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    newbie with chapter 7 questions..

    Thank you to all who take the time to read.. recieved letter of 10% garnish from sheriff in NY yesterday, so now iam scrambling to file chapter 7 before the employer listed in the letter is notified of the garnish. The letter states that will be in 20 days. So my first question is should i plan to complete 2010 tax returns before filing chapter 7? or would 2009 be acceptable? I filed for 1040 extension. Iam also trying to check if the federal unused homestead exemption of up to $10,825 is applicable if you do not own a home. thanks for the help.

    #2
    Originally posted by iamprose View Post
    Thank you to all who take the time to read.. recieved letter of 10% garnish from sheriff in NY yesterday, so now iam scrambling to file chapter 7 before the employer listed in the letter is notified of the garnish. The letter states that will be in 20 days. So my first question is should i plan to complete 2010 tax returns before filing chapter 7? or would 2009 be acceptable? I filed for 1040 extension. Iam also trying to check if the federal unused homestead exemption of up to $10,825 is applicable if you do not own a home. thanks for the help.
    Hello - if you are using a lawyer, check with lawyer - otherwise I believe you're ok with your extension until a) your 341 meeting b) the trustee asks for it, whichever comes first. So in other words, I'd concentrate on filing the Ch7 then complete your tax return.

    At least in NYS you're limited to 10% garnishment....

    GOOD LUCK TO YOU!!!!

    Comment


      #3
      Originally posted by iamprose View Post
      Iam also trying to check if the federal unused homestead exemption of up to $10,825 is applicable if you do not own a home.
      Federal Exemptions are listed at Section 522(d) of the Bankruptcy Code, which reads in part:

      (1) The debtor’s aggregate interest, not to exceed $15,000 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.

      [snip]

      (5) The debtor’s aggregate interest in any property, not to exceed in value $800 plus up to $7,500 of any unused amount of the exemption provided under paragraph (1) of this subsection.
      It doesn't look like the wildcard is dependent on owning a home.
      Last edited by LadyInTheRed; 04-16-2011, 09:08 PM.
      LadyInTheRed is in the black!
      Filed Chap 13 April 2010. Discharged May 2015.
      $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

      Comment


        #4
        i was not served by the sheriff for my garnishment, i was served by a process server. and when this happened, the same order had already been delivered to my work at the same time. in my area, i was informed by the attorney and the trustee that the garnishment order date in court is just a status meeting of all money collected up to that date. because the original judgment order allowed them to garnish already. so they could collect on me from work up until the garnishment date to appear in court. it stopped immediately of course the day i filed. i mean that the garnishment date hearing was closed before the date on the notice. so it is important that you file quickly but i believe your work could already be served. you might want to ask them at work. they served the receptionist and i was presented the notice the day it came out of my check by payroll.

        Comment


          #5
          Originally posted by IamOld View Post
          Hello - if you are using a lawyer, check with lawyer - otherwise I believe you're ok with your extension until a) your 341 meeting b) the trustee asks for it, whichever comes first. So in other words, I'd concentrate on filing the Ch7 then complete your tax return.

          At least in NYS you're limited to 10% garnishment....

          GOOD LUCK TO YOU!!!!
          Thanks for the Old reply. I had noted with interest some of your other posts here.
          If I may be allowed a followup question.. Do you think I could throw a big wrench in my BK case, if I had a planned business, that could actually be classified a hobby now. I didn't list it in my return, when I had no profit, and wasn't using the expenses to offset my day job. I'd hoped that if the trustee flagged it(maybe because til year end there was still expenses on a bus. credit card) I would amend the return for him. You don't think my thinking could risk the BK case, do you?

          Comment


            #6
            "The debtor’s aggregate interest, not to exceed $15,000 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.
            The debtor’s aggregate interest in any property, not to exceed in value $800 plus up to $7,500 of any unused amount of the exemption provided under paragraph (1) of this subsection."

            Boy, Lady, even one sentence of the BK code could spin your head right off your shoulders. Think I should jus stick with the books I have to walk me through it, along with the GREAT help here from lady's like you.

            Comment


              #7
              Originally posted by iamprose View Post
              Thanks for the Old reply. I had noted with interest some of your other posts here.
              If I may be allowed a followup question.. Do you think I could throw a big wrench in my BK case, if I had a planned business, that could actually be classified a hobby now. I didn't list it in my return, when I had no profit, and wasn't using the expenses to offset my day job. I'd hoped that if the trustee flagged it(maybe because til year end there was still expenses on a bus. credit card) I would amend the return for him. You don't think my thinking could risk the BK case, do you?

