While most tax debts cannot be discharged in either a Chapter 7 or a Chapter 13 bankruptcy, it is possible to discharge some IRS tax debts. We offer our clients a Tax Dischargeability Analysis, in which we can look at the specifics of your case to determine whether or not your debts do qualify to be discharged.

Since the BAPCPA in 2005 some clients have difficulty qualifying for a chapter 7 and being able to avail themselves of completely eliminating their debt, but even in a Chapter13 debtors can eliminate a large portion of the qualified IRS debt because it will not be a considered a Priority Debt (Priority Debts must be paid back at 100%)

There are several rules with tax dischargeabaility:
(1) 3 year rule: the tax return must have been originally due at least 3 years before filing Extensions and Amendments change this time frame.
(2) 240 day rule: Also, tax debts cannot be discharged if they’ve been assessed within 240 days of filing for bankruptcy. The 240 day period is extended in several circumstances.
(3) 2 year rule: The tax returns must have also been filed on time or at least 2 years before the bankruptcy has been filed.
(4) No Fraud or evasion rule: There must also not have been any willful attempt to evade or defraud in payment of taxes.

* While the underlying federal tax debt may be discharged, any federal tax liens cannot be discharged.

Even if you don’t live in the Tampa Bay Are the Fair Credit Reporting Act (FCRA) provides consumers with legal protections. Specifically, the FCRA protects all consumers, not just those in Hillsborough County, from being denied credit on falsely reported information.

Credit reporting agencies receive their information directly from your creditors. Their reports consist of historical as well as ongoing information. A bankruptcy stays on your credit record for up to 10 years, but you can minimize its effect thereby increasing your credit score in a relatively short period of time if you follow some simple steps. Following bankruptcy or another dramatic hit to your credit report such as foreclosure your objective should be to responsibly create new credit history, while allowing time to elapse for these events to disappear into your past.

After your bankruptcy, you need to notify the credit bureaus in writing.  You need to notify them that they need to update their records and -O- out your balances after bankruptcy.  You should include a copy of your “Discharge” and “Schedule of Creditors”.  If you don’t have these documents, make sure to ask your Tampa Bankruptcy Attorney You should mail this to each of the 3 reporting agencies by certified mail.  Remember that these agencies are not your creditors, but they are reporting information from your creditors.  Because you have sucessfully been discharged in bankruptcy, your balances have been erased from your creditors, thus relieving them from updating the reporting agencies of your new balances.  All debts discharged in bankruptcy are to be reported as -O-.

If you believe that information on your credit report is inaccurate, the credit bureau must investigate the item within a “reasonable time”, generally 30 days, and remove the item if it is inaccurate or cannot be verified as accurate. 

A local Florida Business Attorney alerts EVERYONE owning a Florida Corporation, Florida LLC, Florida S Corporation or other company registered to do business in Florida that NOW is the BEST time to file their 2010 Annual Reports or Amended Reports.

Now is also the perfect time to amend your Florida articles of incorporation, Florida LLC business agreement, or Florida Partnership Agreements. Now would also be the perfect time to change your Florida Registered Agent or the Principal Place of Business for your Florida Corporation or Company. If you need to start your business please have a look here: and then Contact an experienced Florida Business Attorney.

If you fail to file these documents you may lose your “Active Status”. Failing to pay by May 1, 2010 will cause you to pay a late fee of about $400. There are some very narrow exceptions that can prevent you from losing this status and having to pay the late fee. If you do fail to file before May 1st, please Contact an experienced Florida Business Attorney.

Also, starting July 1, 2009 you can now renew Fictitious Names online, however there was a new law that was passed requiring Fictitious Names to be advertised in the local newspaper of the county in which you plan to do business.

A Power of Attorney is a legal document delegating legal powers of the Principal to an Agent (aka Attorney in Fact) act on behalf of the Principal. The Agent may be granted authority to make decisions regarding financial matters, legal issues and real estate.

Powers of Attorney can be broad or defined in scope as to specific acts that may be undertaken by your Agent. They may also be created to carry out specific acts. People taking extended trips would benefit from granting Powers of Attorney to an Agent to handle their affairs, but also to limit the scope in which they may act. It is important to have a qualified Attorney draft these documents so that you are not granting too much authority to your Agent.

Non Durable Powers of Attorney take effect immediately and remain in effect until the Principal either revokes the powers or becomes mentally incapacitated or incompetent. Powers of Attorney may also be crafted to be Durable and/or Springing.

DURABLE POWERS OF ATTORNEY

Durable Powers of Attorney also go into effect immediately (unless they are Springing – see below) but, unlike non Durable Powers of Attorney, remain in effect even after the Principal becomes mentally incapacitated or incompetent.

