With April 15th only a few days away, many people are working hard to come up with the money to pay the Government. For those who are self employed, estimated tax liability payments are due every quarter starting April 15th. The IRS will allow you to pay your tax debt with a credit card, but you can expect to pay a 2% “convenience fee”.
If charging tax liability please be aware that the Bankruptcy Code specifically disallows that part of your credit card debt to be discharged in a bankruptcy case, unless the tax you are paying is dischargeable as well.
If you have questions about tax liability and credit card debt please call Attorney Miller at 414-277-7742. Our office is accessible in Milwaukee, Racine, Ken0sha, Germantown, West Bend, Ozaukee, Brookfield and all surrounding Milwaukee Metro Areas.
While the housing in metro Milwaukee is starting to pick up, below is a question that many homeowners are facing. Great stuff from Christopher Farrell of American Public Media.
Question: Three years ago — fresh out of grad school, with new jobs and lots of optimism — my husband and I bought a beautiful house that we love. Trouble is, we spent too much money. Now, our mortgage consumes nearly all of our monthly income, leaving us very little to save for retirement, our kids’ college funds or do the things we love such as traveling. We both work for non-profits and like our jobs, so the prospect of increasing our incomes significantly isn’t really there. We’re quite frugal, so there aren’t too many places to cut back. The good news is: We’re not underwater (according to our tax assessment) and we can make our mortgage payments and pay our bills. That said, if we had an emergency, lost a job or had a big home repair, we’d be in trouble.
The question, then, is: Should we cut our losses, try to sell and buy something cheaper? In our accounting, after the realtor fees, etc., we’d probably end up netting about what we owe and lose the about 10 percent equity we have. Is that crazy? Over the long-term, we think about all we could do with the difference between our current mortgage payment and what we’d pay on a house that was, say, $100,000 cheaper, and it seems to make sense. We’d love to hear your advice. Thank you! Julia, St. Paul, MN
Answer: In reading your email, I think you’ve already answered your question: You’re going to move into a cheaper place. It isn’t a crazy move at all. It’s a smart long-term move. House-poor is no way to live. A lesson of the turbulent economy of the past several years is everyone needs to create a margin of financial safety for their household. I applaud what you’re doing, and if I were in your circumstances, I’d be thinking along the same lines.
When it comes to homes, small(er) is financially beautiful. The mortgage is less. So are insurance, taxes, heating, cooling bills and other costs of ownership. These cost savings compound over time.
To me, the real issue you face is timing. When do you make your move?
What I would do to concretely grapple with that question is to start a serious look for the kind of home you’d like in your new price range and in neighborhoods you want to live in. Go to open houses. Hire a real estate agent. Visit homes for sale. You want to see what you can really get in the current market for the amount of money you’re thinking of investing. I would also see what you need to do to get your place ready for sale. What are homes like yours going for in the market?
You can then run actual numbers to see how you’ll stack up financially moving from where you are and into a cheaper place. You can see whether you might lose your down payment. You can weigh short-term costs vs. the long-term gains. And so on.
At the end of this research and number-crunching exercise, you might decide to wait another year. Then again, you might find the right place at a great price and the trade-offs to get there are worth it. With research, you’ll make an informed decision about the timing.
If you live in Southeastern Wisconsin, feel free to visit us for a free consultation at one of our offices in Milwaukee, Kenosha, or Germantown. We can help you to understand your options if you are looking for ways to save your home in Wisconsin. Call us today at 414-277-7742!
Join us for an information-packed webinar with bankruptcy attorney Jamie Miller. This workshop will offer you expert guidance on the different bankruptcy options; as well as the benefits that bankruptcy can offer you to help you take control of your financial life. It is time to get the fresh financial start you deserve. Go to MillerMillerlaw.com and click on the “Registration Now” star to sign up.
Join us April 17th @ 10am for this great Webinar. Register today!
WRITTEN BY BRIAN KOENIG
TUESDAY, 13 MARCH 2012 10:12
As more and more young people graduate from college with mounds of unresolved loan debt, financial experts and bankruptcy attorneys are calling the progressively worsening dilemma the “next debt bomb.” According to a new survey conducted by the National Association of Consumer Bankruptcy Attorneys (NACBA), 81 percent of bankruptcy lawyers report that the number of prospective clients with student loan debt has increased “significantly” or “somewhat” in the past few years.
The organization even compared the purported student loan debt “crisis” with the collapse of the housing industry:
With student loan debt now topping U.S. credit card debt and few or no options available for distressed borrowers (including unwary parents who co-signed loans and now face the loss of nest eggs, retirement homes and other assets), America faces the very real possibility of another major economic threat on a par with the devastating home mortgage crisis, according to a new survey and report published today [Feb. 7] by the National Association of Consumer Bankruptcy Attorneys (NACBA).
