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It’s tax time! If you’re a Chapter 13 debtor, you must do these 3 things!

It's tax time! If you're a Chapter 13 debtor, you must do these 3 things!

By Tracy L. Hirsch

If you’re currently in a Chapter 13 plan and live in the greater Louisville area, be sure to read this before turning over your tax refund money to your trustee.

As February quickly approaches, the season for submitting tax returns and receiving tax refunds is currently underway. While that’s usually a fairly straightforward process, it looks different for those who are in a Chapter 13 bankruptcy plan.

If you’re a debtor in the western district of Kentucky, and are paying back less than 100% of your debts to your unsecured creditors in your Chapter 13 plan, you are required to comply with ‘Local Rule 6070-1.’

Here’s what you need to know about Local Rule Compliance.

Local Rule 6070-1 is a set of requirements that are mandated annually in the Western District of Kentucky. If your Chapter 13 plan pays less than 100% to unsecured creditors, the requirements must be completed every year that you are in a Chapter 13 plan.

The requirements should be completed by April 15th every year, although there is a 30-day grace period if you didn’t get your taxes filed until April 15th (which means that all of the requirements must be completed by May 15th every year).

The requirements are as follows :

> Send copies of your state and federal tax returns to your trustee

> Send any state and federal tax refund money to your trustee (less certain exemptions)

> Fill out and send your annual budget to your trustee

Failure to comply with the above requirements can results in a dismissal of your bankruptcy case. You may be wondering if there are any exceptions to turning over your tax refund money, and there are, but they have to be done through the proper channels.

It’s imperative to follow Local Rule 6070-1 in order to avoid dismissal of your case.

If you’ve had a recent medical emergency or lost your job or had hours cut, there is a possibility of being allowed to use your tax refunds for medical bills and living expenses under those circumstances.

However, you must speak to your attorney first. Your attorney has to file a motion with the Court to get permission for those extenuating circumstances, so you have to speak to your bankruptcy attorney AND get permission from the Court before you spend any of your tax refunds.

If you’re in this position, this is a good time to re-evaluate your case with your attorney, which leads us to an important question that you may have:

Is a Chapter 13 plan still the best option for me, or should I consider converting to a Chapter 7?

This is a great question, and one that your bankruptcy lawyer should be able to answer. There are actually many legitimate reasons for converting from a Chapter 13 bankruptcy plan to a Chapter 7, such as:

> A drop in income due to job loss or a reduction in work hours

> Getting a divorce

> Deciding to give up your real estate (or possibly do a modification)

> Needing to replace your car due to the fact that it was totaled or is beyond repair due to excessive mileage

> Other factors that make you eligible for a Chapter 7 discharge

It’s very important that during the course of your Chapter 13 bankruptcy plan, you immediately communicate any changes to your attorney — whether it be a change in your:

> income (an increase or decrease)

> address

> marital status

> health status

> job status (total loss of job or change of employers)

> anything related to your mortgage, car, and other assets

You will risk having your case dismissed if your attorney is unaware of any of those changes, so it’s important that you notify him or her immediately in order to avoid any issues in your case.

Are you currently in a Chapter 13 plan, and want to know if you qualify to convert to a Chapter 7?

If so, speak to your bankruptcy attorney so that they can help you. Reassessing your case based on changes in your life circumstances can help your attorney help YOU (and that’s what matters most)!

Have you been considering filing for a personal bankruptcy, but aren’t sure which Chapter is right for you? I offer free phone consultations to help Louisville residents weigh their financial options when it comes to unpaid debt.

You can text or call me at (502) 435-2593 to find out how you can start on a path to a debt-free life!

All the best,

Tracy L. Hirsch

Need a free consultation? Text or call me at (502) 435-2593!

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Meet Tracy Hirsch — Louisville’s Compassionate Bankruptcy Lawyer

Attorney spotlight

Louisville’s Tops Magazine features Attorney Tracy Hirsch.

Read a copy of the magazine article (below the photo) to find out how Tracy’s compassionate, client-centered approach stands out from the rest!

Hirsch Law PLLC

“It’s very fulfilling to practice in an area of law that helps individuals feel hopeful about their financial future,” says Attorney Tracy Hirsch of Hirsch Law. Tracy has focused on personal bankruptcy for the past 20 years.

“One of the most common issues that people stress about is money. Financial issues can affect anyone, and people need to know it’s okay to reach out for help. Most individuals think that bankruptcy will ruin their lives, when it can actually give them a debt-free future. It can also protect their car, their home, and their paychecks.”

Tracy offers a different approach than other attorneys when it comes to the bankruptcy filing process. She is directly available to her clients, and they can call and text her on her cell phone 7 days a week.

“When I graduated from law school, I started my career at a ‘big box’ bankruptcy firm,” she says. “In that environment, the attorneys didn’t talk to their clients very much, and they had their assistants do most of the work. It felt very impersonal. I decided to start my own practice so that I could help my clients directly. I want to listen to their stories, and walk them through the entire bankruptcy process with dignity and respect.”

Tracy meets with clients at their very first appointment, and is with them every step of the way. “I want to help my clients feel empowered when they file for bankruptcy,” she says, “because that’s what my clients deserve — an attorney who cares.”

It's never too late to start a debt-free life.

Ready to discuss your options? Let's chat!

(502) 435-2593

Need help immediately? Tap on the phone number to call!

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The Top 5 Reasons Why You Shouldn’t Try to File a Bankruptcy Petition On Your Own

The Top 5 Reasons Why You Shouldn't Try to File a Bankruptcy Petition On Your Own

By Tracy L. Hirsch

Here’s why bankruptcy attorneys are a vital part of the filing process.