Without the Durable Power of Attorney, probate proceedings will be initiated if you become incapacitated or incompetent to determine a personal representative for you. Having Durable Powers of Attorney in effect before your incapacitation or incompetency, will allow you to avoid probate and have the person(s) you name to be your Agent act according to the powers you grant to them.

SPRINGING POWERS – THE BAND-AID TO DURABLE POWERS OF ATTORNEY

Because Durable Powers sometimes need a band-aid, the question is begged, “What needs to be fixed”? Granting durable powers during someone’s lifetimes is a double edged sword in that the Agent has, immediately upon granting the powers, the power to exhaust all of your assets and create liabilities in your name. Your only recourse would be to sue them after the fact for breach of their fiduciary duty. It is therefore, very important to consult with an Attorney before purchasing your Powers of Attorney in a box from your local office supply store or other “professional”.

Here’s what the competent advisor does: many attorneys will either create Springing Powers (which necessitates additional language causing the powers to only “spring” into effect upon some conditions such as the confirmation by 2 or 3 doctors certifying that you are unable to care for yourself. Alternatively, attorneys will hold the powers in escrow in the attorney’s office so that they can only be delivered to your Agent upon incapacity or disability.

One safeguard some advisors recommend to avoid your Agent or Attorney in Fact making the wrong decisions is naming more than one attorney in fact, but this necessitates two signatures on every transaction.

Don’t leave your durable powers of attorney in a safe deposit box. If your attorney in fact has no access to the document, it will be useless. Either give them to your Agent if they are Springing or leave them in Escrow with your Attorney.

Important Lesson: Consult with an attorney to avoid costly probate procedures and to granting powers before necessary.

Recently, I have been inspired to write an article entitled “Important Lessons in Estate Planning”. This article will focus on some common risks associated with the loss of loved ones, friends and other family members who may not fit into either category. (See, even some lawyers have a sense of humor)

The following are the first 3 of many “Important Lessons”. Stay tuned for more to follow!

Important Lesson #1: Have A Will Or Some Other Directive. Without a will or another directive indicating to whom your assets and other property shall descend, your property faces the wrath of intestate succession. Intestate succession is regulated by law, in Florida by the Florida Probate Code and more specifically pursuant to Florida Statutes, Chapter 732

1. John lives in Florida and has a brother Tom.
2. John’s parents are both deceased, he has never been married, never had any children and has no other brothers and sisters.
3. John and Jane become close companions in 1983 and remain life partners, even living with each other until Johns death in 1998.
4. In 1990 John told Jane he wanted Jane to have all of his life possessions when he died (even his white 1969 Camaro SS with orange racing stripes that Tom loved so much).
5. John never made a will.
6. John died the next day.
7. Jane will need strong proof to invalidate the intestate succession in Florida that would have all of John’s property passing to his brother Tom.
8. Tom drives his new white 1969 Camaro SS with orange racing stripes every Sunday because Jane had no standing to object to succession of property other than the statement that John desired Jane to have everything.

Important Lesson #2: Keep A Will In A Safe Place Where It Will Not Be Destroyed Or Land Into The Wrong Hands. This law firm recommends keeping your original will and any other separate writings with us for safe keeping. A safe deposit boxes is not the best choice as it opens up the theory that additional people may have access. See example for “Important Lesson #3”

Important Lesson #3: Properly Destroy Old Wills. Simply drawing “X’s” on the paper or writing void may not be sufficient. Where 2 versions of a will exist and the second, but more recent version is destroyed or “lost” by a disgruntled family member or other party, proof (which is very had to offer) is necessary to validate the claim that the previous version is not the intention of the decedent. Here’s an example:

1. John made a will in 1980 leaving everything to his brother, Tom.
2. John places his will in his safe deposit box, believing it to be safe
3. In 1990 John made a second will, leaving everything to Jane, his life partner since 1983 (even his white 1969 Camaro SS with orange racing stripes that Tom loved so much), but never destroyed the first (it’s still in Tom’s safe).
4. On Sunday afternoon, John sealed the will, which revoked all previous wills, in an envelope and being too sick to physically put the will in his safety deposit box, asked Tom who was visiting John for the day, to put the new will in John’s safe deposit box.
5. Tom planned on putting the will in the safe deposit box first thing Monday morning.
6. John died Sunday night.
7. Tom opened up the envelope and became angry learning that Jane was to inherit everything (even the Camaro!). Tom lit a fire in his fireplace using the 2nd will as kindling.
8. Jane will need overwhelming proof that the 2nd will existed. She will most likely need to present eyewitness testimony testifying that they saw Tom light the will on fire
9. Tom drives his new white 1969 Camaro SS with orange racing stripes every Sunday because Jane had no standing to object to the old will other than the statement that John made a new will

How Can I avoid Probate?

