Published Sunday, May 9, 2010 @ 8:28 am

As we’re all aware, this decade’s Great Recession has dealt, and continues to deal, a significant blow to the budgets of many American families, leaving millions in debt, underwater in their mortgages, and looking for any means necessary to get back on a financially-healthy course.  Now, in the weeks following this tax season’s deadline, important financial news abounds for many cash-strapped citizens and the struggling states they live in.

Looking for good news amid the bad? Take a gander at the latest economic outlook and what it might mean for you.

Our Great Recession Continues (Or Not)
Last week, the Business Cycle Dating Committee of the National Bureau of Economic Research, a group responsible for determining official start and end dates for recessions based on analysis of financial indicators, announced that it cannot yet officially declare an end to the recession. The report indicates that, though many economic indicators have improved in recent months (including mortgage defaults, hiring and retail sales), it is still too soon to say whether or not the recession has come to a close. But the news isn’t all bad….In contrast, one member of the committee disagreed with the  final decision, issuing a memo citing the following two indicators as primary reasons why he believes the recession has already ended, including the fact that Real Gross Domestic Product (GDP), the measure of our country’s overall economic output in a given year, has reportedly improved since June of 2009; and that Real Gross Domestic Income (GDI) has also apparently improved.

To corroborate this evidence, The Huffington Post reported this week, that 70% of those recently surveyed by The National Association for Business Economics believe real Gross Domestic Product (GDP) will “grow by more than two percent this year, up from 61 percent who said the same in January. Twenty-four percent are predicting real GDP will grow by more than 3 percent in 2010, up from 14 percent earlier this year. ‘Industry demand moved higher compared to results in the January 2010 report, pointing to stronger growth in 2010,’ said William Strauss, a senior economist at the Federal Reserve Bank of Chicago. ‘After more than two years of job losses, job creation increased in the first quarter of 2010, suggesting a better outlook for hiring over the next six months.’ The NABE forecast…shows fewer jobs are being shed, more are being created and more companies are making money.”

Hiring Up, and Congress Extends Unemployment Benefits
Similarly, HuffPost revealed that recent hiring growth is said to be at its fastest pace in 10 months.  “American employers in March added 162,000 jobs, the most in three years. Wages and salaries also are improving. Respondents reporting higher pay more than doubled to 26 percent, while those reporting a decline in wages slipped to 6 percent from 7 percent in January. The net reading for wages and salaries – planned increases minus planned cuts – was 20, the highest reading since January 2008. Higher salaries would bode well for the recovery, since consumer spending accounts for as much as 70 percent of U.S. economic activity.”
Despite the increase in hiring, unemployment remains close to 10 percent, meaning that millions of American families may not feel the recession’s end for a while. But everything’s not lost for families suffering from extended joblessness. According to the New York Times the Senate has voted 60 – 40 in favor of extending unemployment benefits. Were it to pass both houses of Congress, the measure would apparently cost approximately $18 billion—a hefty stumbling block for fiscally-conservative Senate Republicans.

Tax Time 2010 Was One of the Best It’s Been

According to Newsweek, we’ll “look back on April 15, 2010, as the day we got of cheaply.”  Due to a staggering national budget deficit and an aging American populace living off (and depleting) Social Security, all signs point to tax increases on the horizon—another good news/bad news scenario that should have us enjoying the “good times,” while we can.

If the financial news from your household is less than good, it may be time to turn to bankruptcy. If you, and your family, have been effected by the economy and are wondering how to get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Saturday, April 17, 2010 @ 6:32 am

As we’re all aware, this decade’s Great Recession has dealt, and continues to deal, a significant blow to the budgets of many American families, leaving millions in debt, underwater in their mortgages, and looking for any means necessary to get back on a financially-healthy course.  Now, we’re finding that tax time is also yielding it’s own set of challenges for some cash-strapped citizens and the struggling states who owe them.

Today, many cash-strapped states such as North Carolina, Alabama and Hawaii have delayed issuing income tax refunds to individuals and businesses; Kansas has suggested similar delays, while Iowa has slowed down the process because it doesn’t have enough employees to process the refunds more quickly.  Further, New York, has considered following the lead of its fellow states by stalling their own state income tax refunds.

“States typically do this when they are tight and they don’t have a budget in place,” Karla Dennis, CEO of Cohesive, a nationwide tax preparation firm, recently told CNBC.  As the business network reported, “things are dire at many states: forty-one states are expected to have mid-year budget gaps totaling $37.7 billion, according to the Center on Budget and Policy Priorities. Delaying the refund, Dennis says, ‘gives the state funds to work with in the interim to fill a gap in their revenues.’”

While some may question the legality of holding taxpayer dollars, these delays appear to be above board—at least for now.  As CNBC noted, “Hawaii’s Department of Taxation announced last month that it will delay income tax refunds until July 1, when processing and payments will resume on a “first-in-first-out basis,” according to a news release. The state is delaying the funds to alleviate a $721 million revenue shortfall for the fiscal year ending June 30, 2010. Under Hawaiian law, processing refunds must be done 90 days after the April 20 due day (or later if a return is filed after the due date). After that, the actual payment must be made within 45 days or interest has to be paid on the refund. Most states have similar laws about when interest kicks in, but they differ from state to state, said Scott Clark a tax attorney and partner at Sonnenschein Nath & Rosenthal.”

Unfortunately, North Carolina citizens face a similar situation. “The state’s Department of Revenue posted a note on its website stating that the ‘state continues to feel the effects of the slow economy, and the department is managing the distribution of refunds as a result.’”

This is the second time in as many years that North Carolinians have suffered the ‘wait and see’ for their state refunds. “Refund payments were slow to be processed in North Carolina last year too, the only difference now is that the department is keeping mum on when taxpayers might expect to receive their refunds. Last year, deadlines weren’t met. ‘We ended up not being right and people got even more upset,’ said Thomas Beam, a spokesperson at the North Carolina’s Department of Revenue. He says besides managing funds, other factors—such as wrong addresses, social security numbers or not attaching the right forms—can further slow down payments. The state continues to release refunds at a slower pace, and updates how much they’ve processed on the site regularly. As of late February, 727,282 refunds were processed in North Carolina totaling over $500 million.”

Experts say that more states may follow suit in delaying state income tax refunds as it becomes more and more clear—with little in their coffers—that they have little other recourse but told hold back. This is little solace for families facing financial struggles and dependent on this annual economic infusion.  “It’s essentially an involuntary no interest loan from the taxpayer,” Ivan Kenneally, an assistant professor of political science at the Rochester Institute of Technology told CNBC.

In these taxing times, a qualified bankruptcy attorney can help when you find yourself short on cash–whatever the reason.  Specifically, the bankruptcy attorneys at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Wednesday, April 14, 2010 @ 5:31 pm

As we’re all aware, this decade’s Great Recession has dealt, and continues to deal, a significant blow to the budgets of many American families, leaving millions in debt, out of work, underwater in their mortgages, and looking for any means necessary to get back on a financially-healthy course.  Now, we’re finding that tax time 2010 is also yielding it’s own unique set of challenges for some cash-strapped citizens who may have had some of their debt forgiven or settled a debt for less than the full amount in 2009.

Have you had some of your considerable student loans forgiven? Have you recently reached a debt settlement with your credit card company?  Have you had a car loan settled or the debt forgiven? Well, what might have been great news then means tough economic times this time of year as that amount is now considered income by the IRS. And if you’re not declaring bankruptcy or if your personal liabilities do not outweigh your assets, then you will have to pay taxes on the amount of debt that was forgiven.

What might this rule mean for you and your budget as tax season closes in? For example, if you had $600 of debt forgiven on a credit card balance and you’re in a 10% tax bracket; that’s an additional $60; for a 15% tax bracket, your tax obligation would increase by $90; and so on and so on. Rest assured your creditors and other debt collectors will indeed file paperwork with the IRS if they have reduced your balance by $600 or more. And so should you. But it’s up to you to include this on your personal income tax return. Play it safe and report any amount you’re forgiven.

Reporting is the easy part. Your creditors and debt collectors will provide you with a 1099-C, or a cancellation of debt form. The filing of this form proves that your creditor reported your forgiven debt and that your debt was actually settled. As such, it’s a must to include with your own tax filing. If there is any dispute about the amount reported on the form, contact the creditor or debt collector immediately to resolve the matter. The more of your debt that is settled, the more you’re taxed, so make sure the 1099-C form is accurate and ask for a corrected 1099-C form to include in your tax return if there are discrepancies.

If you own a home and had debt forgiven, the news is a bit better. Since many homeowners are just struggling to stay current with their mortgages, this tax season (and until 2012), you do not have to report debt forgiveness for a home loan as long as it amounted to less than $2 million on your principal residence. Remember, this reprieve only applies to a principal residence. So, if you had a loan modification or a short sale on a vacation home, you will have to report the debt as forgiven, and, as such, taxable.

But remember, you do not have to pay taxes on debts settled in bankruptcy. So, in these taxing times, a qualified bankruptcy attorney can help you conquer your creditors and get you back on track for a better financial future.  Specifically, the bankruptcy attorneys at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Thursday, April 1, 2010 @ 10:18 am

As we’re all aware, this decade’s Great Recession has dealt, and continues to deal, a significant blow to the budgets of many American families, leaving millions in debt, underwater in their mortgages, and looking for any means necessary to get back on a financially-healthy course.  Now, tax time can  yield a long-term solution for some cash-strapped citizens.

With tax deadlines just a few weeks away, many people just like you are expecting significant refunds, with the average being several thousand dollars. Some of you may consider using this money for major purchases or down payments on a new car. Many more may even want to pay off credit cards and other debts. But if you’re in significant debt, like so many average Americans in this tough economy, if may be better to use that sudden influx of cash to ease your financial situation and erase your debt permanently through bankruptcy.

Here are a few warning signs that you should use your tax refund for the benefits of bankruptcy:

(1) If you’ve are currently out of work and have been unemployed for at least a few months (the average currently being seven months), it might be best to use that tax refund to begin a bankruptcy filing. Unemployment is the primary reason that many Americans are filing for bankruptcy; and your tax refund is just the infusion of capital you need to hire a competent bankruptcy lawyer to help you on a path to a better financial future.

(2) While many people already use their tax refunds to pay off debt, if you are currently unable to make the minimum monthly payment on your credit card or cards, or you are behind on your credit card payments, chances are you should seek professional help in erasing your consumer debt by using that money to instead file for bankruptcy. Credit card companies go after delinquent cardholders quickly in the new economy; your tax refund is the best way to do the same, seizing the opportunity to protect your assets before credit card companies can seize your assets.

(3) And speaking of creditor lawsuits: If you already find yourself embroiled in one, your tax refund-sponsored bankruptcy can be a major asset available to prevent creditors from seizing current and future property.  Once you file for bankruptcy, the benefit of an “automatic stay” kicks in, forcing creditors to cease and desist harassments and other collection actions against average Americans just like you. As such, that annual cash infusion can be just what you need to get the ball rolling on your bankruptcy…and ultimately a better life.

In short, your tax refund may look like quick cash that can be used to pay off some short-term debt; but if you’re like the average debtor, it isn’t nearly enough to garner the peace of mind of erasing all of your debt. You’re better off using that money for a long-term solution like filing for bankruptcy—a solution that will discharge debts and put you on the course to a real financial recovery—especially during these taxing times.

If you’ve been effected by the economy and are wondering how to make your next move, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Sunday, March 28, 2010 @ 6:31 pm

As you know by now, this country’s recent Great Recession has dealt, and continues to deal, a significant blow to the budgets of many American families, leaving millions in debt, underwater in their mortgages, perpetually jobless and looking for any means necessary to get back on a financially-healthy track.

However, there may be a silver fiscal lining to this year’s spring season: The Recovery Act’s tax credits. Now we’re seeing that tax time—normally considered a harrowing economic experience for many Americans—is yielding it a bit of a reprieve for some cash-strapped citizens struggling to stay afloat amid rising education costs, mortgages, and even car payments.

As Rep. John Larson recently relayed to The Huffington Post, “tax cuts were the biggest individual component of the Recovery Act. Even though only half of taxpayers have filed so far this year, tax refunds are already up nearly 10% from last year due to the Recovery Act.”

So, as you file your 2009 income taxes, it may be a welcome surprise to see that you qualify for a many of the Recovery Act’s new tax cuts, simply because you, for example, saved money for higher education, made energy-saving home improvements, purchased a home for the first time or even at all, or, maybe even bought a new car.

Specifically, Rep. Larson fleshed out the following new tax credits available through the Recovery Act that you might be eligible for, including:

The Making Work Pay tax credit
The vast majority of  “working families” have already received the Recovery Act’s Making Work Pay tax credit of $400 for an individual or $800 for married couples filing jointly in their 2009 paychecks. You’ll be happy to know that you’ll also see these benefits in 2010.

Tax credits for college expenses
Getting ready for college? The American Opportunity Credit provides up to $2,500 in tax savings for families and students in addition to enhanced benefits under “529 college savings plans, which help families and students pay for college expenses.”

The Homebuyers tax credit
Were you one of the millions who bought homes in 2009 or early 2010? Under the Homebuyer tax credit, homebuyers like you receive a substantial credit – up to $8,000 for first-time home buyers and up to $6,500 for upgrade homebuyers – for homes under contract by April 30, 2010 and purchased by June 30, 2010.

Tax credits for energy efficient renovations
Have you made home improvements this year? You may be eligible for up to $1,500 in tax credits for making energy-efficient improvements to their homes, such as adding insulation and installing energy efficient windows.

The vehicle sales tax deduction
Did you buy a car between February 17, 2009 and December 31, 2009?  Under the vehicle sales tax deduction, you can deduct the state and local sales taxes paid for your new vehicle purchase.

Expanded family tax credits
Moderate income families with children may be eligible for an increase in the Earned Income Tax Credit and the additional Child Tax Credit.

Tax-free unemployment benefits
Under the Recovery Act, “individuals who received unemployment insurance in 2009 do not have to pay taxes on the first $2,400 of such earnings.”

A qualified bankruptcy attorney can help when you find yourself short on cash during tax time—or anytime.  If you have tax debt from previous years, you may even be eligible for a discharge of those pesky tax debts. Call a qualified bankruptcy specialist today and find out how you can set yourself free from debt. Specifically, the bankruptcy attorneys at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Tuesday, February 2, 2010 @ 3:29 pm

It’s almost February and ‘tis the season for thinking about tax time—even more so if you find yourself considering the benefits of bankruptcy. So, if you believe bankruptcy is the right option to help you start fresh in 2010, in addition to trying to get your 2009 taxes filed in a timely manner, and wondering whether you can discharge any income tax debt in your bankruptcy filing, you may also be thinking about how you can protect your precious tax refund from creditor claims.

But, just in time to file (for taxes and/or bankruptcy), here are some timely tips for protecting your tax refund:

Alter Your Exemptions
If you’re expecting a larger tax refund in the same year you plan to file for bankruptcy, your first best step is to alter your tax exemptions and allowances in the months prior to a bankruptcy filing. Increasing your exemptions now means you’ll receive more money in your paycheck to use throughout the year and less money in the form of a lump sum tax return. In addition to the benefit of being able to apply that money to necessities throughout the year, that’ll be less money available for creditors to seize at the time of any necessary bankruptcy filing.

Apply for Advanced Earned Income
If you receive what’s known as an “earned income” tax credit you can also head off some bankruptcy issues by providing your employer with a W-5.  This special tax form allows you to receive your earned income credit on a monthly, weekly or quarterly basis. And like the tax refund, this process disburses this money directly to you, keeping your money out of government coffers and potentially out the hands of awaiting creditors.