It’s stressful enough to be in debt, and if you’re currently in that situation, you may be thinking that the last thing you want to do is put money toward attorney fees if you decide to file for bankruptcy. While individuals in Louisville, Kentucky are allowed to file on their own, it’s important to understand the risks involved with that.

Filing for bankruptcy is a complex process with a long list of rules that needs to be abided by in order to file successfully. Here are five reasons that show how filing on your own could lead to disaster.

1.) You might file for bankruptcy unnecessarily. Believe it or not, there have been instances when an individual called me for a consultation, and when they told me about their financial situation, I told them that they didn’t need to file for bankruptcy.

Sometimes it’s as simple as settling one solitary debt with a credit card company, and sometimes, the total amount of debt is small enough, that the interest they pay on it will be much less than the cost of filing for bankruptcy.

If the debt is medical-related, an individual may be able to set up a payment plan directly with their doctor’s office or hospital. Regardless, there are a number of scenarios where a bankruptcy might not be the best fit.

It’s important to consult with an experienced bankruptcy attorney to determine whether or not bankruptcy will actually help you in your specific situation.

Hiring a bankruptcy attorney saves you time and money in the long run, and eliminates unnecessary stress.

2.) You might choose the wrong chapter of bankruptcy. Individuals have two options when it comes to filing for bankruptcy — Chapter 7 and Chapter 13. A Chapter 7 wipes out the majority of your debt without any repayment, and a Chapter 13 is a reorganization of debts where you set up a repayment plan to pay back some or all of your debts.

If you have assets, such as a home or car, you’ll want to discuss your options with an attorney to choose the path that will give you the most protection in terms of keeping those assets. In order to determine which is best for your situation, you’ll need to fill out a ‘Chapter 7 Means Test Calculation’ form, which leads to the next point.

3.) You might fill out the Means Test incorrectly. This form helps calculate your debt payments, income, monthly living expenses, and more in order to make some very important decisions in regards to filing a Chapter 7 versus a Chapter 13.

While you may be tempted to fill this out yourself, it’s a lot more complicated than it seems. Underestimating income and even leaving out a source of income such as rental income, alimony, or even year-end bonuses, could result in an objection to your bankruptcy or an allegation of fraud.

4.) If you need to file a Chapter 13, you might miss a deadline that you didn’t know about, and your case could get dismissed. Did you know that you have to complete credit counseling before you file for bankruptcy, and then have to complete a financial management course after you file?

Did you know that you will have a court hearing after you file, which you must attend in order to get your bankruptcy plan confirmed?

Did you know that if you file a Chapter 13, each of your creditors needs to receive a copy of your Chapter 13 repayment plan? In addition, did you know that you are required to review and allow each and every claim filed by your creditors by a specific date?

Also, are you aware that you will have to file your own motions if you need to amend your plan, suspend payments, or borrow money? These are just a few of the many things that you’ll need to know how to do in order to avoid having your case dismissed.

These are complex procedures, and I’ve had multiple individuals come to me after filing on their own because they realized that they were in over their heads.

There are dozens of other rules, regulations, and deadlines that need to be met, which is why it’s a worthwhile investment to hire a Louisville bankruptcy lawyer who can ensure that you will complete everything on the checklist.

You might be thinking that it’s not worthwhile to pay attorney fees, but you’ll most likely break even due to the fact that an experienced bankruptcy attorney can help you negotiate interest rates and lower your payments on loans in both Chapter 7 and Chapter 13 cases.

Additionally, if your income is tight, an attorney can also help you set up a repayment plan where you only have to pay back a portion of your debt instead of all of it. In the end, you could end up saving tens of thousands of dollars by investing a comparatively small amount of attorney fees upfront!

5.) You might inadvertently do something illegal. Did you know that if you file for bankruptcy, then inherit money or win the lottery, you may have to hand some of the money over to your trustee to pay your creditors?

Failing to disclose any possible upcoming inheritance funds, insurance reimbursements, and lawsuit payouts could not only cause you to lose out on that money, but it could also land you in hot water if it gives the appearance that you were intentionally trying to hide that information from the trustee (it’s called an “assumption of fraud”).

There might also be other ways in which you inadvertently create an assumption of fraud.

For example, if you transfer money to family members, max out your credit cards, or even pay off a loan that you borrowed from a friend right before you file for bankruptcy, that will be viewed by the trustee as preferential treatment of creditors and/or an attempt to purposely try to cheat your creditors.

In order to avoid doing something that isn’t “by the book,” it’s important to have an experienced attorney in your corner who can help you.

There are multiple other reasons that highlight the importance of hiring a bankruptcy attorney, but these are some of the common issues that arise when an individual tries to file on their own.

Unfortunately, when a debtor makes a mistake, it can be costly, as they usually end up having to hire an attorney anyway, and then on top of that, they have to pay an additional hourly rate in order for legal counsel to fix the mistakes that were made.

If you’ve been considering bankruptcy, but aren’t sure if it’s right for you, I offer free phone consultations to help you determine the best path to take.

You can text me or call me directly on my cell phone at (502) 435-2593 to set up your free consultation. If you decide to file, we can do the filing appointment over the phone as well.

No matter what your situation is, I’m not here to judge you or shame you. I work hard to break down the stigma surrounding bankruptcy, and offer a compassionate approach to your sensitive circumstances.

I’m just a text or phone call away!

 

All the best,

Tracy L. Hirsch

Attorney-at-Law

Need a free consultation? Text or call me at (502) 435-2593!