New Year Resolution: Get Out of Debt

happynewyear

Getting out of debt competes with losing weight for the most common New Year resolutions.

Here is some advice for making your New Year resolution stick. One secret is to create a goal and a sub-goal.

If your resolution is to get out of debt, you can skip eating lunch out each day and start sending that money in to pay off credit card debt. Then, voila…in six months that credit card might be paid off. As you’ll begin to see, your daily goals help you fulfill your larger goal. Sub-goals are very, very important.

But if you are drowning in debt with bills you can never pay, it is time to consider starting over and getting the fresh start that only the federal bankruptcy law provides.  Bankruptcy can stop the garnishment of your paychecks and bank accounts. Bankruptcy can end the trips to collection court. Bankruptcy can make the phone stop ringing. Yes, it is true.

You have good company if you find yourself in financial trouble. Businesses file bankruptcy regularly. The rich and famous shed their debt and move on with their lives. About 4500 bankruptcy cases are filed every day. You can, too! In fact, forgiveness of debt has been part of our culture for centuries.  It is in the Bible.

No one wants to file bankruptcy, at least I have never met anyone who does. You will feel a tremendous relief by getting out of debt. Financial freedom is the brass ring bankruptcy provides.  Call Mark or Jill today.  We understand.  We can help. 785-354-1471.

 

 

 

 

 

 

Michaux Appointed to U.S. Supreme Court Committee

Jill Michaux

Jill Michaux

Chief Justice John G. Roberts, Jr., appointed Jill Michaux to a three year term on the Advisory Committee on Bankruptcy Rules to the U.S. Supreme Court.  She is one of four practicing lawyers on the 17 member committee. Other members are federal judges from the bankruptcy, district and circuit courts, two law professors who serve as committee reporters, and a lawyer for the U.S. Department of Justice.

She succeeds John Rao of the National Consumer Law Center who served six years. Prior to Rao, the position was filled by Eric L. Frank who later was appointed Bankruptcy Judge for the Eastern District of Pennsylvania, and Henry L. Sommer, president of National Consumer Bankruptcy Rights Center, and Editor-in-Chief of Collier on Bankruptcy.

The rules committee is reviewing mortgage claim forms, a proposal for national chapter 13 plan form, and the modernization of bankruptcy forms, and accompanying rules changes on its agenda.

Jill has represented consumer debtors in bankruptcy for 30 years.  She is a founding member and one of the first directors of the National Association of Consumer Bankruptcy Attorneys (NACBA). She is a founder and past president of the Topeka Area Bankruptcy Council and the Kansas Bar Association Bankruptcy and Insolvency Section.

She is contributor to the Bankruptcy Law Network, the premier website for consumer bankruptcy information, and writes Kansas Bankruptcy blog. She runs the BK-Kansas listserv for 452 members of the bankruptcy bar in Kansas. She is one of two Topeka attorneys and seven Kansas attorneys who are board certified in consumer bankruptcy law by the American Board of Certification. She practices law with Neis & Michaux, P.A., of Topeka.

See the article in the Topeka Capital-Journal.

 

 

Kansas Bankruptcy Filings Drop 10.6%

Kansas bankruptcy filings fell 10.6% in the federal courts fiscal year ending September 30, 2012.  That compares with the 14% fall nationally, according to statistics released by the Administrative Office of the U.S. Courts.

Filings were down for all bankruptcy chapters:

  • Chapter 7  (liquidation) 16%
  • Chapter 13 (individual repayment plans) 10%
  • Chapter 11 (businesses or individuals with high income or debts) 12%
  • Chapter 12 (family farmers) 20%

Business filings fell 16% and consumer cases were down 14% nationally.

The 10.6% decrease in Kansas bankruptcy filings compares to 11.3% in Colorado, 16.3% New Mexico, 7.7 Northern Oklahoma (Tulsa), 10.2% Eastern Oklahoma, 9.4% Western Oklahoma (Oklahoma City), 13.1% Utah, 11.0% Wyoming, 8% Eastern Missouri (St. Louis), 13.6% Western Missouri (Kansas City), and 17% Nebraska.

