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Recent Blog Posts
Pandemic Relief Payments Still Excluded from Chapter 13 Calculations
The recent CARES Act deadline for excluding pandemic relief payments from Chapter 13 “current monthly income” was extended to March 27, 2022.
Way back in March 2020, the CARES Act made some helpful temporary changes to consumer bankruptcy law. (See our blog post in April 2020 about this.) Some of these changes would have expired, but in the meantime, Congress passed two other laws which extended the changes. These are still temporary, so it’s important to know the new deadlines. Last week we focused on one change dealing with Chapter 7’s means test. Today we focus on a similar change and new deadline about Chapter 13’s crucial “current monthly income” calculation.
The Crucial Role of Your “Current Monthly Income” in Your Chapter 13 Payment Plan
Means Test Extension beyond the CARES Act
The CARES Act’s March 27, 2021 deadline for excluding pandemic relief payments from the means test was extended by one year to March 27, 2022.
At the beginning of the pandemic, the CARES Act made some helpful temporary changes to consumer bankruptcy law. (See our blog post in March 2020 about this.) Those changes had expiration dates which have now passed. However, in the meantime, Congress passed two other laws which extended the changes. They are still temporary changes. As time passes, these consumer bankruptcy law changes and their new expiration dates continue to be important. Today we focus on one of these changes pertaining to the Chapter 7 means test.
All Pandemic Relief Payments Excluded as Income for the Means Test
The point of this first change is to prevent the pandemic relief payments from disqualifying people from Chapter 7, “straight bankruptcy.” People could receive and spend their payments without jeopardizing their bankruptcy options. Here’s how it works.
Can I File For Bankruptcy Without My Spouse if I Am Married?
One of the biggest concerns that people have when they file for bankruptcy is how it will affect their financial situation. Many people who are married have shared finances with their spouse, making bankruptcy that much more difficult. Many people falsely believe that when they are married, they must file for bankruptcy along with their divorce. However, even if you are married and have joint finances with your spouse, you can still file for bankruptcy individually. It is important to note, though, that filing for bankruptcy without your spouse can have an adverse effect on his or her credit, depending on the situation.
What Happens to Our Property?
In Texas, any property that either spouse acquires during the course of the marriage is considered to be joint property. However, for the purposes of bankruptcy, joint property is only considered to be that which has both you and your spouse’s name on it. For example, if a person files bankruptcy separately from their spouse in Texas, all of the property that they own -- even jointly -- is part of the bankruptcy estate. This means a spouse’s vehicle can also be included in the bankruptcy estate, even if they have financed the vehicle alone.
Affordable Care Act Enrollment Deadline of August 15, 2021
The usual deadline to apply for health care coverage under the Affordable Care Act was Dec. 15, 2020. It’s now been extended to Aug. 15, 2021.
Our last several weeks of blog posts have been about health insurance and medical bills. Two weeks ago, we got into the topic of health insurance and bankruptcy. Last week was a Q&A about medical bankruptcy. Today we provide urgent information about the current extended Special Enrollment Period for getting insurance under the Affordable Care Act.
Two Key Changes
In the last several months, there have been two major developments with the Affordable Care Act (“Obamacare”). First, a Special Enrollment Period allowed people to start health insurance coverage way past the usual December 15, 2020 deadline. Second, the American Rescue Plan Act lowered the cost of monthly premiums under the Affordable Care Act, often significantly.
What is the Difference Between Debt Settlement and Bankruptcy?
Being in debt is not uncommon. According to Bankrate, consumer debt across the United States has reached $14.2 trillion, with the average American being nearly $93,000 in total debt. There are many different types of debt, including credit card debt, student loans, car loans, or personal loans. When you are in debt over your head, you have a couple of options when you are seeking assistance. Both debt settlement and bankruptcy can help you get out of debt, but the method through which they do that could not be any more different.
Debt Settlement
Debt settlement is an alternative to bankruptcy that may be right for some people. Debt settlement occurs when you or a representative from a debt settlement company contact your creditor to negotiate a settlement amount that is typically much lower than the original amount you owed. In some cases, you may be able to negotiate the settlement so that you are only left responsible for 50 to 70 percent of what your total debt was. The upside to debt settlement is that it is not a legal process. You do not have to file anything with the court. Furthermore, debt settlement does not have the same long-term effect on your creditworthiness as bankruptcy.
