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Author Archives: Jeff Aleman

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A Slice of World Bankruptcy History

The idea of canceling debts is not a new one. In Biblical times, debts were also overwhelming. People virtually had no recourse and when facing insurmountable debt, sold themselves into slavery. During these times, the Old Testament records Mosaic laws that required the Israelites to forgive debtors their debts every seven years. However, this law… Read More »

Undue Hardship and Student Loans

Prior to the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, private student loans were dischargeable. However the BAPCPA changed that. It is a general fact that under the Bankruptcy Code, student loans are not dischargeable. However, under certain circumstances debtors strapped with student loans can discharge them through bankruptcy. The exception falls… Read More »

How Effective Was the BAPCPA?

In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) to reform bankruptcy and in an attempt to make it more difficult for abusive bankruptcy filings to occur. By definition, reform should improve an unsatisfactory condition. Forbes ran an article in 2012 that tax rebates boost bankruptcies. This fact suggests that tax… Read More »

How Bankruptcy Remedies the Economic System

We often hear people say that filing bankruptcy is “unethical” or “wrong” and that it isn’t good for society.  From a macroeconomic viewpoint, however, bankruptcy filings are good for the economy.  When a person files for bankruptcy, it frees up that person’s monetary flow. Without the bankruptcy system, debtors would remain unable to pay debts,… Read More »

How Does an Automatic Stay Affect IRS Debt?

The automatic stay in a bankruptcy case is a court order that stops creditors from collecting debt. This order also applies to revenue agents from the Internal Revenue Service (IRS). The automatic stay prevents the IRS agents from: Garnishing your wages Filing a lawsuit against you Demanding payment Seizing your assets Issuing tax liens Taking… Read More »

Tax Liabilities and Implications with Filing Bankruptcy

Filing bankruptcy often involves tax implications, but not in the ways you might think.  Filing bankruptcy itself is not a taxable event.  However, there could be tax implications if property is sold to pay creditors, or if debts are forgiven by creditors. Typically, when you owe someone $600 or more and they cancel or forgive… Read More »

What Are Preference Payments in Bankruptcy?

When you file bankruptcy, there are rules established by the Bankruptcy Code. One rule addresses payments made to creditors within 90 days of filing for bankruptcy. The name for these payments is preference payments. As the name implies, the creditor obtaining the payment receives preference over other creditors who are also owed money. The bankruptcy… Read More »

How Unperfected and Perfected Liens Work in Bankruptcy

Liens refer to secured property where the property is used as collateral for loans. To perfect a lien, the lender must file it with the correct legal authority. For example, a car dealership must file the lien with the Department of Motor Vehicles or whichever authority in the dealership’s particular state handles the filing of… Read More »

Filing Bankruptcy After Divorce Is Final

One advantage of filing bankruptcy after the divorce is completed is a shorter divorce than a divorce that proceeds concurrent with bankruptcy. Shorter divorces are generally less expensive. Recent changes from the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) made it more difficult to discharge divorce-related debts in bankruptcy. You cannot discharge any divorce-related… Read More »

Filing Bankruptcy While a Divorce Is Ongoing

With a Chapter 7 bankruptcy, the process moves rather quickly and bankruptcy closes generally within three to six months of filing. However, when you are in the middle of a divorce and decide to file bankruptcy, the automatic stay puts a stop to divorce proceedings. The only legal actions not affected by an automatic stay… Read More »