A tax refund is the difference between the taxes you had Read More

Do I have to pay taxes on…?

Another question I receive frequently is whether one has to pay taxes on debt discharged in a bankruptcy. The answer is no. That doesn’t make for much of a blog post, but it does segue nicely to the topic of where debt and taxes do come together. While debt discharged in bankruptcy is not taxable, when debt is eliminated outside of a bankruptcy it can be taxable.  One may choose not to file bankruptcy to Read More

Discharging Taxes in Bankruptcy

They say that nothing in life is certain, except death and taxes. Most people assume that personal income taxes cannot be discharged in a bankruptcy. The general rule with discharging any debt in a bankruptcy is that debt is dischargeable unless it falls under one of the many exceptions listed in the Bankruptcy Code. Taxes are the first exception to discharge listed in the Bankruptcy Code. This should not come as Read More

Let’s Talk About Taxes

While it feels like we are stuck in a never-ending 2020, it’s the middle of February 2021 and tax returns are due in two months. It’s possible some of you have already filed your returns but most are still getting paperwork together and will file closer to April 15th or go on extension. Either way, I am going to spend the next few blog posts discussing taxes and how they relate to debt, bankruptcy, and Read More

Protecting Assets in Bankruptcy

One of the biggest misconceptions is that if you file for bankruptcy relief you will lose your house and all your other assets. This is absolutely not the case. In fact, most Chapter 7 cases filed in New York are “no asset” cases, meaning that all assets are protected and will not be taken by a bankruptcy trustee and sold for the benefit of your creditors. Chapter 13 cases work differently, but typically assets are Read More

New President, New Opportunities

Anytime there is a new president or a major change in Congress, we start to focus on what new laws may be enacted. We’ve heard ideas during primaries and debates, but now it’s time to see what is on the agenda. Some of it may be wishful thinking, but often policies that have been debated for years or decades get a fresh look, even if no change results. That brings me to this week’s topic: student loans. There have Read More

Debt Collection: Part 2

In our last post, we mentioned that you cannot go to jail for not paying your bills (with child support being the main exception). Creditors do have certain rights afforded to them under state and federal law, but there are laws in place to protect debtors from being harassed by aggressive and abusive creditors. Here’s what usually happens in the debt collection process: once you miss a payment, a creditor can Read More

Debt Collection: Part 1

One of the questions that I receive often is "Can I go to jail for not paying my bills?" The simple answer is no, but like most answers, there are always exceptions (like child support or tax evasion). Simply owing taxes is not criminal and will not lead to an arrest, just penalties and interest. However, failing to pay court fees and penalties can sometimes lead to an arrest and jail time. The concept of Read More

Evander Kane Files for Bankruptcy

Evander who??? That’s probably what you’re thinking if you are not a hockey fan. Evander Kane was the fourth pick in the NHL draft in 2009 and an 11-year NHL veteran. Over the course of his professional hockey career he’s earned over $50 million. Just two days ago he filed for Chapter 7 relief. Why is this interesting? As a hockey fan his play on the ice is far more enjoyable, but there are a few lessons to Read More