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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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I have a few questions within one: I am currently in foreclosure--the

Resolved Question:

I have a few questions within one:

I am currently in foreclosure--the sale is scheduled for Feb. 20th and the redemption period ends on August 20th. I currently have about $60,000 in credit card debt, the house has two loans (a first and second) and has no equity--I am actually upside down by $100,000 on the first alone and I owe another $100,000 on the second. And I owe $17,000 of IRS taxes from 2009 and 2010 (both were filed on time). It sucks to be me right~~~
For the record, most of the debt was created by my ex-husband's overzealous goals and attempt to start a business---and forgot to pay the taxes leading to a balance of $17,000.

Question # XXXXX: Should I wait to file bankruptcy until after the 2nd mortgage decides to file a deficiency judgment? Is there a statue of limitation on judgements?

Question # XXXXX: I have two jobs (one that pays $100,000 I have been there for 6 years and the other that pays $40,000 I have been there for 7 years). I plan to resign from the $100,000 job due to stress related issues associated with the work. Once I get kicked out of my home in August, I will no longer be able to afford my credit card payments. Should I file in August or wait for my taxes to expire in 2014.
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 1 year ago.

cfortunato :

Hi - my name is XXXXX XXXXX I'm a Bankruptcy attorney here to assist you.

cfortunato :

1) Why did you only ask if you should wait to file until the second mortgage company gets a deficiency judgment? (Why did you not ask about a first mortgage deficiency judgment?)

cfortunato :

2) What did you mean by your taxes expiring (in 2014)?

Customer:

I didn't ask about the first because I simply forgot.

Customer:

I am highly interested in the 2nd because it is unsecured---but I also care about the second.

cfortunato :

Thank you for your response.

Customer:

The expiration was the 240 day rule that I was reading about related to the taxes

Customer:

I also care about the first---sorry I wrote the second by accident

cfortunato :

The first mortgage is partially unsecured - as the balance on the first mortgage is greater than the market value of the house.

Customer:

Ok....that makes sense.

Customer:

When is the best time to file? Before or after the bank decides to pursue a deficiency

cfortunato :

You may be able to wait until either or both mortgages get deficiency judgments before filing a Bankruptcy - unless either or both mortgage companies issue a C-1099 Forgiveness of Debt.

Customer:

Is that considered income that I would file on my taxes? If they do that then would I have to file bankruptcy

cfortunato :

Yes - the forgiven amount, which is reflected on a 1099-C form is taxable income, unless that mortgage is discharged in a Bankruptcy.

Customer:

I feel like I want to file a chapter 7---and get a fresh start but I am not sure I would qualify since my car payment is so high

Customer:

Do you think I should wait on bankruptcy? I feel like I don't know what to do because there are just so many variables

cfortunato :

So, you can wait to file until you get a 1099-C form, or until one or both mortgage companies get a deficiency judgment.

Customer:

Ok that makes sense. Should I just keep paying my other bills? If I leave my higher paying job that may be harder.

cfortunato :

How many are in your household?

Customer:

And on top of it all--- I just feel an overwhelming amount of stress (sleepless nights, weight loss, migraines, dealing with my ex)

Customer:

It is just me

Customer:

And losing my hair from the stress of two jobs to keep all the balls in the air

Customer:

Sorry I know you are not a therapist (smile)---I just want to make sure I am getting the best advice because this feels so lonely

cfortunato :

It really sounds tough - but it looks like things will get better once you have the foreclosure and/or Bankruptcy behind you. I will look up the income limit for filing a Chapter 7.

Customer:

Only one person in my household

Customer:

I looked it up already---it is $47,000

Customer:

But my car payment is so high---it may disqualify me.

Customer:

Should I sell the car?

cfortunato :

One's car payment does not affect whether or not a Chapter 7 can be filed.

Customer:

Really---that is good news. A woman I just met said I could only have $450 or less in car payments

cfortunato :

If your total gross annual income is less than $47,124, the Bankruptcy court does not look at how you spend your money.

Customer:

She said the courts would look at it as expensive related to my income

Customer:

WOW...that is GREAT news~~~

Customer:

I can keep my car...

Customer:

But will they get mad at me for leaving my higher paying role

Customer:

I am just too stressed to work in the field any longer...the lower paying is far more manageable

cfortunato :

You cannot be forced to work - something to do with the 13th Amendment (anti-slavery).

Customer:

WOW...this is AMAZING.

Customer:

I can resign from my current job and work my second job only.

cfortunato :

No one can get mad at you, or sanction you because you do not want to work 2 jobs.

Customer:

I can keep my car regardless of the payment

Customer:

I am going to wait to see what the mortgage company decides to do with me

Customer:

I am moving out August 1st to an apartment---and wait and see

cfortunato :

You can keep your car as long as it has less than a certain amount of equity - I will look up the amount.

Customer:

It has no equity---I owe $26,000 and it is worth $19,000

Customer:

It is upside down too

Customer:

Everything in my life is upside down

cfortunato :

So you can keep it, as long as you continue to make the payments.

Customer:

I will pay for it

Customer:

This has been really helpful...you are really nice

cfortunato :

So everything in your life has no where to go except up.

Customer:

Most bankruptcy lawyers seem a bit harsh---and revenue focused

Customer:

Please pray I find one that has my best interest---

cfortunato :

Most attorneys I have met are revenue-motivated.

Customer:

I will sleep a lot better tonight.

Customer:

I will keep paying my credit cards too

cfortunato :

You can stop paying your credit cards once you decide you are going to file a Bankruptcy.

Customer:

Ok...

Customer:

I don't use them anymore---only cash

cfortunato :

You can have income taxes dischared if they are more than 3 years old.

Customer:

I think if I file, I am going to wait until they are 3 years old

Customer:

2009- filed in April 2010 (April 2013)

cfortunato :

So, it may be a good idea to try to wait until after April, 2014 to file.

Customer:

I totally agree

cfortunato :

The 3 years is measured from the date the tax return was due to be filed.

Customer:

Can I last that long?

cfortunato :

The return for 2010 was due to be filed April 15, 2011.

Customer:

What if the bank comes after me before April 2014?

Customer:

I filed all of my taxes on time

cfortunato :

They cannot do anything before the redemption period.

Customer:

The redemption ends on 8/20/2013

cfortunato :

In most cases, it takes longer than 6 months to get a deficiency judgment, and then at least another few months to start garnishing ones wages.

Customer:

Ok I should be ok....

cfortunato :

But if your wages are garnished before April, 2014, the garnishment must stop as soon as you file.

Customer:

Ok...that makes sense~~~

cfortunato :

The few weeks or months of garnishment will probably be less than the 2010 taxes that are owed, and that can be discharged if (and only if) a Bankruptcy is filed after April 15, 2014.

cfortunato :

And if you are issued a 1099-C, you have to file a Bankruptcy before you file your tax return for the year in which thhe 1099-C is issued.

Customer:

Thank you so much---you have been extremely helpful!!!!

cfortunato :

You're welcome!

cfortunato :

And don't forget that, ''this too shall pass''.

Customer:

I am trying to hold on everyday

cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience: Bankruptcy professor.
cfortunato and 3 other Bankruptcy Law Specialists are ready to help you

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