Our Brains and Spending

The Wall Street Journal recently ran an article highlighting a study on how shopping with credit cards affects our brains. Conducted by MIT, the study compared brain activity when shoppers planned to pay with a credit card versus paying with cash. The results indicated that people were more willing to purchase expensive items using credit cards compared to cash and were also willing to spend more if using credit Read More

Bankruptcy Filings Down Nationwide Over 38%

For bankruptcy attorneys, it’s no secret that bankruptcy filings have dramatically decreased since the start of the pandemic. While we initially believed that it was merely a function of people not going out to see their attorneys (despite the rise of virtual meetings) or the closing of courts and therefore collections activity, the filings remained in decline. In fact, from April 1, 2020 until March 31, 2021, Read More

Speaking of High-Interest Loans

Two weeks ago we wrote about the dangers of high-interest loans. ESPN ran a story on the same topic, but from a different angle. The ESPN article focused on current and former professional football players who invested in companies that provided high-interest loans to borrowers with low incomes and poor credit. It turned out to be a terrible investment for these athletes, as the companies defaulted on their payment Read More

Be Wary of Long-Term and High-Interest Loans

A recent article caught my attention highlighting the dangers of long-term and high-interest loans. In New York State, the legal limit for interest rates before considered usury is 16%. However, there are loopholes that allow some lenders to charge what is seemingly an unethical rate of interest. Sub-prime loans typically carry a higher interest rate (although not to the level of usury), as do payday loans and title Read More

New York State Bankruptcy Exemptions Updated

In a prior post, we discussed how a New York debtor can protect property in a bankruptcy by using either New York State or federal bankruptcy exemptions. Both sets of exemptions get adjusted every three years. The adjusted New York State exemptions took effect on April 1, 2021, and any adjustments to the federal exemptions will take effect on April 1, 2022. The New York State Department of Financial Services makes Read More

If you owe taxes…

While the deadline to file your 2020 tax returns has been extended to May 17, 2021, this will be my final tax season post so I can move on to other interesting topics. This tax filing extension is certainly a benefit to all filers. Tax filers benefit because they have more time to get everything in order and make payments (if they owe taxes). Accountants also benefit from the additional time. As I mentioned in a Read More

PPP Loans and Taxation

Three weeks ago I wrote a post explaining when forgiven debt is taxable. In light of the current pandemic and three stimulus packages that have been passed, this topic deserves some additional attention. As part of two of the three stimulus packages, Congress provided funding, through the U.S. Small Business Administration (SBA), for the Paycheck Protection Program (PPP). The PPP program provides loans to small Read More

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