Filing for bankruptcy can be a difficult process that will complicate your life temporarily, but its impact can be minimized with the aid of an experience attorney. When going through a bankruptcy the last thing you would want to hear is that there are a few complications with your case. If you feel like there are special circumstances that could complicate your bankruptcy case, you should definitely inform your lawyer about it as soon as possible. While having an experienced and competent bankruptcy attorney will make the process much easier, below are some of the things that could complicate your case:
Unfiled Tax Returns
The act of not filing your tax return does not usually preclude you from filing bankruptcy. But if you should have filed tax returns and did not, your bankruptcy case will most likely be more complicated. It becomes complicated because the Bankruptcy Court requires you to provide copies of the last two (2) tax returns you have filed within days of your bankruptcy case being filed. If you have unfiled tax returns, the trustee in your case may be skeptical regarding your income and/or potential assets, and may delay your case’s resolution by asking for more documentation. In addition, if you are not able to provide up to date tax returns, multiple court appearances will be required, which both you and your attorney must attend. While we have found this is usually not a serious problem, it is something to consider when filing a bankruptcy case.
If you owe a substantial amount of federal and/or state income taxes then it is most likely that you bankruptcy case will be complicated. A substantial tax debt is usually considered to be more than ten percent (10%) or more of your annual income. However, owing far less than that can cause someone having financial difficulty very significant problems. It becomes complicated because most tax debts are not eligible to be eliminated through bankruptcy. If your attorney is willing to go the extra mile to investigate ways that you can eliminate your tax debt, it is worth paying additional fees to speak with an experienced attorney that can help you determine if your tax debts can be discharged in a bankruptcy case. However, even if your tax debts are not eliminated in a bankruptcy case, they will be frozen temporarily by the automatic stay, and the elimination of other debts should make it much easier to concentrate on paying off any tax debts in a payment plan after your bankruptcy case is concluded.
Delinquent Mortgage Payments
If your mortgage payments are delinquent but you are set on keeping the property there could be some complications in your bankruptcy case. For a little clarity, it is only complicated because you want to keep the real estate. If you don’t mind losing the real estate to foreclosure, there won’t be any complications. But if you are delinquent on making your mortgage payments, there will be a number of different things your lawyer will have to do to help you to keep your property. For example, if you are filing a Chapter 7, this could delay a foreclosure and give you time to catch up the mortgage, negotiate a short sale, or work on a loan modification. If you are filing a Chapter 13, the bankruptcy case will stop any foreclosure proceedings, and as a part of the case you will usually be in a payment plan to catch up the mortgage payments. In any event, being behind on mortgage payments usually means a substantial amount of extra work for you and / or your attorney involved which will make for some interesting complications.
Wage Garnishments and / or Judgment Liens
Stopping a wage garnishment is a usually something a bankruptcy attorney can do in a short amount of time. However, because the person filing usually needs to have this wage garnishment stopped quickly, your attorney will need to put a rush on your case. Anytime a bankruptcy case is rushed, it is made more complex because it will usually not be able to be filed with the court all at once, and amendments to the bankruptcy case will usually need to be filed at a later date. In addition, if you own real estate, whether you know it or not, the creditor may have recorded the court judgment and turned it into a lien against any real estate you own. While a homestead will protect you from having the creditor forcibly sell your home, in order to remove the lien, your attorney must file additional paperwork with the court and may need to attend a hearing in front of the bankruptcy court to remove the judicial lien. It is important to remember, not all liens, including judicial liens are able to be removed in a bankruptcy case, further complicating the matter.
It is not uncommon for you or someone in your family to have a large amount of medical debt, possibly leading or contributing to the filing of the bankruptcy case in the first place. Your bankruptcy may become complicated because medical debts typically do not show up on a credit report until much later when they are given to a collection agency. So every single medical debt will have to be provided by you to your bankruptcy attorney to be included in your bankruptcy case. To do this, you may need to go through all your bills from doctors and hospitals, and also let your attorney know the name of all the hospitals you have received treatment from. This can be very time consuming work, as even a brief stay in the hospital can result in several providers sending you bills, including doctors you never met. In addition, doctors must usually send out to third parties to have tests run, and these diagnostic tests will also be billed separately from the doctor. If any one of these medical bills shows up after you have filed your bankruptcy, your attorney must amend your case, send notice to the missing creditor, and sign and file an affidavit swearing that they have served this creditor according to the local bankruptcy rules. While medical bills are usually something an active and experienced bankruptcy attorney has to deal with on a daily basis, it does complicate a case and usually requires much manual work on the part of the filer and attorney.
If you are facing bankruptcy and need to speak with an experienced and effective attorney to help in your case, call us at 770-609-1247 to speak with one of our knowledgeable attorneys.