Budget Counseling

In 2009, we had offered some free seminars in the topics of budget management, managing credit, and good consumer habits – under the program name “Stop the Bleeding Project”,  At the time, our law firm was new and we didn’t have much media exposure, so we had trouble getting enough people interested to justify renting room space.Now that we have our footing in the community, in 2013, Holbus Law Office intends to rejuvenate its budget counseling services.

  1. Our complimentary CD-ROMs that we provide to each of our bankruptcy clients will contain new tools to help manage (a) bank checking and savings accounts and loan / credit card accounts and (b) prepare a budget.  I hope to have the CD-ROMs updated before the end of the year.
  2. We are considering either reintroducing the free STBP seminars or, alternatively, offer individual consultations to offer budget counseling advice to improve finances and / or avoid bankruptcy.  Once that decision is made, an announcement will be posted.

Holiday Reminder and the Presumption of Non-Dischargeability

‘Tis the season to spend copious amounts of money at the mall for decorations, food, and presents.  While we, at Holbus Law Office, wish for everyone to enjoy a Merry Christmas, we also feel obligated to remind those who are contemplating bankruptcy to not overdo it with credit card spending.
Consumer debts in excess of $875 in the 70 days leading up to filing bankruptcy are presumed to be non-dischargeable under 11 U.S.C. sec. 523(a)(2)(C)(i)(II).  Now, denial of discharge of such a debt is not automatic – it requires the filing of an adversary proceeding.  But if your credit card company does so and you fall within these parameters, the debt is presumed non-dischargeable and the burden of proof falls on you to show otherwise.
Falling outside of these parameters doesn’t necessarily mean you get off, either.  For example, someone who racks up $10k in debt outside of 70 days but within 90 days should certainly expect a challenge.  The burden of proof is on the creditors, and it’s a tough burden to overcome.  But it’s hardly impossible.
Exercise common sense this holiday season.  Racking up tons of credit card debt in a frenzied shopping spree on the eve of bankruptcy is not a good idea.  It’s gaming the system, and judges tend not to look favorably on such behavior.

BAPCPA’s Silly Tax Return Gap

Under 11 U.S.C. § 1325(a)(9), a Chapter 13 Plan cannot be confirmed if the provisions of 11 U.S.C. § 1308 have not been met.  1308 requires that a debtor who has filed for bankruptcy under Chapter 13 must have filed his or her tax returns for the past four taxable periods ending before the date their case was filed.
This creates a peculiar situation.
A debtor who files bankruptcy after December 31, 2012 will not be able to have their Chapter 13 Plan confirmed until their 2012 tax returns have been filed with the IRS and their state department of revenue, EVEN THOUGH said tax returns are not due until April 15, 2013.
Debtors who need immediate protection under the bankruptcy stay can still file before their tax returns have been filed, but confirmation gets delayed until those returns have been filed.  However – particularly for above-median debtors – the 2012 tax returns are important.  Speficially, they are often needed to compute actual tax liability on line 30 of the Means Test.
I encourage my clients who need to file under Chapter 13 to try to file before the end of the year.  Except under certain circumstances (e.g. where delaying might yield a more favorable Means Test result), it is to their advantage to do so to prevent the tax return problem from causing unnecessary delays in confirmation.  Those needing to file after December 31 are strongly encouraged to have their tax returns filed promptly and – ideally – before their bankruptcy case is filed.