Kansas saw 3.20 bankruptcy filings per 1,000 people in fiscal year 2012 ranking 30th in the country in chapter 7 filings and 18th in chapter 13 filings. There were 11 cases filed for family farmers, and 51 chapter 11 cases filed in Kansas. Chapter 11 is usually filed by corporations or individuals with large debts. About a third of the consumer filings (3,150) in Kansas were chapter 13 and 6,089 chapter 7 cases were filed for a total of 9,301 bankruptcy filings.

Plan completion rates far higher than the national average show chapter 13 bankruptcy works in Topeka, Kansas.  Debtors are receiving discharges and successfully adjusting their debts more often than not in this midwestern division.

 

How to See Your Chapter 13 Payments Online

The chapter 13 trustees in Topeka and Kansas City, KS, give debtors free online access  to  their chapter 13 bankruptcy records. You may view payments coming in and disbursements going out to “monitor the progress you are making toward your financial recovery.”

How to Access Your Chapter 13 Case Information on the Internet

To view your case on line, you must register for a Username and Pasword on our website, www.13datacenter.com. You will need your Chapter 13 bankruptcy petition to create your user name and confirm information on the petition.

We encourage you to sign up for online access so you may view your case records at any time.  You may confirm a payment has been received and you can see the trustee payments going out to your creditors.  No need for time consuming telephone calls or waiting for the annual report from the trustee to get up to date information about your case.

What Do I Bring to My 341 Meeting of Creditors?

The bankruptcy trustee is required to confirm your identity and Social Security number.  Bring a government issued photo ID card and proof of your Social Security number with you to your 341 meeting of creditors.

Examples of acceptable photo IDs include driver’s license, state issued photo ID, U.S. passport or legal resident alien card.

You must show the trustee the original Social Security card or one of the following documents with your full nine-digit Social Security number listed on it: letter from the Social Security Administration, W-2 or 1099 form, or a pay stub. A tax return is NOT acceptable.

If you are missing either of these documents, please ask your attorney prior to your 341 meeting of creditors for assistance in obtaining them.

How Do  I Get a Replacement Social Security Card?

Your Online Social Security Statement

Locating Your Local Social Security Office

Social Security Administration Office in Topeka


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Kansas Bankruptcy Filings Fall

Bankruptcy Filings Continue Decline

Bankruptcy filings in Kansas followed the national downward trend and declined for the past year.  There were 9648 bankruptcy cases filed in Kansas in the 12 months ending in June, a decline of 9.7%.
  • Chapter 7 – 6420 cases
  • Chapter 11 – 53 cases
  • Chapter 12 – 17 cases
  • Chapter 13 – 3158 cases
In Our Region
In the region, filings were down 10.9% in Colorado, 18.3% in New Mexico, 11.6% in northern Oklahoma, 19% in Nebraska and 16.2% in western Missouri.
For more detail, read Prof. Bob Lawless’s analysis on Credit Slips.  Here is the press release:  Bankruptcy filings for the 12-month period ending June 30, 2012, totaled 1,311,602 petitions, 14 percent less than the 1,529,560 filed in the 12-month period ending June 30, 2011, according to statistics released today by the Administrative Office of the U.S. Courts.
Business and Non-Business Filings
The majority of bankruptcy filings involve predominantly non-business debts. For the 12-month period ending June 30, 2012, non-business filings—where the debts are predominantly personal or consumer in nature—totaled 1,267,167, down 14 percent from the 1,477,426 nonbusiness bankruptcies filed in the 12-month period ending June 30, 2011.
Third Quarter of FY 2012
April, May, and June 2012 constituted the third quarter of the Judiciary’s 2012 fiscal year. The number of bankruptcies filed during those three months was 325,693, down 14 percent from the 379,790 filings in the same quarter of 2011.
Read the full article.