Moreover, the survey reported:
• Nearly two out of five bankruptcy attorneys (39 percent) have seen potential student loan client cases jump 25-50 percent in the last three to four years. About a quarter of bankruptcy attorneys (23 percent) have seen such cases jump by 50 percent to more than 100 percent.
• Most bankruptcy attorneys (95 percent) report that few student loan debtors are seen as having any chance of obtaining a discharge as a result of undue hardship.
• More than four out of five bankruptcy attorneys (82 percent) see the limited availability of student loan discharge in bankruptcy as “a big problem” barring a fresh start for clients.
• Nearly two out of three bankruptcy attorneys (65 percent) say that student loan provider debt collections have become “much more” or “somewhat more” aggressive in the last 18 months.
Most of those clients, the association affirmed, were unable to meet the federal hardship criteria required to exempt their student loans through bankruptcy proceedings. Consequently, many loan co-signers, who are often parents or guardians, are required to cover the payments. Head of the NACBA William Brewer asserted, “This could very well be the next debt bomb for the U.S. economy.”
“Obviously, in the short term, student loan defaults are not going to have the same ripple effect through the economy that mortgage defaults did,” Brewer added. “My concern is that the long-term effect may be even graver, because people who need student loans to try to get a higher education or retraining” will be reluctant to apply for them.
In a previous analysis, Moody’s Analytics conversely noted that student lending is not on a par with the housing crisis, as the student loan market is only one-tenth the size of the mortgage market. “Despite its rapid growth even as credit quality weakened during and after the recession, student lending is not likely to turn into the next subprime crisis,” Moody’s reported earlier this year.
Student loan debt has boosted in recent years to a sum of $867 billion in 2011, which surpasses the $704 billion in outstanding U.S. credit card debt. Throughout the 2010-11 school year, students racked up $104 billion in loan debt from the Education Department — a 50-percent spike in three years — while private education loans dipped by 65 percent in that same period, to $7.9 billion.
What many analysts and political leaders fail to acknowledge is the underlying culprit of the student loan debt debacle. Many observers blame rising tuition costs, which are undoubtedly a factor. But why are colleges and universities charging more for tuition? Similar to the U.S. healthcare system, the present quandary stems from a third-party-payment system. Government has become a chief player in subsidizing tuition costs, and as a result, students are amassing bulky government loans to finance their education.
Indeed, government meddling has manipulated the higher-education market, and has discouraged high-school graduates — who are often naïve in their educational pursuits — from attending the most competitively priced institutions. Consequently, many of these young individuals choose schools charging $30,000 per year in tuition over schools charging $10,000 per year, hoping they will land high-paying jobs come graduation. Such skewed incentives have granted colleges and universities the unbounded authority to inflate tuition rates to astronomical levels, and thanks to federally induced market distortion, these institutions get off scot-free.
Adding to the government’s intervention in the higher-education market is a Federal Reserve system that is generating an inflationary hailstorm. In October 2011, GOP presidential candidate Ron Paul explained in an article for USA Today how these two government measures have spurred an adverse evolution in this delicate sector of the U.S. economy:
Like housing and medicine, education costs went through the roof when government became involved. In the last three decades, the overall inflation rate has increased more than 100%, which means we basically pay double now for everything we buy. This price inflation is an inevitable consequence of printing money out of thin air and devaluing our dollar. But compare this inflation to the rise in the cost of college tuition, which has increased almost 500% in the same amount of time.
This is what happens when we print money out of thin air and couple it with government intervention in education.
Many clients ask: Why do I have to take a credit counseling class? The simple answer is: the Bankruptcy Code requires it.
You may have paid your lawyer all of the fees required, you may have provided your lawyer with all the information necessary for a petition to be properly prepared, your petition may have been prepared, you may have signed it….but if you have not taken the pre-filing credit counseling session and provided a certificate of completion to your attorney, your petition cannot be filed. Many clients are fearful of the credit counseling: What will they ask? I don’t know what to say? What if I don’t pass? How much does it cost?
The credit counseling itself is extremely simple; you cannot fail. You will be asked about income and living expenses; estimated answers are fine. The counseling can be done on the Internet, or by telephone. You must use an approved agency. The Resource page of our website www.milwaukeebankruptcy.com has a list from which you can choose.
The credit counseling is not expensive at all. There are some that are extremely inexpensive.
Keep in mind that in order to receive your Court-Ordered Discharge, which finalizes your bankruptcy, there is a second class that you must take called a Financial Management Class. Again, this can be done on the Internet or by telephone.
If you have any questions about the credit counseling classes please contact our Milwaukee, Germantown or Kenosha office of Miller & Miller Law.