Every year Americans receive thousands of dollars in refunds from the IRS. Unfortunately, most people find that their refund quickly disappears on things like credit cards with crazy interest rates, or, on urgent expenses like car or home repairs that were put off for far too long. In either case, using your refund on these things buys you little time, as you wind up with little to no savings, again waiting for next year’s refund. You need to break the cycle. Here are 3 reasons why spending your refund on filing bankruptcy will break the cycle and give you a fresh start.
1.Reason #1: There is an immediate impact.
From the moment you file bankruptcy, you notice the difference. The barrage of collection calls and collection notices will stop. Most of your debts, including credit cards, past due utility bills, and medical debts are completely erased. Using your tax refund to “pay down” these debts would be a temporary fix. You’d essentially be burning money and only slowing down the inevitable. Bankruptcy, on the other hand, is a permanent fix. Exactly what it’s designed to be… a fresh start. You will finally be able to breathe again and to move on with your life.
2.Reason #2: Your credit score will thank you. And sooner than you think.
My clients are constantly telling me “I can’t believe that my credit already improved. Is this a mistake?” No, it’s not a mistake. If you take a moment to really think about it, this makes sense. Right now, you have a lot of debts. Credit cards, medical bills, utility bills, car note, etc. Even making minimum payments on these debts every month can hurt your credit. Why? Because it shows the credit agencies that you are barely scraping by, meaning you are a risk to them. This reduces your credit score. Making partial payments or missing payments is obviously even worse. Every single month that you have a missed payment, a partially missed payment, or a minimum payment, is another month that your credit score takes a hit. It’s a slow death, and it will go on for years. Even if it’s only a few points each month, your credit score continues to go down Each. And. Every. Month.
Bankruptcy puts a stop to this. Yes, your credit score will take a hard hit the day you file bankruptcy. It has to. But Bankruptcy only reduces your credit score that one single time, not every single month like the minimum, partial, or missed payments do. The Bankruptcy can also eliminate most of your other debts in one fell swoop. Gone for good. This means that you no longer have a missed, partial, or minimum payment hurting you every single month!
This means that your credit score can start to go UP, instead of down, every month. How fast that happens is up to you. There are steps you can take to accelerate the process, like taking out a secured credit card and making timely payments on it every month. Essentially, Bankruptcy gets rid of all of the negative accounts that are dragging your score down, and since the Bankruptcy will now be the only negative item on your account, the more (1) time that passes and the (2) more positive things you can put on your account after your bankruptcy, the more that your credit score will go up. The moral of the story? Bankruptcy can actually allow you to improve your credit score.
3.Reason #3: You can finally build a savings account and have financial flexibility.
How much are you spending on those minimum, partial, or missed payments every month? $100? $200? $300? Well all of that money can now begin to go into your savings account every month. All of it. Bankruptcy is not intended to punish you. It is intended to get rid of the punishment of overwhelming debt and give you a fresh start. You are allowed to have disposable income after a bankruptcy, and you are allowed to keep every penny of it.
When was the last time you had a nice dinner? Bought a new winter jacket? Took your kids to the movies? If you are working hard every day but it just doesn’t get any easier, then do yourself a favor, give Robson & Lopez LLC a call to receive a free and personalized consultation. Your tax refund can provide you a lot more than just temporary relief. Use it wisely and you can finally get a fresh start on your finances.
The consultation is free. What’s the harm? Call us today.
Over the past couple of years, investigative journalists have shown that Chicago’s parking ticket system disproportionately punished Black and Hispanic communities. In response, the city council recently made a drastic change. In November of last year, they amended the municipal code so that a person filing chapter 7 bankruptcy can erase parking tickets that are at least 3 years old. The change went into effect on January 1, 2019.
To be perfectly clear, the bankruptcy laws have not changed. Bankruptcy law is federal law, to change it would take an act of the United States Congress. Given the current state of federal politics, that is unlikely to happen anytime soon. So, as has always been the case, a chapter 7 bankruptcy will NOT discharge your parking ticket debt. Traditionally, you had to file a chapter 13 bankruptcy to discharge parking ticket debt. The difference is that a chapter 7 is known as a “direct” bankruptcy, meaning that if you qualify, you file it and without paying back anything, all of your debts are discharged (cancelled). But bankruptcy law states that some debts do not go away in a Chapter 7. The most commonly known of these debts is parking tickets. A chapter 13, on the other hand, provides what is known as a “super-discharge,” which does cancel parking ticket debt. However, a chapter 13 requires that a debtor pay all of their disposable income every month into a “plan” for 3 to 5 years, ultimately paying back part of their debts at a reduced percentage. Upon the successful completion of the plan, the remaining debts are discharged, including parking tickets.