Means Test Median Income for May 1, 2012

The median family income figures by household size to use on the bankruptcy means test for cases filed on or after May 1, 2012 have been released. Fortunately, for Kansas consumers struggling with paying debts, the figures have increased and more people will be able to pass the means test on the first go through.

If your income exceeds these figures, don’t despair, you still may pass the means test on the second go through. Most clients do. Many people, including other lawyers, misunderstand the means test and conclude incorrectly that the median income figure is the end of the analysis. You may still qualify for bankruptcy with above-median income.

Unfortunately, the bankruptcy means test is a complicated formula with many variables and different court rulings from place to place. It cannot be easily calculated. We calculate the means test for  our clients so you do not have to worry about it.

KANSAS 1 – $42,924 2 – $57,562 3 – $64,834 4 – $74,959

Add $7500 for each additional household member

 

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Get Your Federal Tax Return Done for Free

You need your tax returns to file for bankruptcy.  But when you are having bill problems, how do you find the money to get them prepared?  Here is how to get your federal income tax return done free, according to a press release from the Internal Revenue Service.

Do Your Federal Taxes for Free with IRS Free File

WASHINGTON — IRS Free File, which has been making taxes a little less taxing for a decade, opens today, Jan. 17. More than 33 million returns have been filed through Free File since its debut.

Everyone can use Free File, either the brand-name software offered by IRS’ commercial partners or the online fillable forms. Individuals or families with 2011 adjusted gross incomes of $57,000 or less can use Free File software. Free File Fillable Forms, the electronic version of IRS paper forms, has no income restrictions.

“Free File can save you time and money. You can prepare and e-file your tax return at no charge. And, the software helps you find the tax breaks you are due,” said Diane Fox, director, Free File program. “Free File helps make taxes less taxing.”

Free File software is a product of a public-private partnership between the IRS and the Free File Alliance, LLC. The Alliance is a consortium of approximately 20 tax software providers who make versions of their free-file products available exclusively at www.irs.gov/freefile.

All Free File members must meet certain security requirements and use the latest in encryption technology to protect taxpayers’ information. Seventy percent of taxpayers – 100 million people – are eligible for Free File software. It’s perfect for first-time filers, families looking to save money or older Americans adept at using the Internet.

People with an adjusted gross income of $57,000 or less are eligible for at least one software product if not more. Each of the Free File software providers sets their own eligibility requirements, usually based on qualifiers such as income, state residency, age or military status.

The easiest way to locate a software provider is to use the online “get help” tool atwww.irs.gov/freefile that, with a little of a taxpayer’s information such as income, age and state residency, can identify matching free-file products. Or, taxpayers can review all providers and their offers. Some software providers also offer state income tax preparation for free or for a fee.

Also, the IRS is working with select volunteer tax sites such as Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly. There are 200 locations nationwide that have set up Free File kiosks where taxpayers can use computers to prepare their own returns with Free File.

For taxpayers whose incomes are more than $57,000, there’s Free File Fillable Forms, available only at the IRS website. This program is best for taxpayers experienced in preparing their own federal tax returns. For people who prefer doing their taxes the old fashioned way – by paper – this is an electronic alternative.

Free File Fillable Forms performs some math calculations and provides links to some IRS publications. It does not use the familiar question-and-answer format used by software. Taxpayers can e-file the forms for free.  It also does not support state income tax returns.

Taxpayers must access the free-file products through IRS.gov or authorized kiosks to avoid any charges for preparing or e-filing a federal tax return.

Once taxpayers have selected a Free File software product, they will be directed away from IRS.gov to the partner’s site to prepare and e-file their returns. The IRS does not retain any personal information from the taxpayers.

The IRS also encourages businesses, state and local governments, charities and churches to inform their employees, clients and customers about Free File.

 

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We are a Debt Relief Agency

We are a debt relief agency at Bankruptcy Law Office.  That means we help people file for relief under the bankruptcy code.  Congress changed in law in 2005 and required that we call ourselves a debt relief agency to make sure you know that we are bankruptcy attorneys.

Congress also requires that we give you a lot of notices and disclosures. In our opinion, these notices are designed to scare and intimidate good people who have suffered misfortune and need debt relief.

