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Archive | March, 2015

Let me show you how to start a great annual tradition that can save you money and your reputation, and it’s free!

Even after you have filed your bankruptcy case and started to build a solid financial future, erroneous and outdated information can creep into your credit report, driving down your credit score without any justification.

Now is a good time to check your credit report at www.annualcreditreport.com. This is the free credit report source. I think you should check your credit report every single year. Tax Time is a great memory trigger to take a few minutes to make use of your free annual credit report review. It is easy and smart to check this all important rating to protect your reputation against errors and inaccuracies.

Couple listing their creditors for their bankruptcy filing

How to Dispute Errors on Your Credit Report

If you find mistakes on your credit report, you should dispute the errors by writing each of the credit bureaus. The Federal Trade Commission provides a helpful article on writing credit report dispute notices at http://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports. The FTC provides a sample form letter that you can change and use at http://www.consumer.ftc.gov/articles/0384-sample-letter-disputing-errors-your-credit-report.

Errors on Your Credit Report Can Do More Harm Than You Think

Your credit score can raise or lower the interest rates you pay on vehicle loans, mortgages and consumer accounts, and can affect the rates you pay for automobile and other insurance policies. Some employers “cull” job applicants based upon their credit scores.
The good news is that following a bankruptcy filing, your credit score can often increase in comparison to the level before you filed.

How to Spot Harmful Credit Report Errors

There are many credit score errors that you should look for on your annual credit report, including these:
1) Credit lines/cards that your report shows as open that you know to have been closed, paid off and canceled long ago.
2) Credit card reports that show high balances when the cards actually have much lower balances.
3) Debts that were discharged in bankruptcy that your credit report lists as open and unsatisfied obligations.
4) Debts that were discharged in bankruptcy that have been reposted on your credit report by a collection agency that is unaware of your bankruptcy filing.
5) Inaccurate information about delinquencies or late payments.

If You Live In the State Of Washington, We Can Help

Our law firm offers premier bankruptcy and debt representation in the Puget Sound and southwestern Washington areas and beyond. We have helped clients from the San Juan Islands and Bellingham to Vancouver, and eastward to Aberdeen and North Bend.
If you or someone you know is struggling with their debt load, we are here to help.

Spring Cleaning!

It happens. You had an appointment with us or scheduled an appointment that you could not make. We want to help you through financial difficulties that won’t go away. Now is the time to contact us to move forward on a bankruptcy case.

To serve you better, we now offer expanded spring hours during our busy tax season to help you get your case filed quickly, and to get those creditors off of your back right now!

Your Debts Won’t Go Away By Themselves

After filing for bankruptcy, many people can get a loan to replace their aging automobile not long after the case concludes successfully. You may soon be able to apply for a credit card to handle unexpected expenses.
But doing nothing will bring the wrong kinds of certainty. By doing nothing,

  • Your credit score will stay down indefinitely,
  • You will not get a car loan except at ridiculously high interest rates
  • You will not get a modest limit credit card, and worst of all,
  • Your creditors will continue to sue, harass and garnish you.

Those are the realities of doing nothing. Nothing will change for the better unless and until you take control of your future, and get your bankruptcy case filed.

Life After Bankruptcy Is Always Better Than Living in Fear and Dread of Debt

Call us at (253) 383-1001 during our expanded spring hours:
Monday 8 AM—7 PM
Tuesday 8 AM—7 PM
Wednesday 8 AM—5:30 PM
Thursday 8 AM—7 PM
Friday 8 AM—5 PM
Saturday 9 AM—3 PM
You can reach us by email at [email protected] with any questions you might have or to arrange your free, no obligation 30 minute consultation with the attorney. We care about your future, and we are here to help.

If All This Seems Confusing or Too Complicated,
Please Call Us for Help

Tax problems or long neglected debts can be complex and overwhelming. I may be able to help you understand your situation; I can certainly help you by discussing certain trade-offs and options concerning your situation with your debts, the IRS, and bankruptcy. Contact my office for a free, no obligation consultation right away!

How to Prepare and File your Federal Income Taxes for Tax Year 2014

As I write this, tax day for federal income tax year 2014 is only a few weeks away. You may have some unfinished business to clear up, whether it be to file your taxes for 2014, to make preparations to make for a smoother tax season next year, or to understand how to handle unpaid taxes. Let’s examine some topics that I hope you will find beneficial now and useful throughout the coming year.

Tax Return documents

The most important thing is to file your tax returns on time, and to prepare them correctly, even if you owe money to the IRS and can’t afford to pay the entire amount before April 15th. You should also let your tax return preparer know you have filed—or are thinking about—filing for bankruptcy protection.

Tax Preparation Software

According to an opinion piece published in the Wall Street Journal, “…more than three-fourths of all individual tax returns will be filed electronically [this year].” For those taxpayers who use their own computers and tax preparation applications, “Taxpayers who employ an accountant or other preparer have some protection from daunting penalties if the IRS finds mistakes. Software users who prepare their returns without help have little or no protection.”

