Bankruptcy Reader

By Priya Jestin, Staff Writer

The filing and subsequent discharge of Chapter 13 bankruptcy could eliminate some types of personal income tax liability. However, there are a few restrictions that you must meet in order to eliminate personal income tax liability through bankruptcy.

In a Chapter 13 bankruptcy, you have to make payments to a bankruptcy trustee who then distributes a percentage of the payment to your creditors. Once a Chapter 13 plan is filed with the court, it determines the amount to be distributed to each creditor by the trustee. One good thing about this is that the bankruptcy judge can force the IRS to accept extended payments on personal income tax liability through a Chapter 13 plan.

You can also discharge your tax penalties in a Chapter 13 bankruptcy because they are clubbed together with other unsecured creditors of the debtor, like credit cards. This means you only have to pay back through the bankruptcy at 10% or ten cents on the dollar.

By Priya Jestin

First things first — you cannot actually file a bankruptcy online. It would be really nice if you could complete such a painful task in the privacy of your home. But there are several services that you can avail of online. Quite a few sites offer services that simplify the process of filing bankruptcy without an attorney. These sites allow you to prepare all the forms online and then print them out to file with the bankruptcy court. You can even download the forms or hire a paralegal to help fill out your petition online. Some of these sites include: <.p>

• BankruptcyFormProcessing.com
• Rapid Law
• JurisCounsel.com

Whichever method you choose, once you are ready; you’ll have to file the actual petition with your local federal bankruptcy clerk. A word of advice: you cannot get any legal advice from these Online and paralegal bankruptcy petition preparers — they are barred by law from providing such advice.

I just stumbled on this bit of news and it was so interesting, I just had to share it with you guys. Did you know that New York City came REALLY close to bankruptcy just a little over 30 years ago? Sounds phenomenal doesn’t it? According to reports, the margin between solvency and default may have been paper-thin.

This happened in 1975 after the Ford administration rebuffed its appeals for help. A statement by Mayor Abraham D. Beame was drafted and typed and ready to be released on Oct. 17, 1975, if the teachers’ union did not invest $150 million from its pension funds in city securities. Nytimes.com reports:

“I have been advised by the comptroller that the City of New York has insufficient cash on hand to meet debt obligations due today,” the statement said. “This constitutes the default that we have struggled to avoid.” The statement, which pointedly invoked the comptroller, Harrison J. Goldin, a sometime Beame adversary, went on to say that the city had applied for and obtained a court order to preserve its assets from creditors.

Read more: When the City’s Bankruptcy Was Just a Few Words Away

By Priya Jestin, Staff Writer

I couldn’t resist the title. And nor can I resist this statement: There was one Tower, which fought bravely but couldn’t fight its destiny. And then there was a Tower that fought against all odds and is now ready to rise like a Phoenix from the ashes.

Okay guys, I’m sorry for letting myself go. But what does one do when you cannot get over a Tower hangover. Fine, getting on with the topic, I’m talking about Tower Automotive Corp now and not Tower Records. Kathleen Ligocki, president and chief executive of Tower Automotive Corp. recently announced that the firm was ready to emerge from bankruptcy. Three creditors are supposed to have agreed to invest up to $250 million to help restructure the company.

According to the restructuring plan, the senior secured debt would be refinanced and paid in full. All allowed administrative and priority claims will also be paid in full. A few unsecured creditors would be entitled to cash and can buy shares in the new company. Tower is one of 13 auto suppliers that filed for bankruptcy in the last five years, and one of six companies on a 2005 filing roster that included Delphi Corp. and Collins & Aikman Inc. Wish there were some Good Samaritan to save Tower Records too.

“I will file bankruptcy, and start everything all over again”, if this thought has been there in your mind, the only thing I would do is shoutting Heeellllllloooooooo!!! Sharp and shrill in your ear. Filing bankruptcy is not that easy, it is like filing invitation for a life-long damage to yourself.