These notices, in our view, are based on the false assumption that all or most people who consider bankruptcy relief are dishonest. Please rest assured–so long as you are honest and meet the requirements set out under the law, it is very likely you are entitled to debt relief. We can guide you through all the requirements of filing for bankruptcy, so long as you provide us accurate and complete information.

BAPCPA REQUIRED NOTICE NO. 1
(§§527(a) (1), 342(b) (2) and 527(a) (2) of the Bankruptcy Code)

Types of Bankruptcy
The Bankruptcy Code is divided into chapters. The chapters that usually apply to consumers are Chapter 7, where most or all of your debt is wiped out, and Chapter 13, which involves a repayment plan. In most cases, once you file your case, the “Automatic Stay” immediately goes into effect. The Automatic Stay means that a bankruptcy filing automatically stops, or stays, and brings to a halt most lawsuits, repossessions, foreclosures, evictions, garnishments, attachments, utility shut-offs, and debt collection harassment. Generally, most creditors cannot take any further action against you or your property without permission from the Bankruptcy Court.

Chapter 7. Chapter 7 is designed for debtors who are having financial difficulties and are not able to re-pay their debts.

If your current monthly income is above the State Median Income you will be required to perform a Means Test to determine if you are eligible for this type of bankruptcy relief.

If you do not meet the requirements of the Means Test then you may be precluded from filing a Chapter 7 and have the option of converting to Chapter 13 or filing a Chapter 13.

Under Chapter 7 a Trustee takes possession of all your property. You may claim certain property as exempt under Kansas law. You can only exempt the value of property that is not subject to the liens of your creditors. The Trustee then liquidates the non-exempt property and uses the proceeds to pay off your creditors according to priorities of the Bankruptcy Code.

The purpose of filing a Chapter 7 is to obtain a discharge of most of your existing debts.

If, however, you are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, your discharge may be denied by the Court, and the purpose for which you filed the bankruptcy petition will be defeated. The filing fees charged by the court for a Chapter 7 total $274.00.

Even if you receive a discharge, there are some debts that are not discharged under the law. Therefore, you may still be responsible for such debts as certain taxes and student loans, alimony and support payments, criminal restitution, and debts for death or personal injury caused by driving while intoxicated with alcohol or drugs.

Under certain circumstances you may be able to keep property that you have purchased subject to a valid security interest. Some of these options include what is called redemption and the reaffirmation of an existing pre-bankruptcy debt.

Chapter 13. Chapter 13 is designed for individuals with a regular and stable source of income who are temporarily unable to pay their debts but who desire to use their best efforts and good faith to pay them in installments over a period of time subject to the protections afforded by the Chapter 13 rules. You are only eligible for Chapter 13 if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code. The filing fees charged by the court total $189.00 for a Chapter 13. Under Chapter 13 you must file a plan with the Court to repay your creditors all or part of the money that you owe them, using your future earnings or by the disposition and/or abandonment of certain collateral such as land and motor vehicles. You are protected from your creditors in most case upon the filing of your case but your plan must be approved by the Court before it can take effect.

Chapter 11. Chapter 11 is designed primarily for business reorganization, but is also available to consumer debtors. Its provisions are quite complex. In the majority of cases, Chapter 11 is unnecessary and too expensive for consumer debtors. The court filing fee is $1039.00.

Chapter 12. Chapter 12 lets family farmers repay their debts over a period of time and is similar to a Chapter 13. The filing fee is $239.00.

Credit Counseling. Reputable credit counselors can advise you on managing your money and your debts. They may also be able to develop a plan to repay your debts.  Unfortunately, many credit counselors are not reputable and charge high fees and contributions that will cause you to fall deeper into debt and damage your credit rating.

Furthermore, many misrepresent their non-profit status and/or their affiliations with religious or charitable organizations, and are little more than collection agents for credit card companies. Under the changes to the Bankruptcy Code that took effect in 2005, you are required to take two short credit counseling courses, one before you file bankruptcy, and one after you have filed. We will refer you to a credit counselor that has been approved by the United States Trustee for these courses.