Bankruptcy law has not changed. Instead the city of Chicago created a new program focused on helping debtors in a Chapter 7 bankruptcy. The thought process behind the program is that people who most needed a chapter 7, were being forced into filing a chapter 13 and making monthly payments that they couldn’t afford. Once the debtors failed to make their payments, the chapter 13 would be dismissed and the debtors were right back where they started. Parking ticket debt still there, licenses suspended, cars booted or towed.
How does the program work? It’s pretty simple actually. Here are the steps.
If you complete these steps, the city will erase any parking tickets that are more than 3 years old (from the time the bankruptcy is filed), and will erase late fees and penalties on all tickets regardless of age. It’s a good program.
The biggest setback of this program is that it only erases parking tickets that are older than 3 years. For a debtor with a lot of parking tickets in the last 3 years, a chapter 13 bankruptcy may still be the better option. Figuring out which option is better, comes down to dollars and cents. If the city’s payment plan under the new program requires a debtor to pay $1500 up front and $250 per month, but a chapter 13 plan only requires a monthly payment of $50, the chapter 13 is likely to be the better choice.
You should also consider how the bankruptcy will affect your other debts and property, and the positive or negative impact on your credit. You should NOT file bankruptcy before consulting with an experienced attorney. An experienced bankruptcy attorney can help you figure out what is best for your specific situation. The lawyers at Robson & Lopez LLC are happy to help you out. Our consultations are always FREE. Call us today at (312) 523-2166.
Cook County Property Taxes Too Much? Appeal Your Property's Assessed Value To Lower Your Property Taxes.
Cook County currently has the second highest property taxes in the country! And given Illinois' current financial woes, it is all but certain that property taxes will go up once again. While forcing homeowners to pay for politician's poor financial decisions is just plain unfair, it is not likely that homeowners will get relief in the form of a reduced property tax rate anytime soon.
But, while you cannot lower the county tax rate, it is possible to lower property taxes on your property. You can do so by appealing what is known as your property's "assessed value." The assessed value is determined by the Cook County Assessor's Office, and it is what determines how much you will pay in property taxes. By lowering the assessed value, you lower your property taxes.
To appeal, you have to make sure to not miss your property's filing deadline. There is a 30 day filing period every year per each Township in Cook County. You will not receive notice of this deadline from the County unless your property is up for re-assessment, which only happens every 3 years. To find out this years filing deadline for your property, call our offices today.
Do you need a lawyer to appeal? The Assessor's website states that you do not need a lawyer to appeal. But you also don't need a lawyer to sue someone or to file a divorce. However, unless you have countless hours and days to learn the process, do the research, and gather the evidence, you may not want to file the appeal on your own. A lawyer familiar with the process will ensure that your appeal is proper, timely, and as strong as possible.
To learn more about the appeal process, contact us for a free, no obligation, consultation.
On December 16, 2014, President Obama signed a bill that extended the Mortgage Forgiveness Debt Relief Act to cover any mortgage debt cancelled through the end of 2014. This is good news for many individuals and families as it will reduce their tax burden for 2014.
As part of short sales and some mortgage modifications, the lender agrees to forgive some of the homeowner’s mortgage debt. Normally, that forgiven debt would be considered “income” for the purposes of federal taxes. The Mortgage Forgiveness Debt Relief Act prevents homeowners who went through a short sale, foreclosure sale or principal reduction from being taxed on the amount of mortgage debt forgiven. The act had previously expired at the end of 2013, but the extension now makes it retroactive through all of 2014.
When preparing your 2014 taxes, you should avoid form tax preparation services and unlicensed tax preparers. Instead, we highly advise you to seek the help of a qualified and licensed Certified Public Accountant (CPA), as the tax relief provided by the extension is not automatic. Make sure to mention to whomever you choose to assist with your taxes that you had mortgage debt forgiven in 2014, and to verify that the forgiven mortgage debt is listed on your tax schedules.
If you have questions about this or other impacts of your short sale or mortgage modification, give us a call. We will be happy to talk you.
The attorneys at Robson & Lopez LLC focus on consumer protection law and property law. The posts on this page are designed to be generally educational only, and not intended to be legal advice. We cannot guarantee that issues written about here apply to your personal situation. If you would like to talk to an attorney about the specifics of your case, please call us for a free consultation: