Kentucky Bankruptcy Law

Counsel with Care

Debtor Education Course

In order to file a personal bankruptcy, either Chapter 7 or Chapter 13, you have to complete a course in Credit Counseling. This was meant to prevent people who really did not need to file from doing so, but it has just created a booming industry where you must usually pay $50.00 in order to get the required certificate. It is essentially an additional filing fee except that it goes to private companies. This certificate is the “ticket in”.

There is also a “ticket out”. Within thirty days of your meeting of creditors, you will have to complete a Debtor Education (a.k.a. Financial Management) course. You have to pay another fee (often another $50.00) in order to obtain this certificate. No certificate and no discharge in the bankruptcy. I was excited for five distinct reasons to discover, though, that Dave Ramsey’s group has begun to offer the “ticket out” – the Debtor Education course online. First, I know they will come at the issue from a biblical perspective. Second, Dave Ramsey had to file bankruptcy at one point and so he can relate to what you are going through. Third, they have designed the course to hold your interest. Fourth, it is less expensive than most of the other places. Fifth, and most importantly, they have a real message of hope in the material that will bless you.

January 11, 2010 Posted by | Bankruptcy, Credit Counseling & Debtor Education | , , , , | Leave a comment

Bankruptcy and tax returns

The new year also ushers in tax season. Instead of sugar plums we have receipts of deductions dancing in our heads. This season creates some additional concerns pertaining to bankruptcy. If you are trying to file a Chapter 7 and you just squeak in under the means test, pay special attention to your deductions. If you have claimed too few tax decutions on your W-4, then the trustee might object that the presumption of abuse actually does arise (“presumption of abuse” is legalese in the bankruptcy code for “doesn’t qualify” for a Chapter 7). Another related issue is the size of your tax refund. If you have claimed too few deductions then you will likely have a refund coming to you.

Even if you pass the means test regardless of under-deducting, you still need to be mindful of your refund. If you receive your refund prior to filing your petition, it would be wise to spend in on household necessities like groceries or repairs that are long passed due, but which will not substantially increase the value of your home or automobile. If you will not receive the refund until after filing, be sure to ask your attorney to see if there is a “wild card” exemption available that can cover it. Otherwise, you may have to surrender some or all of your refund to the trustee.

In general, it is not good to claim too few deductions. Sure, you and most people enjoy having the refund once a year, but you are essentially making an interest free loan to the government when you under-deduct. Along with that issue, add the concern about the means test and possibly losing your refund in a Chapter 7 and it is just wiser to claim the actual number of deductions availabel to you.

January 11, 2010 Posted by | Bankruptcy | , , , , , , | Leave a comment