Honesty is required. A person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty of perjury in connection with a case under the bankruptcy code shall be subject to fine, imprisonment, or both and all information supplied by a debtor in connection with a case under this title is subject to examination by the Attorney General.

1. All information that you are required to provide with a bankruptcy petition and thereafter during a bankruptcy case is required to be complete, accurate and truthful.

2. All assets and all liabilities are required to be completely and accurately disclosed in the documents filed to commence the case, and the replacement value of each asset must be stated in those documents where requested after reasonable inquiry to establish such value.

3. Current monthly income, the amounts specified in section 707(b) (2) and, in a case under chapter 13 of this title, disposable income (determined in accordance with section 707(b) (2)), are required to be stated after reasonable inquiry; and4. Information that an assisted person provides during their case may be audited pursuant to this title, and that failure to provide such information may result in dismissal of the case under this title or other sanction, including a criminal sanction.

BAPCPA REQUIRED NOTICE NO. 2  (§ 527(b) of the Bankruptcy Code)

INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES
If you decide to seek bankruptcy relief, you can represent yourself, you can hire an attorney to represent you, or you can get help in some localities from a bankruptcy petition preparer who is not an attorney. THE LAW REQUIRES AN ATTORNEY OR BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN CONTRACT SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY PETITION PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST. Ask to see the contract before you hire anyone.

The following information helps you understand what must be done in a routine bankruptcy case to help you evaluate how much service you need. Although bankruptcy can be complex, many cases are routine. An attorney can help guide you through this intricate process, making it easier and less stressful for you.

Before filing a bankruptcy case, either you or your attorney should analyze your eligibility for different forms of debt relief available under the Bankruptcy Code and which form of relief is most likely to be beneficial for you. Be sure you understand the relief you can obtain and its limitations. To file a bankruptcy case, documents called a Petition, Schedules and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly and filed with the bankruptcy court.

You will have to pay a filing fee to the bankruptcy court. Once your case starts, you will have to attend the required first meeting of creditors where you will be questioned by a court official called a “trustee” and, much more rarely, by creditors.

If you choose to file a chapter 7 case, you may be asked by a creditor to reaffirm a debt. You may want help deciding whether to do so. A creditor is not permitted to coerce you into reaffirming your debts. It may not be in your best interest to reaffirm a debt.

If you choose to file a chapter 13 case in which you repay your creditors what you can afford over 3 to 5 years, you may also want help with preparing your chapter 13 plan and with the confirmation hearing on your plan which, if held, will be before a bankruptcy judge.

If you select another type of relief under the Bankruptcy Code other than chapter 7 or chapter 13, you will want to find out what should be done from someone familiar with that type of relief. However, please be advised that in most cases, you will only be concerned with chapter 7 and chapter 13.

Your bankruptcy case may also involve litigation. You are generally permitted to represent yourself in litigation in bankruptcy court, but only attorneys, not bankruptcy petition preparers, can give you legal advice.

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Who are the Chapter 7 Trustees in Kansas?

Chapter 7 Trustees

The chapter 7 interim trustees for cases filed in the the U.S. Bankruptcy Court for the District of Kansas are charged with liquidating non-exempt property and recovering transfers improperly made by you prior to the filing of your petition. They turn these assets into cash and pay the cash to your creditors. They are paid a commission on the monies collected. Most chapter 7 cases are “no-asset” cases and are closed when the trustee reports to the Court that there no are assets to distribute to creditors.

Clients – Do NOT contact trustees!  Call your attorney!

