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Non-dischargeable Debts in Bankrutpcy

Non-dischargeable Debts in Bankruptcy in Ohio

There are some debts that are considered non-dischargeable in bankruptcy, regardless of whether Ch. 7 or Ch. 13 is filed. These debts are considered non-dischargeable by operation of law and will automatically survive bankruptcy. The list of non-dischargeable debts includes, but may not be limited, to the following debts:

  • Debts for spousal or child support or alimony
  • Debts owed to a former spouse or child if they arose out of a divorce or separation in Ch. 7 bankruptcy but these debts may be discharged in Ch. 13 bankruptcy
  • Attorney fees in child custody and support cases
  • Student loans
  • Certain debts to government agencies for fines and penalties
  • Certain taxes and tax liens
  • Debts for judgments in wrongful death or personal injury lawsuits resulting from motor vehicle accidents while you were intoxicated
  • Debts for certain condominium or cooperative housing fees (association dues)
  • Criminal restitutions, court fines and penalties, and
  • In asset Ch. 7 cases or Ch. 13 cases, debts that were not scheduled in the initial bankruptcy filings.

There are other types of debts that are not considered automatically excepted from discharge by operation of law. For these debts, creditors must file a non-dischargeability action in the bankruptcy court to receive a ruling that the debt is not dischargeable. These types of debts include:

  • Certain credit card purchases for luxury goods
  • Certain cash advances
  • Debts for fraud while you were acting in a fiduciary capacity, or embezzlement or larceny
  • Debts for willful and malicious injury; and,
  • Debts obtained through fraud, false pretenses or false representation

If you are considering bankruptcy as an option,contact Columbus, Ohio lawyer, Mina Nami Khorrami,  for a free initial consultation to discuss your case in more detail.

The within statements are general in nature and this information is not intended as a substitute for legal advice regarding your specific case, nor is an attorney-client relationship established between Mina Nami Khorrami, LLC and any person reading this information. Mina Nami Khorrami is an experienced bankruptcy and debt attorney based in Columbus, Ohio.

Inherited Individual Retirement Accounts in bankruptcy

Inherited Individual Retirement Accounts in Bankruptcy

                If you are considering filing for bankruptcy, you may wonder if you can keep your property after the bankruptcy is filed.  There are many factors to consider in answering this question. 

                One area where the law has recently been clarified concerns individual retirement accounts, or IRA’s.  Generally, an IRA that you establish for your own retirement is exempt in the bankruptcy and you are permitted to keep it (although there are some limited exceptions to this general rule).  Furthermore, if your spouse passes away and you inherit the IRA that your spouse established, this too is generally exempt in bankruptcy and you are permitted to keep it (although again there are some limited exceptions to this general rule). 

                But what about an IRA that you inherit from someone else?  In the recent United States Supreme Court case of Clark v. Rameker, the Court found that an IRA inherited from someone other than your spouse is not exempt under federal law because, among other reasons, unlike an IRA you establish for yourself, you are not permitted to make contributions to the inherited IRA; you must make specified withdrawals from the inherited IRA; and there is no penalty for withdrawals made from the inherited before the age of 59 1/2.  Thus, under federal law, an IRA inherited from someone other than your spouse is not exempt and you could lose it in your bankruptcy.

                However, if you live in Ohio, and you are entitled to claim Ohio exemptions, you may be able to protect the inherited IRA in your bankruptcy.  Unlike the federal law, a recently passed Ohio law protects inherited IRA’s from your creditors.

                Call our office today to schedule a consultation to discuss your situation, including any issues regarding an IRA, with Attorney Mina Nami Khorrami.

The within statements are general in nature and this information is not intended as a substitute for legal advice regarding your specific case, nor is an attorney-client relationship established between Mina Nami Khorrami, LLC and any person reading this information. Mina Nami Khorrami is an experienced bankruptcy and debt attorney based in Columbus, Ohio.

How to Stop IRS Garnishment and Levies

How to Stop IRS Garnishments and Levies through Bankruptcy

Is IRS garnishing your wages or threatened to levy your bank accounts or other assets? Bankruptcy might be a solution to this problem.

It is important to note that you must file all of your required federal, state, and local tax returns. Even if you owe taxes, you must assemble all of your records, consult with your tax advisor and file your returns. Your failure to file tax returns may result in a higher tax liabilities, penalties and interest.

If you have filed your tax returns but do not have copies of them, you may obtain a tax transcript from the IRS.

