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Bryan P. Keenan

Pittsburgh Bankruptcy Legal Blog

Can filing for bankruptcy help me with my IRS tax debt?

The Internal Revenue Service (IRS) can spark fear in a person just by sending a letter or making any type of contact about IRS tax debt. Pittsburgh residents who are dealing with this issue and are told they owe payments on their taxes will be worried about what the future holds. This is compounded if they are already having financial problems and cannot make their payments for credit cards, mortgages, automobiles and more. Fortunately, bankruptcy can help with tax debt.

The circumstances must be right for this to be done and it is not always possible, but when there are concerns about this problem, legal advice is essential. Generally, it is easier to discharge tax debt with a liquidation bankruptcy through Chapter 7.

Plan to take control of your financial future

Many adults don't ever take the time to sit down and review their bills. When you do, you might realize that you are in more debt than you originally thought. The issue with many forms of credit is that people can get stuck paying for only the minimum payments. On accounts that are accruing interest, you might not notice much headway in the balance reduction if you are only paying for the bare minimum each month.

If you have taken a hard look at your finances and realize that your current plan isn't going to get you out of debt, it is time to do something about it. Some people try to get those debts paid off faster by paying more on them. This is a good idea for some, but only if they have a good plan and the capability to follow that plan.

Credit card debt worse than student loans for Millennials

Pennsylvanians will be at an immediate disadvantage when they graduate from college with substantial student loan debt. This can affect every decision they make from where to live, what job they should take, whether they should get married or not and more. Credit card debt is also a problem for many as they frequently need to use credit cards to purchase necessities when they are short on cash. This leads to a rising tide of debt. For those who think student loan debt is worse than credit card debt, new information is contradicting that narrative.

A recent study says that Millennials are increasingly having trouble with credit card debt and that might be surpassing student loans in terms of hindering their lives. The study says that 13 percent of Millennials who owe on their credit cards are paying the balance each month. The remainder are piling debt upon debt. Eventually, this can reach a critical mass where they are essentially spinning their wheels with nowhere to go. On average, the credit card debt is $5,700. Paying the minimum will do little to reduce that.

Credit card debt, loans and other expenditures deplete savings

Pittsburghers and people across Pennsylvania will be well-acquainted with debt no matter their situation. Even those who have a good job and have a commensurately good salary will have various debts. For those on the lower rungs of the economic ladder, it is often necessary to accrue debt to attend school, purchase a home and make ends meet. However, various expenditures -- credit card debt, student loans and mortgages -- are increasing. It is at the point that people are unable to save significant money in bank accounts or make investments, if they can do that at all. As debts rise and problems come up, it can leave debtors in desperate financial straits.

If, for example, a person is barely making the minimum payments on debts every month and a sudden medical issue forces them to enter the hospital or they lose their job, they can find themselves well behind on their payments. This is a cycle that is difficult to escape. The lenders are aware of the danger Americans are in and how they are forced to use credit cards, lines of credit and refinancing to stay one step ahead and purchase needs and wants. They will make offers that debtors accept and will rapidly make their issues worse.

Get out of debt quickly with Chapter 7 bankruptcy

While there are several types of bankruptcy that can be beneficial for Pittsburgh debtors, only Chapter 7 has the benefit of getting out of debt quickly without needing to pay back any money to unsecured creditors. Of course, Chapter 7 bankruptcy is not suitable to every situation, but for those who either do not have significant property and assets or have property that they are willing to allow to be part of a Chapter 7 liquidation, this is likely the best alternative. Understanding the foundational aspects of a Chapter 7 filing is imperative before deciding.

Chapter 7 is not a good idea for people who have secured debts and could lose a house or a car. However, if there are significant unsecured debts like credit cards, these can all be wiped away with a Chapter 7. If there is a home or a vehicle and the person wants to retain it, there are options to do so if the payments continue to be made. This will depend on the circumstances and creditors might object, making it important to discuss the possibility with a legal professional.

Unexpected medical bills can lead to financial troubles

Medical bills are a huge expense for many people in this country. When these bills are due to an unexpected emergency, they can lead to financial ruin. This is especially true if there are surprise costs associated with the emergency care, which occurs in approximately one out of every six emergency room visits.

