Sacramento Bankruptcy & Debt Relief Attorney

Bankruptcy planning

Before filing bankruptcy, it is best to plan for your filing. Ensuring your eligibility, protecting your property and making sure your debts will be discharged are all considerations in evaluating the type and timing of your bankruptcy.

For best results: consult a bankruptcy professional! Measure twice, cut once as the saying goes. Same situation in bankruptcy. Consulting with someone who knows bankruptcy will allow you to measure what you have and, more importantly, let you know what needs measuring!

Car accident injury and bankruptcy

Car accident injuries and bankruptcy relate in two primary ways:

1. If you caused an accident and are liable for another’s injuries or losses;

2. You were injured in a car accident caused by someone else.

If you were responsible for an accident that resulted in someone else’s injury, you may be liable for damages, meaning you may owe that other person money for their medical bills, pain & suffering, wage loss or property (car) damage. If you don’t have insurance, or enough insurance to cover the potential claim, you could be personally liable. Bankruptcy eliminates this type of debt and is a common cause of bankruptcy filing.

If you were injured by someone else in a car accident (or other type of accident), you have a potential claim against that person. That money you may get from the accident must be disclosed in your bankruptcy and, almost always, can be protected (exempted) entirely, meaning you can keep what you get from the injury and still eliminate your debts through your bankruptcy filing.

“Wild card”: what it means for Sacramento bankruptcy filings

“Wild card” is a term used for bankruptcy filings here in Sacramento and California related to protecting (exempting) your property. In addition to exempting all forms of your property, exemption laws used in California allow you an extra allowance of property protection by increasing the amount of property you can protect through a “wild card.” When applicable, the wild card exemption allows over $20,000 of property protection when you file for bankruptcy. Often the wild card is used to protect cash, bank accounts or tax refunds. It is a great tool to protect your property while eliminating your debt through bankruptcy.

Car repossessions and bankruptcy

If your car is repossessed you will likely owe the finance company or bank for the costs connected with repossessing your car. More so, you may owe for the difference between what you owed on the vehicle and the amount for which the car was sold at auction. This gap is referred to as a deficiency.

Both the repossession costs and any potential deficiency are dischargeable through a bankruptcy filing.

If your car is repossessed, bankruptcy can also get your car back. Timing and type of bankruptcy are factors in whether your car can be reclaimed if you file for bankruptcy.

Bankruptcy and credit card debt

Credit card debt is one of the most common types of debt discharged in bankruptcy. It is normally unsecured debt, meaning the debt does not need to repaid after filing for bankruptcy.

Transferring property prior to filing bankruptcy

Before filing bankruptcy do not transfer your property to anyone. Doing so may subject the property to a claim of the trustee. This means that even if you give your property away, the trustee can potentially take the property back and use it to pay your creditors.

Exemptions laws, particularly in California, generally allow you to protect all your property and, in so doing, there is no need to shield your property by giving it to someone else before you file for bankruptcy.

Don’t bury your head in the sand: bankruptcy can help you

As is reflected throughout this site, bankruptcy is often a far better option than living with debt. It is better for your credit, financial standing and peace of mind. This CNBC video may help in your decision whether to file for bankruptcy.

Is debt discharged through bankruptcy considered income on taxes?

No. If a debt is forgiven or otherwise cancelled outside the bankruptcy context, that amount can be considered income on your taxes. Often people receive a 1099 (1099-C) for the amount of debt that is cancelled and must pay taxes on that amount.

Here is what a 1099 looks like for cancellation of debt income:

But if you file bankruptcy, the debt is discharged and, according to the IRS, cannot be considered income.

Sacramento bankruptcy: dealing with holiday debt

Bankruptcy is an option to deal with holiday debt. Often filing bankruptcy is the best alternative. Factors to consider whether bankruptcy is your best option include the amount of debt you owe, what your assets and property are worth and the amount of income you earn.

As always, consultations to consider your bankruptcy options are free. If you are even considering filing bankruptcy, free advice to deal with your debt is always worth the price!

Sacramento bankruptcy: is written-off credit card debt still collectable?

Yes. Credit card debt written off by the bank does not mean the debt is done. Credit card debt that is written off is a way the credit card company can remove the debt they are owed as an asset from their books. It doesn’t mean you no longer owe that debt. You do.

Typically debt that credit card companies write off is then sold to collection companies at a fraction of the dollar amount owed. That collection company can then collect that debt from you. Collection companies are often more aggressive in their efforts to collect the debt than the originating credit card company you initially owed the debt. They are not lenders, they are collectors.

Even if you avoid collection efforts from collection companies, the credit card company that wrote off the debt can still do you damage. As discussed in earlier posts, the debt credit card companies write off can be considered forgiven. Though forgiven debt can still be collected upon by another company or collector, the credit card company can send you a 1099 for the forgiven debt they wrote off. This means you must pay taxes on the amount of that forgiven debt.

Bankruptcy is a cleaner fix. Debt that is discharged in a bankruptcy is eliminated forever. No one else can collect on that debt and the amount discharged is not considered income for tax purposes.

Bankruptcy filing for fresh financial start for 2016

Get a fresh financial start for the upcoming new year! Bankruptcy can be a valuable tool to eliminate your debt. Learn more by scheduling a free consultation. Here are some bankruptcy basics courtesy of the federal court system.