Chapter 7 and IRS liens

Generally, Chapter 7 bankruptcy is not the best way to resolve a tax liability since most tax debts are not dischargeable in a Chapter 7 bankruptcy. Specifically, sales, excise and payroll taxes are generally non-dischargeable.

However, certain income tax obligations are dischargeable as long as said income tax obligation was 1) based on a return that was due at least 3 years ago; 2) you actually filed a return not less than 2 years ago; 3) the tax debt was assessed by the IRS at least 240 days ago; and 4) the tax liability was not incurred through fraud or willful tax evasion. Please keep in mind that this is a simplified discussion and that extensive tax analysis must be conducted to determine the dischargeability of tax debts.

The practical effect of filing a Chapter 7 petition when a tax debt is not dischargeable is that once the Chapter 7 proceeding is concluded, the tax debt, accrued interest and certain penalties will become immediately due again.

Chapter 13 and IRS liens

Since Chapter 13 bankruptcy provides for payment of tax obligations over a period of 3 to 5 years, you can provide for payment of non-dischargeable taxes and interest thereon. In a Chapter 13 bankruptcy, you may be able to pay a small percentage of the penalty portions of the tax obligation and obtain a discharge of the remainder of the penalty portion of the tax obligation. In addition, it may be possible to “cram down” the liens of the IRS to the actual value of all your property. Please note that filed tax liens, unless paid or otherwise resolved, will survive after bankruptcy so proper steps must be taken to release them.

Tax problems are serious issues. We are not qualified tax attorneys or tax advisers, and we do recommend that you contact your tax advisor, but we can help you use and apply bankruptcy to resolve your tax issues.

Contact Columbus, Ohio lawyer, Mina Nami Khorrami,  for a free initial consultation to discuss your case in more detail.

The within statements are general in nature and this information is not intended as a substitute for legal advice regarding your specific case, nor is an attorney-client relationship established between Mina Nami Khorrami, LLC and any person reading this information. Mina Nami Khorrami is an experienced bankruptcy and debt attorney based in Columbus, Ohio.

How can you keep your tax refund in bankruptcy

How to Keep Your Tax Refund and File for Ch. 7 Bankruptcy.

Once you file for  bankruptcy, any anticipated tax refund is part of your bankruptcy estate. Your refund is one of the assets that the trustee in your bankruptcy will be able to collect. A trustee is appointed to represent your creditors once you file a Ch. 7 bankruptcy. Usually around tax season, starting as early as October or November of the tax year, a trustee considers your tax refund, especially if you have received a large tax refund in the prior year. Certain portions of your tax refund are exempt under Ohio exemption laws, specifically the earned income tax credit and additional child tax credit portion of your tax refund,  however, the remainder of your tax refund is not exempt. You can apply your cash exemption and/or miscellaneous exemption on your tax refund but sometimes the exemptions are not sufficient to protect the non-exempt portion of your tax refund.

The best way to avoid this problem is to eliminate the possibility of a large tax refund. The first thing we ask our client to do is look at their W-4 to adjust their exemptions so that sufficient taxes are withheld to avoid owing any taxes when you file your return, but also minimizing your refund. This is a sound policy, as you do not want the IRS to sit on your taxes for a year, just to give it back to you around the tax season with 0% interest.

If you do have a large tax refund, you can avoid paying your tax refund to your bankruptcy trustee by waiting to file your bankruptcy until after you file your tax return, obtaining your tax refund,  and spending your refund before filing your bankruptcy. You should keep records of how you spend your tax refund. Generally, spending your tax refund on necessities, such as food, car repairs, clothing, house repairs, as well as living expenses, such as car payments, rental payments, utilities, mortgage payments, insurance and related monthly expenses are allowed. What is not allowed is to spend your tax refund by paying back a loan to a friend or family member, or paying down on a credit card or other unsecured debts, as the trustee will be able to recover such expenditure after you file your bankruptcy.

If you cannot wait to file your bankruptcy due to garnishment or foreclosure, then you should know that you might lose a portion or all of your tax refund, depending on the timing of your filing, the amount of your refund and the applicable exemptions.

Tax considerations apply in a Ch. 13 bankruptcy, although there are some different considerations to take into account when filing a Ch. 13 bankruptcy.

 Careful bankruptcy planning is recommended before filing bankruptcy. Contact Mina Nami Khorrami, LLC to discuss your case.

The within statements are general in nature and this information is not intended as a substitute for legal advice regarding your specific case, nor is an attorney-client relationship established between Mina Nami Khorrami, LLC and any person reading this information. Mina Nami Khorrami is an experienced bankruptcy and debt attorney based in Columbus, Ohio.