The most common ways to avoid probate include: Joint Ownership. Revocable Living Trusts. ITF (aka Totten Trusts) and POD accounts.

Joint Ownership
Joint Ownership in the forms of either Joint Tenancy with Rights of Survivorship or Tenancy by the Entireties are forms that will avoid probate upon the death of all but the final owner. They are forms of ownership involving at least two owners, and may be used to hold in many types of assets, including vehicles, real estate, bank accounts, stocks, etc.

Assets held jointly with full rights of survivorship pass automatically by operation of law to the surviving joint owners and do not require probate. Probate however is not bypassed automatically upon the death of the final owner, probate might still be necessary if no other probate avoiding strategies are implemented.

Joint assets held as tenants in common do not avoid probate. Assets held as a tenants in common must be probated.

Assets held by a husband and wife as tenants by the entirety pass automatically by operation of law to the surviving spouse and do not require probate. As a matter of Asset Protection, Florida considers any marital property held as tenants by the entirety to be held as both spouses and by neither spouse individually. Therefore creditors of just one spouse cannot seize tenancy by the entirety property in Florida.

Please make sure with an attorney the status of your assets if they are not clearly labeled as “Joint Tenants with Rights of Survivorship” or as “Tenants by the Entirety”.

One disadvantage of jointly-held property is that probate is not avoided when the last joint owner dies. Probate will be required upon the death of the last surviving joint owner.

Another disadvantage of joint tenancy with rights of survivorship is that any joint owner can withdraw, sell or convey his or her interest in the asset without approval of the original owner. Creditors are able to seize interests in jointly held assets. Also, liability on certain assets (like vehicles) can be attributed to both owners even when one owner “creates” the liability. In Florida, the owner(s) and the driver of a vehicle are both liable. Be sure to speak with an attorney as to how your assets should be titled to avoid liability where it is not due.

A tenancy by the entirety might also be a bad idea for guardianship purposes. For example, a guardianship may be required where one owner of Tenancy by the Entirety property becomes incapacitated and in need of funds (medical bills for example). Remember that one owner of tenancy by the entirety property cannot convey either their interest or an entire interest in the tenancy by the entirety property by themselves.

Because of these disadvantages of joint ownership, many Florida residents have resorted to having an attorney create living trusts to avoid probate and to avoid the disadvantages of joint ownership.

Living Trusts
In Florida, you can make a living trust to avoid probate for virtually any asset you own and all of the assets you own — real estate, bank accounts, vehicles, collectibles like artwork or sports memorabilia and so on. Unlike a Testamentary Trusts (which only becomes effective upon death) you can still retain complete control over all of your assets while living as the trustee. You need to create a trust document (it’s similar to a will), naming a successor trustee to take over as trustee after your death. Then you must transfer ownership of your property to the trustee of the trust-which is still you. Once all that’s done, the property will be controlled by the terms of the trust. At your death, your successor trustee will be able to transfer it to the trust beneficiaries without probate court proceedings, but according to your trust document where, hopefully, you have outlined how the trustee should distribute and care for your assets.

Payable on Death (POD) and In Trust For (ITF or aka Totten Trusts) Accounts
In Florida, you can add a POD or ITF account designation to bank accounts such as savings accounts, mutual fund accounts, certificates of deposit. In both cases you are still the only one in control of all the money in the account — your beneficiary has no current rights to the money, and you can spend it all if you want. At your death, the beneficiary can claim the money directly from the bank, without probate court proceedings.

Some institutions only allow POD designations while other banks only allow ITF accounts.

How would you like to get rid of that pesky second mortgage (2nd Mortgage) on your house and still keep your house?

It’s quite possible, keep reading…

****  You could potentially, file Chapter 13 Bankruptcy to eliminate all your credit card debt, reduce your car payments, cure the arrears on the first mortgage, and now entirely remove your second mortgage!  What’s more is that if the value in your home bounces back in several years, the increase in value is an increase in your equity.

If you are like many people in today’s economy, you have been faced with the situation where you have a home that is worth far less than what you paid for and you have two mortgages.  Many times people like you were only able to purchase a home by putting twenty percent (20%) of the purchase price down as a down payment.  Banks allowed purchasers to facilitate this by taking out one mortgage for eighty percent (80%) and a second mortgage for twenty percent (20%), or an 80-20, of the home’s value to use as a down payment.