Health Insurance and Bankruptcy
Having health insurance is extremely important. Both Chapter 7 and Chapter 13 bankruptcy can help you get and keep your health insurance.
Last week we discussed the 6 months of free health insurance provided by the recent American Rescue Plan Act. It may apply to you if you lost your job and your health insurance with it. If this applies to you please check out that blog post.
Today’s blog post gets into the broader topic of health insurance and bankruptcy.
There’s lots of evidence “that medical bills are the single largest causal factor in consumer bankruptcy.” Medical Debt as a Cause of Consumer Bankruptcy. Studies have been showing this for many years.
What may be more surprising is that most people who file for bankruptcy have health insurance at the time of filing. According to one study, nearly 70% of personal bankruptcy filers had health insurance. Medical Bankruptcy in the United States, The American Journal of Medicine.
What Is a 341 Meeting of Creditors During a Texas Bankruptcy?
The United States Bankruptcy Code allows for different types of bankruptcy under certain circumstances. Only some of these are available to individuals, with the two most common types of bankruptcies being Chapter 7 and Chapter 13 bankruptcies. Even though the steps taken to discharge debts are different, both Chapter 7 and Chapter 13 bankruptcies must take a few common steps. One of those steps is the meeting of creditors, also known as the "341 meeting of creditors" or the "341 hearing" after the portion of bankruptcy code it is written into. No matter the type of bankruptcy you end up filing for, understanding the steps of the bankruptcy process are important.
What Is a 341 Meeting of Creditors?
In most cases, you will not have to appear in court before a judge to complete your bankruptcy. One of the most important steps of the bankruptcy process is the 341 meeting of creditors, which typically takes place in a courthouse, with a trustee presiding over the hearing, rather than a judge. The purpose of the meeting of creditors is essentially for the bankruptcy trustee to verify your identity, ensure your forms are filled out correctly and that all of the information given is accurate.
How Does the Process Work When You File for Bankruptcy in Texas?
If you intend on filing for bankruptcy, then you likely already have a decent idea of what a bankruptcy is. For many people, filing for a bankruptcy is a way to get a fresh financial start and change their lives immensely, yet many people do not actually understand what the process entails. The bankruptcy process consists of various steps that must be taken in order to accurately complete the process. Though the majority of the process consists of paperwork and other administrative tasks, it can be daunting to some, which is why hiring a skilled bankruptcy attorney is recommended.
- Attend Pre-Bankruptcy Credit Counseling: Before you even begin your case, you are required to complete pre-bankruptcy credit counseling. This is typically one meeting that lasts for an hour or two with a credit counselor who is approved by the U.S. Department of Justice. This course must be completed within six months prior to your bankruptcy filing and usually involves discussing your financial situation and your options for bankruptcy.
If You Already Owe Income Taxes
What do you do (and not do) if you already owe 2018 or 2019 income taxes, or taxes from earlier years, and haven’t sent in the latest tax returns? What if you owe 2020 income taxes even though the IRS is not taxing $10,200 of unemployment income that year? That was our topic last week. The first $10,200 of unemployment is not being taxed because of last month’s American Rescue Plan Act. This week’s topic covers your options if you owe income taxes for prior tax years. Even if you don’t owe for 2020, or owe less, that may not help much if you were already behind.
If You HAVEN’T Submitted Recent Tax Returns
For tens of millions of Americans, the last year has been the most financially disruptive in their lifetimes. Many lives were turned upside down around a year ago. If that includes you it’s understandable that you had trouble preparing and sending in your 2019 income tax returns.
If You Owe Taxes (Even If Unemployment Benefits Aren’t Taxed)
Do you owe 2020 income taxes even though the IRS is now not taxing the first $10,200 of unemployment income? What to do and not to do.
Last week we discussed the extent to which unemployment income is not taxed because of the American Rescue Plan Act. Generally, you don’t pay federal (and possibly state) income tax on the first $10,200 in benefits you received in 2020. Section 9042(a) of the Act. (See our last blog post about qualifying for this, and other details.)
Let’s get into two significant practical problems you may still have in spite of this substantial benefit:
- You received more than $10,200 in unemployment benefits and so you owe income taxes on that extra amount.
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