Garnishment – How Exemptions Help

Garnishments – How Exemption Helps Without Bankruptcy

                If the filing of your bankruptcy has to be delayed for certain reasons, such as allowing a statutory time limitation to expire, waiting for taxes to become dischargeable, pendency of tax refunds, or other valid  reasons, there are ways to avoid, delay or minimize garnishments.  The first thing you need to do is to talk to your creditors and make payment arrangements to avoid a lawsuit from being filed against you. In most cases, creditors must first file suit against you, serve you with a summons and complaint, obtain a judgment against you before they can garnish your wages. There are certain exceptions when the creditor does not have to file suit, including certain governmental tax creditors, domestic support obligations, court ordered child support, child support arrears and student loans which are in default.  These creditors can proceed with garnishment of your wages without first having to obtain a judgment against you.

                Exemptions can help when a garnishment is pending. Every state has exemption laws.  The state legislature passes a law that protects certain assets of its citizens from the reach of their creditors, even when a judgment is obtained.  For example, Ohio exemption law allows you to keep $475.00 (this amount is adjusted periodically) of cash, your unemployment benefits, Social Security, certain retirement plans and individual retirement accounts, and the equity in your home, your car, and your household goods, up to certain dollar limits.  There are several other applicable exemptions.

If the garnishment is against your wages, there are certain limitations on the amount that can be garnished. The garnishment of your wages cannot exceed 25% of your disposable earnings (after deduction of taxes), or the amount by which your disposable earnings exceeds thirty times the maximum hourly wages.

                If a creditor tries to take your property or wages, you can request a hearing.  At the hearing you can claim that your property is exempt.  If the creditor garnishes your bank account, and your Social Security or unemployment checks are deposited in your bank account, you can take your bank statements to the hearing and show the Court where the money came from and obtain the proper exemptions.

                Call Mina Nami Khorrami, LLC to discuss your exemption rights in more detail and how the exemption laws apply to your situation. 

The within statements are general in nature and this information is not intended as a substitute for legal advice regarding your specific case, nor is an attorney-client relationship established between Mina Nami Khorrami, LLC and any person reading this information. Mina Nami Khorrami is an experienced bankruptcy and debt attorney based in Columbus, Ohio.

Gap Insurance

Gap Insurance and Bankruptcy

Gap insurance is usually offered on a car loan and it is intended to cover the difference between what you owe on your car and how much the car is worth. Do you need gap insurance?

In most cases, an auto insurance policy is sufficient protection to cover the cost of repairs or replacement. However, if the value of your car is lower than the amount you owe on your loan, the gap insurance will cover the difference. Gap insurance is offered in car purchases and leases. Gap insurance is used mostly in situations where you have a negative loan balance from a car you traded in when you purchased or leased your new car.

You do not need gap insurance if you will not owe more than your car is worth during the terms of your loan or lease. You can determine the value of your car by looking at the value of the last year’s model of car you are buying. You can look at Kelley Blue Book valuation online at www.kbb.com. If you decide to buy gap insurance, shop around and choose the best coverage for you. In most cases, gap insurance has no real value and should not be purchased.

If you are purchasing a car while you are in Ch. 13 bankruptcy, you must first obtain bankruptcy court and trustee approval. Most trustees do not approve a car loan if there is gap insurance on a car loan.

If you file bankruptcy, depending on the date you purchased your car, you might be able to modify the terms of your car loan. If you purchased your car within 910 days prior to the filing of your bankruptcy, the refinancing might be limited to the interest and the length of repayment, however, if you had purchased the car longer than 910 days prior to the date you filed your bankruptcy, then there are more flexibility in refinancing your car loan based on the value of the car, the terms and balance of your car loan.

                Call our office today to schedule a consultation to discuss your situation, including any issues regarding an IRA, with Attorney Mina Nami Khorrami.

The within statements are general in nature and this information is not intended as a substitute for legal advice regarding your specific case, nor is an attorney-client relationship established between Mina Nami Khorrami, LLC and any person reading this information. Mina Nami Khorrami is an experienced bankruptcy and debt attorney based in Columbus, Ohio.

Four Chapters Of Bankruptcy

2. The Four Chapters of the Bankruptcy Code Available to Individual Consumer Debtors

Chapter 7: Liquidation

            1. Chapter 7 is designed for debtors in financial difficulty that do not have the ability to pay their existing debts. Debtors whose debts are primarily consumer debts are subject to a “means test” designed to determine whether the case should be permitted to proceed under chapter 7. If your income is greater than the median income for your state of residence and family size, in some cases, creditors have the right to file a motion requesting that the court dismiss your case under § 707(b) of the Code. It is up to the court to decide whether the case should be dismissed.