Bankruptcy is listed as top-five negative events that affect our life. For a moment, you may feel as though you have done a smart job. But bankruptcy is like a boomerang that keeps reverberating in your life. Job and loan application often ask if you have ever filed for bankruptcy. In case you lie thinking that bankruptcy stage is history in your life, then you are gone, and you are left ‘BANKRUPT’.

–by Priya Jestin, Staff Writer

I may not be too off the mark if I said that most of us don’t know much about secured credit cards. Probably we don’t consider it too important or we don’t realize the necessity of knowing the difference between secured and unsecured cards.

The big difference between a secured credit card and an unsecured credit card is that a savings deposit serves as collateral for a secured credit card. So, if you need a secured credit card, the first thing you need to do is deposit money into a savings account. A secured card is good for people who have a less than perfect credit history. As you pay your bill on time each month, it helps you build a positive credit history.

When shopping for a secured card, you must ask the issuer to explain their policies regarding credit bureau reporting. When the bank reports on your positive payment record, it helps build a good credit history with the credit bureaus.

Did you know that a small event like not returning a book to a public library could affect your credit score? Of late records of outstanding money for small things like parking tickets and fines, are finding their way to individuals’ credit records. Authorities do not have much choice in this matter. They are faced with the tough choice of either trying to clear past-due accounts or raise taxes and cut spending. Since the second alternative is not very popular, the government is left with no alternative whatsoever.

However, the only problem with such an approach is that it can taint a person’s credit record credit record to such a point that s/he finds it difficult to make big purchases like a house or a car. So while this may be a legitimate way to get back money that is rightfully owed to it, is the state doing more harm than good in the long run?

When you are indebted to someone, it is good to know the kind of creditors you have. Generally speaking there are two broad categories of creditors: Secured and unsecured. A ’secured creditor’ has a lien, or interest on your property, which s/he can use to satisfy the debt. Now within this category, you will find voluntary liens like mortgage or security interest in a car. Then there are involuntary liens on property that result from unpaid taxes or a judgment.

An unsecured creditor on the other hand, has no interest in any particular property of the debtor. So, apart from a bankruptcy, the only way unsecured creditors can get their money back is if you, the debtor pays up voluntarily. If you decide not to pay up, your creditors will have to sue you, get a judgment against you, and ask the sheriff to seize some of your property and sell it to satisfy their claims.

The complications may have slowed down the process, but it cannot stop it. I mean did the authorities really believe that by making the rules stricter and by making it tougher, people aren’t going to file? Agreed, the government must have had some really good reason to pass the new Bankruptcy Act last year, but the reason sure does escape me. Why do I sound so angry? Well because a close friend of mine just went through one of the worst experiences of her life when she tried to file for bankruptcy.

Sophie worked in a small firm that operated out of New York. It was quite a small firm that outsourced work from bigger companies and employed only around 15 people. Now last year, thanks to the outsourcing boom, Sophie’s firm didn’t have much work for its employees and slowly it started laying them off. Sophie hadn’t been laid off but she couldn’t continue with the uncertainty of not knowing if she would get her paycheck this month. And worse, her finances were running dry fast and she was too heavily in debt. Soon, she had creditors troubling her at all hours, asking her to repay her loans.

Knowing she couldn’t repay without going totally bust, Sophie decided to file for bankruptcy. And that’s where her problems started. First, it was almost impossible for her to get an attorney who could explain the new law and the effects it would have on her. Then, she realized she’d have to go in for counseling and pay for it with money that she could ill afford to waste.

So what did Sophie finally do? Last I heard, she’d gone underground. She doesn’t use the banks, asks her bosses for cash payments so her wages don’t get stuck in the way and worse, was very stressed. All this just because she decided to get her finances in order

West Contra Costa Healthcare District, a hospital district that serves the East San Francisco Bay region filed for bankruptcy, claiming it had at least $50 million in debts. The filing Sunday will allow the hospital to line up new financing, attorneys said. Mercurynews.com reports:

"The filing of the case activates something called an ‘automatic stay,’ a federal injunction that prohibits creditors from collection efforts from this day forward," said Andrea Porter, a San Francisco attorney representing the health care organization. "We have a whole new ball game today."

Read more: East Bay hospital chain files for bankruptcy protection