Filing bankruptcy more than once: What to do if you find yourself in this situation again

Filing bankruptcy. For many people, this is a once-in-a-lifetime experience and they never want to repeat it.

However, for some, filing bankruptcy is something that happens more than once – even if steps are taking to avoid the process.

You can experience filing bankruptcy more than once in your life, however – the legal experts at Mina Nami Khorrami LLC can help you take steps to avoid it. But if you can’t – and sometimes, it is just unavoidable – we can help sort out the questions you might have about filing bankruptcy more than once.

Read on:

Depending on the type of bankruptcy petition you filed previously, there are waiting periods that must be met before you can file a subsequent petition.

If your previous situation had you filing bankruptcy under Chapter 7, you have to wait eight years from the date you filed your previous Chapter 7 to qualify for a discharge in anew Chapter 7 petition.

If you previously filed a Chapter 7 petitionbut you want to now file a Chapter 13 petition, you have to wait four years from the date you filed your previous Chapter 7 to obtain a discharge in a new Chapter 13.

And if you had a previous Chapter 13 petition, you have to wait six years from the date you filed your previous Chapter 13 before filing a new Chapter 7 petition. And if you have a previous Chapter 13 petition, you have to wait two years from the date you filed your previous Chapter 13 to file a new Chapter 13 case.

There are, however, exceptions.

If you have a previous Chapter 13 case that paid 100% to the unsecured creditors or paid 70% to unsecured creditors with good faith, there is no waiting period to file a new Chapter 13 case.

It’s always a good idea to ask a qualified attorney about filing bankruptcy if you have filed a bankruptcy previously.

Avoiding filing bankruptcy multiple times is ideal and you should avoid it if you can, but sometimes life happens.

Mina Nami Khorrami LLC

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

Treatment of Tax Obligations in Bankrutpcy

Treatment of Tax Obligations in Bankruptcy

The treatment of tax obligations in bankruptcy is quite complex under the Bankruptcy Code and will require an in-depth analysis of tax claims, debtor’s returns and the timing of the filing of the return. A debtor’s ability to discharge any tax debt is based upon the classification of the tax debt. For purpose of bankruptcy, a tax claim can be either a trust fund tax (sales taxes or employee withholding taxes), a secured claim (filed and recorded tax liens), an administrative tax claim (tax claims arising after the filing of the bankruptcy petition), a priority tax claim (taxes are due within a certain time before the filing of the bankruptcy petition), a general unsecured claim, or a penalty claim.

The first inquiry is whether or not a tax return was filed by the debtor on time. A taxpayer must file his/her tax return on time before a determination of whether or not such tax claim is dischargeable in bankruptcy. If the tax payer fails to file the required tax return, the tax obligation in general will not be dischargeable. If the tax payer files the return late, then other factors must be considered for the determination of the dischargeability of the late file tax obligation.

Trust Fund Taxes

Trust Fund taxes are taxes which have been collected by the debtor from third parties. Sales taxes and income tax withholdings are examples of trust fund taxes and these funds are held in trust by the debtor for the taxing authority. If the debtor fails to collect trust fund taxes and/or fails to pay over these funds to the taxing authority, then such taxes are considered priority, will not be dischargeable in bankruptcy and must be paid in full.

Secured Tax Claims

Once the taxing authority files a tax lien in the county where the real estate of debtor is located or where the debtor resides, a secured tax claim may arise. The tax claim is secured to the extent that there is equity or value in the real estate or personal assets of the debtor. For example, if the filed tax lien is $30,000, the debtor’s real estate is worth $100,000, the first mortgage payoff is $80,000, the tax claim will be secured up to $20,000, and $10,000 of the tax claim is considered unsecured. The discharge in bankruptcy will not automatically eliminate the tax lien even if the tax obligation itself is unsecured and dischargeable. Secured tax liens must be paid to the extent there is value of the secured tax lien

Administrative Tax Claims

Administrative tax claims are generally taxes that have accrued after the bankruptcy petition is filed. There are a few exceptions under the bankruptcy code, but in general, administrative tax claims, together with interest and penalties, must be paid in full and are not subject to discharge.

Priority Tax Claims

Certain tax claims are considered priority and must be paid in full and not subject to discharges. There are several categories of priority tax claims. A careful examination of the tax return and the filing date is required to determine the priority status of a tax claim.

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.

Qualification requirements for filing bankruptcy in Ohio

Qualification for filing bankruptcy in Ohio

There is nothing different about bankruptcy cases in Ohio than any other state in the nation. Each case must be analyzed based on the client’s income, expenses, assets and debts. People who consider filing bankruptcy have not been able to make payments on many of their bills for months before they file for bankruptcy. Most people want to avoid bankruptcy and struggle with the decision to file bankruptcy. The deciding factor happens when garnishment proceeding is pending and the client is unable to meet the daily living obligations.

The hardest part about bankruptcy is gathering the required financial documents and filling out the bankruptcy schedules and statements correctly. It is important to ensure that you list all of your assets, claim the proper exemption on your assets, list your creditors by type, accurately detailing your income and expenses, and figuring out the means test are only some of the complex issues that debtor face in their bankruptcy but your bankruptcy attorney will play a critical role in making sure the bankruptcy schedules and statements are accurately prepared and filed. Remember that bankruptcy law is complex and filled with many deadlines and loopholes which must be strictly followed.

Debtors do not need to justify their bankruptcy filings. As long as you are honest, and accurately complete the bankruptcy schedule and statement, making full disclosures of all assets, liabilities, and transfers, if any, and you cooperate with the trustee, then you will be entitled to obtain the discharge which is a huge relief for many financially strapped clients.

Creditors and other parties in interest have 60 days after you first meet with the trustee at a hearing called the 341 meeting of creditors, to object to your bankruptcy discharge. If there are no objections, you will receive a discharge of all of your debts, except for the debts that are non- dischargeable. See article on non-dischargeable debts.

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

Non-Exempt Assets in Bankrutpcy

When you file Ch. 7 bankruptcy, all of your assets becomes the property of your bankruptcy estate, subject to exemptions (see Garnishment – How Exemptions Help). Since Ch. 7 bankruptcy is also considered a liquidations, the trustee in your Ch. 7 case can sell non-exempt assets for the benefit of your creditors. 

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.

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.