I apologize in advance to any school administrators reading this blog who know far more than I do about why America teaches what it teaches in our schools. I can only comment on my personal experience, which was taking pre-calculus and calculus in high school and struggling through every minute of it. Then I took the one required math course at Indiana University during my undergrad and struggled through that one too. And what I can say now is that in my opinion most people would be better off in life if they were taught negotiation instead of calculus in school.
I know there are some people whose jobs require that they know a lot about math. If you are an engineer, a physicist or some other type of math nerd you are going to need those skills in life. But lets face it, if you are going to be an engineer you are going to have to take a lot of math courses in college. This makes sense. What does not make sense to me is requiring the english major who wants to teach 6th grade language arts suffer through calculus level math in high school and college. If the english major was interested in math he or she would have majored in math. And I won't even start about how useless calculus is in everyday life to most of us, because I think we all know that much.
Wouldn't it make sense if schools spent time on negotiation instead of math for those students not planning on going into a math-intensive field? It seems to me that learning how to negotiate is its own form of useful problem solving, which is similar to math, but a whole lot more useful to the general public. Think about how many people hate to buy a car due to the negotiating that goes on in order to get the best deal. Since we are all likely to buy several cars in our lifetime it seems like this is a useful skill to be teaching children in our schools.
Many of the clients I meet with at Halcomb Singler with debt problems are frustrated that the interest rates on their credit cards have risen or that they aren't making enough money at work. These frustrations lead to financial difficulty. Why not equip people through our schools with the skills necessary to be aware that one can call up a credit card company and negotiate the rate or walk into his or her boss' office and lay out the reasons that a raise is appropriate. Isn't the skill of negotiating down medical bills after a car accident more useful than calculus?
What I have observed with many of my clients at Halcomb Singler is that they are afraid to negotiate. This may be out of the fear of someone telling them "no," because they don't know if it appropriate to negotiate in a certain situation or because they don't know what to ask for in negotiations. In my opinion just about everything is negotiable. This is especially true for those who are behind on their bills and attempting to avoid bankruptcy. If you are able to pay $50.00 on a $150.00 bill why not call and see if the creditor will accept $50.00? This does not take any specialized legal knowledge. It simply takes the guts to pick up the phone and ask. The worst thing that can happen is that they say "no."
I think it is a great idea for people to try to negotiate down their debts to avoid filing for bankruptcy. However, those using this method should be aware that negotiations may have some negative tax consequences, so it is important to check with your accountant or attorney about the potential tax consequences of your negotiations prior to doing so. Now that I have potentially offended school administrators I ask any of you who are teachers, school administrators or parents of children in school whether we are preparing our students for the negotiation of life? If we are not I believe we are doing our children a disservice and we should start asking why such an important skill is overlooked by education.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Monday, February 27, 2012
Sunday, February 19, 2012
The Ostrich Method is an Epic Fail for Finances and Bankruptcy
All of us are subject to what I call the "ostrich method"from time to time in our lives. What I mean is that we all have something that we just don't like to think about or talk about. For me, it's when anything happens to my car. For those of you who read this blog you have probably already figured out that I am not obsessed with cars, so it's not that I am the one who parks in the furthest spot from the grocery store to make sure that no one hits it while I am shopping. Quite the opposite. I try to spend as little money as possible on cars. When my car requires a repair it makes me crazy. I attempt to ignore the problem, complain to the person at the repair shop about how expensive the repair is, etc. The bottom line is I try to avoid and/or ignore car problems, which is what I call the ostrich method.
At Halcomb Singler we meet with people using the ostrich method on an almost daily basis, and it gives us great job to help people stop avoiding their problems and start figuring out how to solve them. Whether a lawsuit has been filed against someone, mounting debts are causing lots of stress or medical bills are mounting after a car accident that wasn't that person's fault. No one wants to deal with getting sued over a bill or even not being able to pay a bill. I get that. But I can also say with certainty that problems don't solve themselves and unfortunately they typically don't go away if you ignore them long enough either. Actually, they often get worse. That unpaid bill can turn into a lawsuit or that lawsuit can turn into a garnishment, etc.