Chapter 7 Trustees in the Topeka Division

  • Darcy D. Williamson, Attorney at Law, 510 SW 10th, Topeka, KS 66612, Phone: (785) 233-9908, Fax: (785) 233-2613

Chapter 7 Trustees in the Kansas City, KS, Division

  • Carl R. Clark, Lentz Clark Denies PA, P.O. Box 12167, Overland Park, KS 66282-2167, Phone: (913) 648-0600, Fax: (913) 648-0664
  • Eric C. Rajala, 11900 College Boulevard, Suite 341, Overland Park, KS 66210, Phone: (913) 339-9806, Fax: (913) 339-6695

Chapter 7 Trustees in the Wichita Division

  • Steven L. Speth of Speth of Speth & King, 300 W Douglas St., Ste. 230, Wichita, KS 67202, Phone: (316) 264-3333, Fax: (316) 264-1305.
  • Carl B. Davis, Davis & Jack, L.L.C.,  2121 W. Maple, Wichita, KS 67213, (316) 945-8251.

Credit Counseling Before Bankruptcy

Everyone who files a bankruptcy must get a credit counseling certificate before the bankruptcy can be filed. There are almost no exceptions.

You do not have to pay your bills in a debt repayment plan through a credit counselor.  In fact, the credit counselors say 1 to 3% of people who do the pre-bankruptcy counseling can afford to pay their bills.  This requirement was put into the law to deter you from filing bankruptcy.

All you have to do is “attend” a one-time briefing to discuss your finances and get information about your bankruptcy and non-bankruptcy options, then you are given a certificate. You can do this in person, over the telephone, by mail or over the Internet.  We will assist you in getting this briefing.  If you have not already done this step, please wait and discuss with us how best to accomplish this.

Here are approved credit counselors we recommend:

Consumer Financial Education Foundation of America (CFEFA) by Internet and telephone, $35 (paid through our office prior to case filing)

Hummingbird Credit Counseling and Education on the Internet, $49 (paid through our office prior to case filing)

Housing and Credit Counseling, Inc., in person in Topeka, Lawrence and Manhattan, $45, (paid to HCCI at time of counseling) 1195 SW Buchanan, Suite 101, Topeka, KS 66604-1183, 785-234-0217.

Consumer Credit Counseling Service, Inc., in person or telephone, $50 for individual, $75 per couple, Salina, Wichita, Hays, Hutchinson, Garden City, (paid to CCCS at time of counseling)

A FREE internet service for getting your certificate of credit counseling for bankruptcy.  This service is internet only and goes not guarantee delivery of your certificate. The web site says the process takes up the five days after you enter your information.  Do not use this service if you need to file your bankruptcy case right away, but if you are not in a hurry, free is free. You will be responsible for getting your certificate over the internet and bringing it to us. Some people have reported to us being charged $5.00.

 

AFTER bankruptcy financial education course

Bankruptcy Trustees in Kansas

Chapter 13 Bankruptcy Trustee – Topeka

Chapter 13 Bankruptcy Trustee – Kansas City, Kansas

Chapter 13 Bankruptcy Trustee – Wichita

Chapter 7 Bankruptcy Trustees

Chapter 12 Bankruptcy Trustee

U.S. Trustee Region 20 – Wichita

Executive Office of the United States Trustee

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How to Contact the Topeka Bankruptcy Law Office

Stop being stressed out by bills you can’t pay! Get the fresh start only the federal bankruptcy laws can give you. Contact us at the Topeka Bankruptcy Law Office today!

Mark Neis and Jill Michaux, Topeka’s only consumer bankruptcy law specialists.  You expect board certification in your doctor, expect it in your lawyer, too.

Bankruptcy Law Office Location

Neis & Michaux, P.A., Bankruptcy Law Office

825 Bank of America Tower, 534 S Kansas Ave Ste 825

Topeka KS 66603-3446

785-354-1471 telephone –  785-354-1170 facsimile

mark.neis@neismichaux.com - jill.michaux@neismichaux.com

our website: bankruptcykansas.info

bankruptcy blog: www.bankruptcylawnetwork.com

personal finance blog: www.moneyhealthcentral.com

 

View street view of Bank of America Tower Map to Our Location

Call Mark and Jill today.  We understand your bill problems.  785-354-1471

 

Earned Income Tax Credits Now Exempt in Kansas Bankruptcy

Debtors will get to keep one year of earned income tax credits when filing bankruptcy in Kansas. A new law went into effect April 14, 2011, granting the exemption.  This change in the law will prevent bankruptcy trustees from taking the portion of income tax refunds that is EITC, a valuable benefit for low to moderate income, working people, most of whom have minor children at home.