Some pretty famous people have had problems, or claimed to have problems, with tax preparation software. According to the story, “During the confirmation hearings of Treasury Secretary Timothy Geithner three years ago, we learned that he failed to pay self-employment tax on income from the International Monetary Fund. Mr. Geithner partially blamed the oversight on the TurboTax software he had used…”

Today, the IRS and the tax court have not sided with taxpayers who claim “the TurboTax defense” like Secretary Geithner. In fact, the article states that, “So far the U.S. Tax Court has nearly always rejected the TurboTax defense. Only two cases have offered taxpayers penalty relief for software reliance.”

Ideas for Action

  1. The primary responsibility for accurately preparing a return with tax preparation software still resides squarely on you, the taxpayer. Careful review of your return manually remains important, especially if your tax situation is complex.

How to Fix a Botched Return

Jonnelle Marte’s column on the MarketWatch site picks up the thread, and offers a good backgrounder on when and how to fix mistakes in a previously filed income tax return. According to the article, “Tax pros say you should come clean about mistakes on your tax return as soon as possible, but exactly how you do so depends on the mistake. In fact, not all errors require filing an amended return, the Internal Revenue Service says.”

Ideas for Action

  1. Don’t file another original return on IRS form 1040. Use IRS form 1040X, even if you’re amending a previously filed return.
  2. You have up to three years to refile a return that will produce a refund. The article explains the conditions that apply, and when the three year deadline ends for each tax year.
  3. Tax due situations are nothing to mess around with. If you owe a substantial amount, engaging a tax professional is a very good idea. According to the article, if the IRS discovers the error, “the government will bill you for: (1) the unpaid tax amount plus interest (currently at a 3% annual rate), (2) the additional failure-to-pay interest charge penalty (at a 6% annual rate), and (3) maybe other penalties too. But the IRS can waive penalties if you show you had a reasonable cause for the underpayment.”
  4. The article concludes by advising us to “be sure to use the current version of Form 1040X http://www.irs.gov/pub/irs-pdf/f1040x.pdf, which you can print out from the IRS website at http://www.irs.gov/. (Right now, the current version is dated December 2014.) If you need to attach corrected or additional tax forms, be sure to use the forms for the year you’re amending. For example, if you’re filing Form 1040X to claim additional itemized deductions for 2011, you’ll need to attach a corrected 2011 version of Schedule A. The IRS website has prior-year tax forms too. Click the following link, http://www.irs.gov/app/picklist/list/priorFormPublication.html, then you’ll be able to search for the form(s) you need, or sort by headings, or simply page through the many, many forms to find the one(s) you need.

Budgeting

There are plenty of books, articles, software, and other media that explain how to establish a budget. Perhaps the hardest part is to commit to the plan you establish, regardless of how you intend to implement it. Thanks to the wealth of information about budgeting available today, at least the cost to establish a budget has gone down dramatically.

Intuit, the company behind Quicken and TurboTax, has a free online budgeting tool for families and individuals called Mint https://www.mint.com/. Intuit claims to have 10 million individual users. The product is pretty simple to use, and may be all that you need to help you see where your money is going, and help you perform some rudimentary tax planning to avoid surprises in tax years to come.

Columnists like Dave RamseySuze Orman, and other “celebrity financial experts” all have good plans, and will sell you tools, books, and programs to manage them in some cases. Whatever approach you take, it is never too late, and never too early, to make a financial plan and follow through on it.

Ideas for Action:

  1. Always file your tax returns on time–even if you can’t pay. You can get an automatic six month extension to enable you to complete your tax return filing for the year. Here’s an article on the IRS web site with more details on the procedure.
  2. The IRS has a “Fresh Start” initiative to help struggling taxpayers. Here’s an article that describes the program.
  3. Tax problems can be complex. I may be able to help you understand your situation; I can certainly help you by discussing certain trade-offs and options concerning your situation with the IRS and bankruptcy.

What about Tax Consequences of Foreclosure Sales?

I published a series of articles on my web site that cover the tax impacts of foreclosure:

In this series of articles, I define some of the terms and situations that can trigger Federal Taxes on a foreclosure sale. This area requires expertise and experience that you may not find at firms that churn out bankruptcy filings using a factory approach. If you are concerned that you may have a complex foreclosure transaction as part of your bankruptcy case, please engage my firm to help you work through the details by contacting us right away. We can help!

IRS Debt and Bankruptcy

Generally speaking, taxes are exempt from discharge through bankruptcy. However, in some cases, you can discharge an IRS debt using a Chapter 7 bankruptcy filing. The only IRS debts that can be discharged are those that are over three years old. There are certain conditions that must be met first. Read more about IRS and bankruptcy in an earlier article I posted on my site.

If All This Seems Confusing or Too Complicated, Please Call Us for Help

Tax problems can be complex. I may be able to help you understand your situation; I can certainly help you by discussing certain trade-offs and options concerning your situation with the IRS and bankruptcy. Contact my office for a free, no obligation consultation right away!