Can I Go To Jail For Not Paying My Bills?

I recently met with a wonderful person about their financial situation. This person is elderly and while they owe about $20,000 in credit card bills, it might as well be $200,000.00 based on their fixed income.

This potential client didn’t have any assets to speak of in terms of a house or car. So I told them to stop paying the bills.

The potential client became very upset.

“They’re going to put me in jail!” the prospective client cried.

Creditors Can’t Collect You

No, they are not. You will not be put in jail.

There is no such thing as debtor’s prison in our great country. Yes, it is true that in a very few places in our country this has happened, but it was not because of credit card bills or personal loans. It was because of fines and, sometimes, taxes, particularly the failure to file a required tax return. Lying to the Court about your financial situation and assets can get you in some deep trouble as well.

What can creditors do to collect their money? They can, if they wish, take you to Court, and they can try to collect their money, but they cannot collect you.

We Can Help

That being said, why worry about this stuff when all you have to do is to call us at Steidl and Steinberg? We will look at your entire financial situation and let you know what we think should be done about it. We can guide through the process of dealing with your financial problems and the creditors who are sending you bills. And it’s free.

You don’t need to be concerned about collection calls or letters. You don’t have to worry about getting harassed throughout the day by persistent bill collectors. Let’s see what we can do to get you out of this mess.

You Should not be Afraid of Bankruptcy

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“Bankruptcy? I would never consider that! They take your home and car! They come into your house and take everything you own!”

I can’t tell you how often I hear this. And, kind of like the ants in your kitchen, this is all I see, but I know that there are more misunderstandings like this. So let’s debunk these myths:

1. Your House

The bankruptcy laws allow you to keep an amount of equity in your house, equity calculated by taking the market value of the house and subtracting the amount owed on the mortgage and home equity loans. The federal “exemptions” (what you can keep in a bankruptcy case) allow equity of $23,000.00 for each homeowner in a house that you or a dependent live in. Remember, that says each of the homeowners, so $46,000.00 for two of you, and sometimes this can be stretched. Pennsylvania allows an exemption that could be much higher in certain circumstances. Simply put, if you are qualified, and most of our clients are, we will not allow you to lose your home unless you wish to give it up.

2. Your Vehicles

Each person filing is allowed equity in a vehicle of about $3,700.00. That is equity after subtracting the amount owed. Is there a lot of equity in your car or truck? Don’t fret! To the extent that we don’t have to use up all of your home equity, we can apply some of the unused amount of your home to your vehicles.

3. Household Items

If you are like most people, you have used furniture and appliances and these are not worth a whole lot. For example, let’s say one of your neighbors is having a moving sale. How much are you going to pay for a used sofa? How about the dryer? They want how much for some old tools?

You get the picture. This stuff is usually worth little, and the bankruptcy laws protect your ability to keep them. I cannot remember a time in my more than three decades of doing this type of law that the Court ever came out to my client’s house to look.

Of course, we would still need to disclose everything that you own but, normally, everything you own isn’t all that much. In the few situations where you own too much, we often can help as well.

Instead of fearing the unknown, instead of listening to your so-called knowledgeable friends who want to steer you away from a possible bankruptcy, get the facts! Call or email us and talk to us about your situation. Our consultation is free. And you won’t lose anything.

The Court is not Going to Come to Your House

The Court won't come to your house.

One of the great myths of those considering filing for bankruptcy is that the Court is going to come to your house and start inventorying your possessions, perhaps taking some of them.

Let’s put those fears to rest. That’s not going to happen.

The reason why it isn’t normally true is because most of us don’t really have much of value. You may have paid $2,500.00 for your living room furniture seven years ago, but that was seven years ago and before the grandchildren began climbing all over it.

That was a good washer and dryer that you purchased three years ago, but really, what would someone pay for it now?

The bankruptcy laws allow you to keep a generous amount of household goods, along with reasonable amounts of equity in your house, vehicles, jewelry, and lots of other stuff. And because of this, it’s rare that a client will lose anything. We will carefully review your situation before we file any papers and will let you know if there is any risk whatsoever.

The important thing in the preparation of a case is that you need to tell us what you have. Don’t try to hide an extra vehicle or a boat or a savings account because you think you might lose it.

