Author Archives: Jay Butchko
Are Chapter 7 Bankruptcies Ever Denied?
No, unless the debtor fails to meet one of the two basic qualifications for bankruptcy. All debtors must be honest and unfortunate. Honest debtors aren’t trying to manipulate the system for their own purposes, and unfortunate debtors are, well, unfortunate. More on these things below. Honest and unfortunate debtors receive all the benefits of… Read More »
Bankruptcy or Debt Negotiation: Which is Best?
The answer to this question, and most others like it, is “it depends.” Most financial planners believe a family’s debt-to-income ratio (DTI) should not exceed 15 percent of net income. That’s unrealistic for most people. If a family earns $6,000 a month and pays $1,500 rent, that’s already 15 percent, before they make their… Read More »
How Much Will the IRS Accept for an Offer in Compromise?
“Compromise” usually implies give and take. But for a taxpayer, an IRS offer in compromise is all give and no take. IRS bureaucrats decide if a taxpayer qualifies for OIC relief. IRS bureaucrats also decide whether an offer in compromise is reasonable. So, the IRS could easily insist that OIC applicants pay the entire… Read More »
Is Chapter 13 Right for Me?
Especially for some people, the moral imperative to repay debts is very high. But reality gets in the way. Credit cards are a good example. The average credit card interest rate is so high that these debts quickly spiral out of control. Similarly, there’s a practical obligation to pay secured debts, like a home… Read More »
What Can I Do About Back Taxes?
Many people falsely believe they don’t have to do anything about back taxes. The overall audit rate is less than 1 percent (the audit rate for high-earning taxpayers is significantly higher). So, quite frankly, many people think they can owe back taxes and the IRS won’t do anything about it. The formal audit rate… Read More »
Should I File Chapter 7 or Chapter 13?
The answer to this question usually depends on the kinds of debts you have. Some people have issues with unsecured debts, like credit cards. The average credit card interest rate is over 20 percent, so the balance shoots up quickly. Other people have issues with delinquent unsecured debt, like past-due auto loan payments. Legally,… Read More »
Is Debt Settlement Worth It?
If bankruptcy is off the table, then yes, debt settlement is worth it. Some people don’t qualify for Chapter 7 because their income is too large and/or they don’t qualify for Chapter 13 because they have too much debt. Chapters 7 and 13 have some informal filing requirements as well. Other debtors have crippling… Read More »
Does Bankruptcy Stop Foreclosure?
Yes. As soon as debtors file their voluntary petitions, Section 362 of the Bankruptcy Code stops most creditor adverse actions. Additionally, consumer bankruptcy exempts home equity, making it almost impossible for the trustee (person who manages a bankruptcy for a judge) to liquidate a home. Some informal exemptions are available that extend this protection… Read More »
Does Bankruptcy Adversely Affect Government Benefits?
No. Many people are surprised to learn that government benefits are exempt assets in Illinois. Furthermore, the exemption isn’t value-based, like the home equity or motor vehicle exemption. Social Security Insurance benefits, SSD benefits, workers’ compensation benefits, VA disability benefits, and all other such benefits are 100 percent exempt. Federal or state pension plan… Read More »
Does Bankruptcy Affect My Security Clearance?
Yes, but in most cases, bankruptcy has a positive effect, not a negative effect, on your security clearance. In fact, Guideline F of DoD Directive 5220.06, the controlling rule in this area, basically encourages people with financial problems to file bankruptcy in order to protect their security clearances. Filing bankruptcy to cure financial problems… Read More »