SENATE BILL No. 12

AN ACT concerning civil procedure; relating to bankruptcy;

exempt property; earned income tax credit.

Be it enacted by the Legislature of the State of Kansas:

Section 1. An individual debtor under the federal bankruptcy

reform act of 1978 (11 U.S.C. §101 et seq.), may exempt the debtor’s

right to receive tax credits allowed pursuant to section 32 of the

federal internal revenue code of 1986, as amended, and K.S.A. 2010

Supp. 79-32,205, and amendments thereto. An exemption pursuant

to this section shall not exceed the maximum credit allowed to the

debtor under section 32 of the federal internal revenue code of

1986, as amended, for one tax year. Nothing in this section shall be

construed to limit the right of offset, attachment or other process

with respect to the earned income tax credit for the payment of

child support or spousal maintenance.

Sec. 2. This act shall take effect and be in force from and after

its publication in the Kansas register.

(Published in the Kansas Register April 14, 2011.)

Prior to the enactment of Senate Bill 12, bankruptcy trustees took earned income tax credits and tax refunds for their fees and for creditors’ claims.  Tax refunds are the most commonly seized assets in Kansas consumer bankruptcy cases.  The amount forfeited by individual debtors was substantial, but the amount distributed to creditors is relatively low, often 1 or 2% of their claims.

The law limits the bankruptcy exemption to the right to receive one year of earned income tax credits and does not prevent government offset of the credits for child support collection.  Bankruptcy trustees will still be able to take tax refunds not attributable to earned income tax creditors from debtors.

The Earned Income Tax Credit or the EITC is a refundable federal and Kansas income tax credit for low to moderate income working individuals and families. According to the Internal Revenue Service, Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit. To qualify, taxpayers must meet certain requirements and file a tax return, even if they do not have a filing requirement.

Our thanks goes to Kansas Senator John Vratil, R-Leawood, for sponsoring SB12.  The bill passed unanimously in the Senate and nearly so (118 to 5) in the House of Representatives.  Testifying in favor of the bill were Marilyn M. Harp, executive director of Kansas Legal Services, and attorneys John Hooge of Lawrence, Paul Post of Topeka and Kansas Bankruptcy Information blogger Jill Michaux of Topeka.

 

Money Health Central Takes Mystery Out of Personal Finance

We are proud to announce that our own, Jill Michaux, has helped to create another resource for consumers in financial need. Money Health Central is designed to take some of the myth and mystery out of budgeting and finance for regular people who need to watch where their money goes.

The site will contain everything from warnings about consumer scams to budgeting tricks and tips to money savings recipes.

Money Health Central hopes to guide families to avoid the mistakes that cause financial disaster. Written by six established consumer law attorneys from diverse parts of the country, new posts go up every day or so be sure to make Money Health Central a regular stop over.

You can visit the Money Health Central site by subscribing to receive free, automatic updates by email. Thanks for visiting!

IRS Gets 90 Days When Clock Stops

In re Montgomery, (Bkrtcy.D.Kan.) (Judge Somers Case No. 10-20869) February 24, 2011: Claims – Taxing authority was entitled to only one 90-day enlargement on top of all suspension periods.

The suspension paragraph of the tax priority provision, in requiring suspension of the three-year “lookback” period for “any time during which an automatic stay was in effect in a prior case under this title or during which collection was precluded by the existence of one or more confirmed plans under this title, plus 90 days,” did not require the addition of multiple 90-day periods for each period in which a stay or confirmed plan prevented a taxing authority from collecting taxes, but the addition of only one 90-day period to the sum total of any such suspension periods. The phrase “plus 90 days,” being separated from what preceded it by a comma, had to be construed as standing independent from what preceded it.

Summary courtesy of West Highlights.

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