            2. Under chapter 7, you may claim certain of your property as exempt under governing law. A trustee may have the right to take possession of and sell the remaining property that is not exempt and use the sale proceeds to pay your creditors.

            3. The purpose of filing a chapter 7 case is to obtain a discharge of your existing debts. If, however, you are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, the court may deny your discharge and, if it does, the purpose for which you filed the bankruptcy petition will be defeated.

            4. Even if you receive a general discharge, some particular debts are not discharged under the law. Therefore, you may still be responsible for most taxes and student loans; debts incurred to pay nondischargeable taxes; domestic support and property settlement obligations; most fines, penalties, forfeitures, and criminal restitution obligations; certain debts which are not properly listed in your bankruptcy papers; and debts for death or personal injury caused by operating a motor vehicle, vessel, or aircraft while intoxicated from alcohol or drugs. Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a wilful and malicious injury, the bankruptcy court may determine that the debt is not discharged.

Chapter 13: Repayment of All or Part of the Debts of an Individual with Regular Income

            1. Chapter 13 is designed for individuals with regular income who would like to pay all or part of their debts in instalments over a period of time. You are only eligible for chapter 13 if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code.

            2. Under chapter 13, you must file with the court a plan to repay your creditors all or part of the money that you owe them, using your future earnings. The period allowed by the court to repay your debts may be three years or five years, depending upon your income and other factors. The court must approve your plan before it can take effect.

            3. After completing the payments under your plan, your debts are generally discharged except for domestic support obligations; most student loans; certain taxes; most criminal fines and restitution obligations; certain debts which are not properly listed in your bankruptcy papers; certain debts for acts that caused death or personal injury; and certain long term secured obligations.

Chapter 11: Reorganization

            Chapter 11 is designed for the reorganization of a business but is also available to consumer debtors. Its provisions are quite complicated, and any decision by an individual to file a chapter 11 petition should be reviewed with an attorney.

Chapter 12: Family Farmer or Fisherman

            Chapter 12 is designed to permit family farmers and fishermen to repay their debts over a period of time from future earnings and is similar to chapter 13. The eligibility requirements are restrictive, limiting its use to those whose income arises primarily from a family-owned farm or commercial fishing operation.

Different Types of Bankruptcies

Understanding Bankruptcy Law in Ohio

The power to establish bankruptcy laws is specifically mentioned in the US Constitution and the bankruptcy laws in our country have been in existence in some form for centuries, although sweeping changes were made to the consumer bankruptcy laws in October of 2005. Even the basics of the bankruptcy law are intricate and filled with pitfalls for the unwary. There are different kinds of bankruptcy filings with varied qualification and requirements. This article will provide a basic overview of the different available bankruptcies under the US Bankruptcy Code.

Chapter 7 Bankruptcy

Chapter 7 (Liquidation) is designed for debtors who do not have the ability to pay their existing debts. Individuals, corporations and partnerships are eligible to file Ch. 7.  In consumer Ch. 7 cases, the household income together with many other factors is evaluated to determine eligibility of the individual. Such qualification does not exist for businesses. The law allows you to keep certain personal and real property, known as “exempt” property.   Many people find that all of their property is exempt and they can keep everything while obtaining a complete discharge of all of their debts.   Some particular debts are not discharged under the law. Thus, you may still be responsible for most taxes and student loans; debts incurred to pay non-dischargeable taxes; domestic support and property settlement obligations; most fines, penalties, forfeitures, and criminal restitution obligations; and debts for death or personal injury caused by drunk driving. There are other exceptions to discharge if a creditor can prove that the debt arose as a result of fraud, breach of fiduciary duty, theft, or from a willful and malicious injury.

Chapter 13 Bankruptcy

Chapter 13 (Debt Repayment) is designed for individuals with regular income who can afford to pay back all or a portion of their debts over a period of 3 to 5 years. Only individuals, not partnerships or corporations, are eligible to file Ch. 13, however, individuals who own business are eligible. The debts of a Ch. 13 debtor must meet the eligibility requirement of the Bankruptcy Code, specifically, as of April 1, 2019,  noncontingent, liquidated unsecured debts must be less than $419,275 and noncontingent, liquidated secured debts must be less than $1,257,850 under 11 USC §109. These debt limits are adjusted periodically to reflect changes in the consumer price index. Most of the debts that are not dischargeable in a Ch. 7 case are not dischargeable in a Ch. 13 case either, with some exceptions.