In order to achieve your goal of “stripping off” a second mortgage, certain situations must be in place.  First of all, you can’t achieve this by filing for Chapter 7 bankruptcy.  The only real options in Ch. 7 bankruptcy are to

• (1) keep the home and pay the 2nd mortgage (or reaffirm the debt) or
• (2) to surrender the home and the mortgage as well as any deficiency that may occur.

Filing for Chapter 13 bankruptcy, on the other hand, may allow you to strip down your second mortgage if the right conditions are present.  Your 2nd mortgage must be fully unsecured, as opposed to undersecured.  An unsecured mortgage is one in which the value of the home is completely covered by the balance of your first mortgage.  An undersecured 2nd mortgage is one in which only part of the mortgage is secured by the home because the first mortgage is in adequate as to cover the entire value of the home. Here’s an example of an 80-20 unsecured mortgage situation that is commonly seen:

• the purchase price of the home in 2003 was $365,000
• the home is now only valued at $250,000
• the first mortgage balance is $292,000
• the second mortgage is $73,000

However, here is an example of an undersecured 2nd mortgage:

• the purchase price of the home in 2003 was $365,000
• the home is now only valued at $250,000
• the first mortgage balance is $240,000
• the second mortgage is $150,000

In this case, the 2nd mortgage is undersecured because the second mortgage lender has a security interest of $10,000.  Filing for Chapter 13 bankruptcy will not help in this situation as the 2nd loan is, although very little, partially secured.

There are always exceptions: the situation is likely that the 1st mortgage may fully cover the value of the home, but upon appraisal the home value comes in above the balance of the first mortgage, thus encumbering the second mortgage.  In this situation, even where the 2nd mortgage is only secured by $1, a court may have to make the determination as to the valuation of the home.  Also, you must fulfill the payments through the duration of  your plan, which may be 5 years.

Further, even where the second mortgage is stripped off it may not completely vanish.  The stripped off second mortgage will be treated similarly to all other unsecured debts in Chapter 13, meaning a portion will be paid back.  The determination as to how much must be repaid will be derived from a calculation of the value of your unsecured debts compared to your disposable income.

A recent question recently inspired this post. I feel as though it is particularly relevant considering the coinciding and increasing rates of bankruptcy and divorce. Let’s not forget that finances is one of the leading causes of divorce in America.

Q: I want to get married but my fiancée is planning on filing for bankruptcy, how will this affect me and should he file before or after we get married?

A: If you are currently unmarried and your fiancée wants to file for bankruptcy, he or she should do it before you get married.
If currently you have no credit accounts in common with your fiancée, your credit report should not be affected by your fiancée’s bankruptcy.

However, after marriage you should always try to apply obligations, such as apartments or other large purchases in the name of the non-filing spouse. However, be careful to keep vehicles in the name of the predominant driver to limit your liability. Generally in Florida, liability for motor vehicle accidents rests with the driver and the owner. Therefore, married couples should only title vehicles in the name of the predominant driver of that vehicle so that liability cannot attach to marital assets or the individual assets of your spouse (there are additional asset protection techniques that can protect you – please call The Pikramenos Law Group to make sure you and your business are fully protected).

Also, when you apply for joint credit purchases such as a car or a mortgage, the lender will review both your credit reports. Your fiancée’s bankruptcy will be noted, and your purchasing power may be lessened due to his or her credit history. On all credit reports subsequent to the bankruptcy, you should always list the non-filer’s name and social security number before that of the spouse who filed for bankruptcy.

Remember that the credit score of anyone who files for bankruptcy will not be stellar and will often inhibit the acquisition of certain leases or purchases. As such, the filing spouse’s credit report should be exposed or otherwise utilized as little as possible until their credit can be restored. A chapter 7 bankruptcy will disappear in 10 years, a Ch. 13 in 7 years. Quality credit scores can be achieved sooner than this though.

If you have further questions about this matter or about other related topics, please do not hesitate to contact this office.

Recently added to the website is our new “Bankruptcy Intake Package” which is a form used to gather information to assess your situation for bankruptcy. This form will help to put your finances in perspective and will also help The Pikramenos Law Group in filing a petition for you and counseling you through the remainder of the process.

You can find the form here: Bankruptcy Intake Package. There is also a permanent link on the right under the “Contact” section as well as on the “Contact” Page.

2008 Was a Rough Year
According to a press release by the American Bankruptcy Institute on December 15, 2008, the first nine months (Jan.-Sept.) of 2008 realized a dramatic increase of Bankruptcies up 35% to 841,496, compared to 622,999 for the same time period in 2007. “The dramatic spike in both personal and business bankruptcies reflects an economy in distress, with worried consumers over-extended and unable to supply the spending typically needed to keep the national economy going,” said ABI Executive Director Samuel J. Gerdano.