              Thank you for your kind words!

              Wow, that's an interesting question - I think some of the gurus will jump in here, maybe Des? I think the question is more whether you made money on it or not...BUT I do believe you have to list your "Business" if you consider it a business...you also said that you had a business credit card - if it's attached to you in any way (you owe and pay the bill) you have to list it as a debt (which is not a bad thing!) BUT and however - I do believe that for the TAX RETURN you follow the IRS/tax laws/regs. If the TAX law doesn't require you to put it on your TAX return, then I BELIEVE you shouldn't do it. What does everyone else think?

              In other words, tax laws/regs drive the TAX return, and the BK laws drive the info you put on your filing.

              Comment


                #8
                Originally posted by IamOld View Post
                Thank you for your kind words!

                Wow, that's an interesting question - I think some of the gurus will jump in here, maybe Des? I think the question is more whether you made money on it or not...BUT I do believe you have to list your "Business" if you consider it a business...you also said that you had a business credit card - if it's attached to you in any way (you owe and pay the bill) you have to list it as a debt (which is not a bad thing!) BUT and however - I do believe that for the TAX RETURN you follow the IRS/tax laws/regs. If the TAX law doesn't require you to put it on your TAX return, then I BELIEVE you shouldn't do it. What does everyone else think?

                In other words, tax laws/regs drive the TAX return, and the BK laws drive the info you put on your filing.
                Hi IamOld, small business was definately a loser. and absolutely will list everything in BK, I just didn't want to submit my most recent tax return, if any small details like that could get the case dismissed. I should not have followed the tax advice to forget about the loss if I wasn't going to claim it. I believe now that it should be either listed on 1040 as a bus. loss, or treated as a hobby loss and deducted(up to the amount of any sales made) Thanx for taking the time to help.

                Comment


                  #9
                  Just a note that the value you listed in OP is current-you can use 10,825 as wild card if you don't own a home (or if you are not claiming the exemption even if you do have a home). You can also double it if filing jointly.

                  As to the tax question, an aggressive trustee might ask for your extension because it is supposed to show your tax liability or refund due. If it shows a refund then you could have problems depending on the amount. If that is the case you should consider the ramifications of filing and getting the refund and spending it before filing.

                  As far as the BK goes from what I have learned here tax law and bk law are separate and one needs to be careful not to use one that does not apply. From my understanding your "business"/hobby would be treated by bk as income in and expenses out regardless if you made a profit or not. From a tax perspective if you make money you need to report it because you will owe taxes on it. If you lose money you can deduct it on Schedule C as long as you can prove that you are operating it with the intention of making a profit. The IRS uses a standard that if you make money in three of five years it is assumed you have a real business. If not but you advertise, have a website, a separate bank acct, etc you may be ble to prove you really were in business.

                  best advice-talk to an attorney.

                  Comment


                    #10
                    I'd plan on having to fork over the tax refund unless it is otherwise exempted. Tax refunds are generally considered to be fair game in most states. For instance, I was tagged for an unexpected refund on my 2010 taxes even though I was discharged in Nov 2010 and expected no refund and had no withholdings for tax year 2010. The refund came from an unexpected tax law change...it was picked up by the Trustee and a bill delivered in the mail for over half of it.

                    You will be asked in your 341 about your 2010 tax filing status and how much you expect for a refund. If it is under a certain amount (several hundred dollars) or would fall under a wildcard exemption, the Trustee may let it slide or require you to amend your filing...but I would not plan to get your refund back at this point.

                    As far as the business/hobby...what paper trail does it have? Is there a corporation filed? Do deposits show on your bank statements? Tax deductions for it in the last two years? A Trustee is required to follow up anything that looks like it has value, i.e. income or assets. If you have a business or hobby (eBay sales, for instance) that have no real inventory, income, or value, it will likely be of no interest to the Trustee. List it and be ready to explain it at your 341. Better to list it and explain it at your 341 than to not list it and explain why you didn't at your 341 when the upset Trustee gets in your grille.

                    Comment


                      #11
                      New BK7 Question..

                      Hope all enjoyed the holiday! I have an important question. I plan to fight off filing BK7by taking a line of credit type loan from my employers pension plan. If I can't turn things around in time, will I need to either exempt the full loan amount, or cough it up to the trustee? Would it matter that I can show the loan payouts going directly to pay overdue living expenses? What if I use a portion of the loan to fund a small business, to raise some extra cash? Any input would be most welcome, even any leads that I might find more info on this subject. Thanx

                      Comment

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