Chapter 11 Bankruptcy

Chapter 11 (Reorganization) is designed for business but is also available to individuals. Generally, small businesses shy away from Ch. 11 as it is expensive, risky, time-consuming, and complex. However, Ch. 11 is the only bankruptcy option for a small business seeking to restructure and continue in operation if it is owned by a partnership, limited liability company, or corporation. Ch. 11 is also the only bankruptcy option for individual business debtors who want to reorganize but owe too much money to meet Ch. 13 eligibility requirements.

Other Bankruptcy Chapters

Chapter 9 bankruptcy is applicable to municipalities. Chapter 12 is designed to permit family farmers and fishermen to repay their debts over a period of time from future earnings similar to Ch. 13. The eligibility requirements are restrictive, limiting its use to those whose income arises primarily from a family-owned farm or commercial fishing operation.

How to File Bankruptcy                    

It is strongly recommended that persons wanting to file for bankruptcy seek a qualified attorney who can guide them thought the intricate and complicated process of the US Bankruptcy Code.

Avoid foreclosure: Four tips to weather the storm of job loss

Job loss: Let’s face it, there are only a few things we deal with as adults that are more stressful. And if you are facing one, you might also be worried about how to avoid foreclosure.

After all, if you don’t have income, how will you pay for your home and avoid foreclosure?

A foreclosure after a job loss isn’t inevitable and there are steps you can take in the immediate aftermath that can help you out. Read on:

Contact your lenderOne of the first things you can do if you think you might not be able to make your monthly mortgage payments is to contact your lender immediately. Don’t just stop paying or ignore the issue. Many lenders – especially smaller companies – want to work with homeowners and avoid foreclosure. There are often options like forbearance or loan modifications you can work out.

Look for other resources

Obviously, after a job loss you will likely be looking for other employment or collecting unemployment benefits. However, you can also work to fix up your resume, find a second job or sell high-ticket personal items on marketplace sites like eBay to avoid foreclosure.

Call an attorney

Many foreclosure attorneys offer free consultations to potential clients who are looking for some advice – before foreclosure is filed. It never hurts to ask an expert a few questions about your unique situation.

Sell your home

If you think you might not want to keep your home, try and sell it before you find you can’t make payments. It might seem drastic, but it is something to consider. A foreclosure is a difficult and ugly process, so if there is a chance you can find other living arrangements and sell your home – without going through a foreclosure – this is one avenue to explore.

Mina Nami Khorrami LLC

Do you have questions about how to avoid foreclosure? The legal experts at Mina Nami Khorrami LLC can help. Contact us today at 614-857-9590.

Financial resolutions for 2019

It’s that time of year again: A new year, a chance for a fresh start and a time to make financial resolutions.

If 2019 is the year for you to set some new financial resolutions and work toward eliminating debt, then you are in luck.

The first of the year is the best time to start resolving to get your house in order and make some financial resolutions. So where to start? Read on:

Emergency fund

One of the best things you can do is to start saving toward an emergency fund. While a lot of financial gurus say to have 6-12 months salary in reserve, that just isn’t feasible for a lot of folks. It can seem daunting and impossible, so some people just never start.

However, starting to save enough cash so you can weather life’s inevitable storms (like car trouble) can go a long way.

So in 2019, set a financial resolution to save a bit each month, so you’ll have a small cushion of cash in 2020!

Pay bills on time

This might seem like a no brainer, but by not racking up late fees and interest each month after not paying your bills on time, you can save a tidy sum. Those fees really add up and can damage your credit and prevent you from doing the first financial resolution of saving an emergency fund. So set up a system so you don’t miss deadlines and get those bills paid – on time.

Household budget

Everyone knows they need to do a household budget, but who really takes the time? You, if you want to set a financial resolution that can help you save more and spend less. There are free apps for your smart phone that can help and the library also has books on how to set – and stick to – a budget. You don’t need a pricey financial advisor. One way to start? Track your monthly spending and see if there are areas you could trim.

A caveat: We know that for many people, it can be hard to feel like you aren’t barely hanging on financially and so some of these resolutions might seem impossible. But, no matter your income, you can do the best you can with the resources you have so you can work toward a more orderly financial system.

Mina Nami Khorrami LLC

If you have questions or concerns about bankruptcy or foreclosure, the legal experts at Mina Nami Khorrami LLC can help. Contact us today at 614-857-9590.