A primary issue that comes up in these cases is when you receive care from an "out-of-network" provider in an emergency. Many people who suffer from an injury or illness that requires emergency care aren't thinking about what hospitals are in their insurance network. Unfortunately, getting care from a place that isn't in that network can lead to costly bills.

How can I ensure a successful Chapter 13 bankruptcy?

For Pittsburgh residents who feel as if they are drowning in debt, Chapter 13 bankruptcy might seem like an ideal strategy to get on stronger financial ground. This is undoubtedly true if the debtor takes the necessary steps to ensure the plan's success. Failure to follow through on the terms of the Chapter 13 could lead to its dismissal. To avoid this, knowing how to make the plan work is key.

Unlike a Chapter 7 liquidation where the case is essentially over once the trustee approves it and the debts are discharged, the tradeoff for retaining a home or a car through Chapter 13 is that the debtor makes certain payments to a trustee who will then distribute payments to the creditors. It is imperative that debtors understand that Chapter 13 is a commitment to make certain payments for three or five years. In general, the duration of the payments will be five years and the debtor will have a predetermined amount that must be paid.

Credit card debt an issue for many college students

Debt is nothing new for college students in Pittsburgh, throughout Pennsylvania and across the nation. While much of the focus today is on student loan debt with legislators and lenders considering ways to ease that financial burden young people face, another issue that is gaining greater attention is the amount of credit card debt students accrue. When stacked on top of the student loan debt, people can find themselves overwhelmed by debt even before they have framed their college diploma and started looking for a job in their chosen career. Understanding this problem is step one. Finding a strategy to address it often requires legal help.

A recent study indicates that more than one-third of college students across the nation are in some level of credit card debt. These students have at least $1,000 in debt with many increasingly relying on their credit cards since 2012. The study says that students are placing an undue burden on themselves and hindering their financial future. More than 30,000 students took part in the study. It found that more than half stated they were not ready to oversee their finances. Credit scores have also been damaged by this growing trend. 15% stated they had damage to their credit score because they were late with payments.

Possible changes to FDCPA can impact those with credit card debt

When Pittsburghers are in credit card debt or are facing other financial struggles, it can cause problems in every aspect of their lives. Personally and professionally, the fear and trepidation as to what the future holds will seem to be never ending for these individuals. A common concern is the number of calls and other methods of contact creditors and debt collectors make to try to get some or all the payments they are owed. There are certain limits to the number of calls these creditors can make and when they can be made based on the Fair Debt Collection Practices Act (FDCPA). Keeping track of the law and potential changes is important for debtors to be shielded from creditor harassment.

There have been new rules proposed to change FDCPA, though, and if they are implemented they would give creditors greater freedom to contact debtors. These modifications would let debt collectors send an unlimited number of emails and text messages to those who are behind on their bills. At the same time, there would be a reduction in how many phone calls to debtors can be made per week.

Some attempts to clear credit card debt make matters worse

Pennsylvanians who find themselves struggling with credit card debt and other accruing expenses will oftentimes listen to any advice to try to get into a better situation without filing for bankruptcy. There are many reasons why people avoid bankruptcy, including a belief that they are not upholding a responsibility, as well as a failure to understand exactly how beneficial bankruptcy can be. It is only after they have made a series of mistakes with popular debt solutions that they find they are not solutions at all. After that, they might consider other, time-tested strategies. To successfully utilize these strategies, individuals often turn to legal professionals.

Some of the ways in which people try to get out of overwhelming debt are taking on a consolidation loan, cashing out with mortgage refinancing, and taking a loan on a retirement plan. In the short-term, these tactics might seem to quell the pressure exerted by companies seeking to collect on credit card debt. However, over the long-term they generally make the situation more difficult. Taking out a consolidation loan, even one with a low interest rate, might seem wise. Yet, there are often disadvantageous terms and costs that are buried in the fine print. As such, pursuing this option might not make a person's finances better than they would be if they chose to file for bankruptcy.

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Bryan P. Keenan & Associates, P.C.

993 Greentree Road
Suite 101
Pittsburgh, PA 15220

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