Failure to be totally honest in your bankruptcy paperwork can result in what you are most afraid of, and that’s losing things. You could also possibly face bankruptcy fraud charges. Why anyone would want to risk this when the bankruptcy laws are so generous is beyond me. Tell us the truth so that we can protect you and your things.

Instead of listening to the well-meaning but legally dangerous friends who tell you the Court is coming to your house, listen to us at Steidl & Steinberg instead.

The IRS is accepting silent tax returns

the irs tax return changes 2017

 

I have been asked several times by various clients if President Trump is going to reform taxes and/or abolish the Internal Revenue Services. Well, I can safely say that the IRS is not going to be abolished. It’s also very safe to say if Congress does pass a large tax reform bill, you will still have to pay taxes.

Tax return changes for 2017

But so far there has been one executive order which may change how you can file your tax return this year. Under the Affordable Health Care Act (commonly referred to as Obamacare), you were required to report your health insurance information on your annual tax return. If you did not have health insurance for any part of the year you would then be assessed a “shared responsibility payment” and your tax bill would be increased for not having health insurance. Technically this law has not changed. That means if you report that you do not have health insurance you will be assessed this additional tax. But President Trump’s executive order requires the IRS to process your tax return even if you do not disclose anything about your health insurance.

At this time, the Affordable Health Care Act/Obamacare remains in limbo, pending the Republican-controlled Congress plans for repeal or replacement measures.

What will the IRS do if you remain silent?

By remaining silent on the return, the IRS would still process your return and would only assess you a shared responsibility payment if it conducted a formal audit and verified that you did not have health insurance for all or part of the year.

You could save yourself this payment by remaining silent, but you would then run the risk of being audited and being subjected to an IRS assessment of the penalty. But, in all honesty, your chances of being audited, as an individual tax payer, are low, generally speaking.

Don’t let tax time to become a source of panic for you. Call us and schedule a free, in-person consultation with one of our skilled tax attorneys.

How Can I Buy Another Car if I File for Bankruptcy?

car bankruptcy

When potential clients come into Steidl & Steinberg for a free consultation, I ask them for some basic financial information. One of the things I look at is their transportation situation. Do they commute by bus? Car? Do they need their car for work? Are they taking care of elderly parents? Are the kids’ activities part of their transportation needs? How old are their vehicles? How many vehicles do they have? How many miles and in what condition are they? Are the vehicles from traditionally reliable manufacturers or are their vehicles notoriously unreliable?

Are the vehicles paid for? How much are the monthly payments, and for how long? Are the payments up to date or is the repo person at the door?

I want to make sure that your needs are met with whatever option you might choose. A solution to your financial problems doesn’t work if you can’t get to work or if your kids are stranded. So you should be very relieved to know that in general, vehicle solutions are much easier to come by in bankruptcy situations than one might believe. This is the case in both Chapter 7 straight bankruptcy cases and in Chapter 13 reorganization cases.

Your Car is Safe in a Bankruptcy

You won’t lose a vehicle in bankruptcy unless you are voluntarily relinquishing it, or unless I have told you in advance of filing any papers that you have too many vehicles to keep. There are no  surprises here. If you owe money on it you will have to pay for it, and sometimes we can get interest rates or balances lowered in Chapter 13. but your vehicle isn’t going anywhere.

Then you talk about your car. It has over 200,000 miles and there isn’t enough duct tape to keep it together. You are wondering if you file for bankruptcy, how will you ever be able to get another one since I won’t have any credit?

Our Chapter 7 clients are pleasantly surprised when they get offers from dealers to look at cars while their bankruptcy is being processed. I advise my clients they have to wait until the Chapter 7 is over — about four to five months from filing the papers — before they can buy their vehicles.

Chapter 13 situations are a bit more complex . I look carefully at your vehicle situation prior to entering a Chapter 13 Plan. If there is no way that vehicle is going to get you through the term of the Plan, we review options that sometimes include the possibility of buying a car before you file the Chapter 13 papers. This depends on a number of factors but I want to make sure you can get around safely and reliably.  If the unexpected occurs and you have to obtain a vehicle while you are actively in the Chapter 13, the Court will approve your purchasing a reasonable vehicle for once we ask for the Court’s permission.

So if you are hesitant to consider any kind of bankruptcy because of your car or truck situation, don’t be. Give us a call and set up your free consultation.