Know Your Refund
While some can’t wait to file, many people time their bankruptcy for a time following the potential for receiving a non-exempt, but sizeable, sum.  As such, when considering your bankruptcy, it’s important to determine what your refund will be. Depending on whether you’re receiving a generous refund, you may consider holding off on your bankruptcy filing until you have had an opportunity to use the refund on your family’s necessities—spending the money on food, clothing, medical co-pays, car repairs, etc., keeping all receipts as you spend.  In the alternative, if you are planning to file for bankruptcy, do not use your tax refund to pay back relatives or friends, large sums of unsecured debt to any one unsecured creditor, or purchase luxury items, all of which could cause a problem with your bankruptcy filing in terms of creditor claims.

Know the Rules for the State You’re In
Your own state’s laws could mean your refund is partially or fully exempt from creditor claims. As a result, it is essential that you consult with a qualified bankruptcy attorney to review your individual bankruptcy situation in and around tax time. This consultation can assure you’ve attempted to protected your precious tax refund from every imaginable angle.

If you are considering bankruptcy, knowing a qualified bankruptcy attorney can also help you with additional tax decisions, yielding the right kinds of support, information and insights—at a low cost— for a financially viable and secure future.  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at http://www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Tuesday, January 19, 2010 @ 2:48 am

The holidays are now officially over. The New Year has begun in earnest. And ‘tis the season for tax time. If you believe you’re bankruptcy bound in 2010, that definitely means it’s also time to get your 2009 returns in order.

Thinking About Chapter 13 Bankruptcy?

Chapter 13 bankruptcy helps restructure your debt into a more manageable payment plan—allowing you to pay back what you owe over time, often at a percentage of the cost. If you’re considering this type of bankruptcy, it’s important to remember that tax returns should be provided in Chapter 13 cases.  You must file all tax returns for all tax years – including returns for 2009.  Bankruptcy Code Section 1308 provides:

(a) Not later than the day before the date on which the meeting of the creditors is first scheduled to be held under section 341(a), if the debtor was required to file a tax return under applicable non-bankruptcy law, the debtor shall file with appropriate tax authorities all tax returns for all taxable periods ending during the 4-year period ending on the date of the filing of the petition.

(b) (1) Subject to paragraph (2), if the tax returns required by subsection (a) have not been filed by the date on which the meeting of creditors is first scheduled to be held under section 341(a), the trustee may hold open that meeting for a reasonable period of time to allow the debtor an additional period of time to file any unfiled returns, but such additional period of time shall not extend beyond–

(A) for any return that is past due as of the date of the filing of the petition, the date that is 120 days after the date of that meeting; or

(B) for any return that is not past due as of the date of the filing of the petition, the later of–

(i) the date that is 120 days after the date of that meeting; or

(ii) the date on which the return is due under the last automatic extension of time for filing that return to which the debtor is entitled, and for which request is timely made, in accordance with applicable nonbankruptcy law.

In plain English, this verbose section of the Bankruptcy Code means that if you’re a Chapter 13 filer, you must file your tax returns before the creditor’s meeting to assess your ability to repay your debts.  If you have yet to file, your bankruptcy trustee (appointed to evaluate the case and serve as an agent for collecting your payments and making distributions to your creditors), may continue the meeting until it is filed, up to 120 days.  After this 120-day window, your case can be dismissed.  As such, it’s best to be proactive, avoiding any reliance on an extension.

What About Chapter 7?

If you’re considering filing a Chapter 7 bankruptcy in order to dispense all of your unsecured debts, the tax implications are a bit different.  In this case (as in a Chapter 13 case), it is vital to alert your bankruptcy attorney if you expect that you will owe taxes pending the filing of your 2009 return.

On the other hand, if you expect a refund, like the majority of Americans, based on where you live and other considerations, this financial return (or a portion of it) may be considered an asset of the bankruptcy estate, and, as such, will only be protected to the extent you can protect it with state exemptions (up to $10,000.00 for a married couple in North Carolina).

If you’re considering bankruptcy in 2010 and are concerned about the tax implications, including when to file, whether you can keep your tax refund, and any other factors in your personal circumstances that might require consideration, it’s important to speak with an experienced bankruptcy attorney who can competently guide you on the right path to the best result.

The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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