When I meet with people considering bankruptcy I let them tell me the story of how they came to need to consider bankruptcy. In my experience people want to tell me what happened.....their story. And while I would in no way ask someone to tell me that story if they were not comfortable in doing so, it appears to me through my experience that most people like to tell me what they have been through and I am happy to listen. And once they have told me that story we start talking about solving the problems. I see that appointment as a way to figure out how to move forward. How to stop using the ostrich method that we all know will not work and how to stop burying one's head in the sand and find solutions. As with every problem that we face in life, it is much harder to think about the problem than it is to execute a plan to solve it. Fixing a financial problems allows people to enjoy their lives and think about something other than financial issues for a change.
I meet with those who live in the Indianapolis area as well as Noblesville, Fishers, Zionsville, Carmel, Tipton, Kokomo, Crawfordsville and all of the cities in between. If you would like to schedule a free initial consultation to discuss bankruptcy options call Halcomb Singler at 317-575-8222 or click here and we will be in touch to schedule an appointment.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
At Halcomb Singler we meet with people using the ostrich method on an almost daily basis, and it gives us great job to help people stop avoiding their problems and start figuring out how to solve them. Whether a lawsuit has been filed against someone, mounting debts are causing lots of stress or medical bills are mounting after a car accident that wasn't that person's fault. No one wants to deal with getting sued over a bill or even not being able to pay a bill. I get that. But I can also say with certainty that problems don't solve themselves and unfortunately they typically don't go away if you ignore them long enough either. Actually, they often get worse. That unpaid bill can turn into a lawsuit or that lawsuit can turn into a garnishment, etc.
When I meet with people considering bankruptcy I let them tell me the story of how they came to need to consider bankruptcy. In my experience people want to tell me what happened.....their story. And while I would in no way ask someone to tell me that story if they were not comfortable in doing so, it appears to me through my experience that most people like to tell me what they have been through and I am happy to listen. And once they have told me that story we start talking about solving the problems. I see that appointment as a way to figure out how to move forward. How to stop using the ostrich method that we all know will not work and how to stop burying one's head in the sand and find solutions. As with every problem that we face in life, it is much harder to think about the problem than it is to execute a plan to solve it. Fixing a financial problems allows people to enjoy their lives and think about something other than financial issues for a change.
I meet with those who live in the Indianapolis area as well as Noblesville, Fishers, Zionsville, Carmel, Tipton, Kokomo, Crawfordsville and all of the cities in between. If you would like to schedule a free initial consultation to discuss bankruptcy options call Halcomb Singler at 317-575-8222 or click here and we will be in touch to schedule an appointment.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Tuesday, February 14, 2012
Debt Can Suck the Love From Valentine's Day
Valentine's Day might suck if you are in debt, but probably not for the reason(s) you are thinking right now. It's not because you might not be able to afford the deluxe assorted chocolates or a weekend getaway for your Valentine. It's not even because you and your Valentine might decide to skip the "Hallmark Holiday" altogether so that you can focus on paying off your debt. The reason that debt will make your Valentine's Day suck is that debt is a huge factor in stress. At Halcomb Singler I meet with couples every day who are stressed beyond belief about debt and considering bankruptcy.
Some of the couples I meet with are just stressed out from debt, some are stressed out and blaming each other for the debt (sometimes they are open with the blame and sometimes you can just tell), and sometimes they are going through divorce but want to file bankruptcy prior to finalizing their divorce. But one thing that they have in common is that debt has negatively effected or sometimes even ended their relationship. Sometimes I feel more like a marriage counselor than a bankruptcy attorney.
Think about it. If you are not living paycheck to pay check and have 9 months of emergency savings in the bank it probably wouldn't really annoy you if your spouse went out and bought 3 dozen long-stemmed roses for Valentine's Day. In fact, you would probably love it. However, if your spouse goes out and spends $150.00 on 3 dozen roses and you have been stressing out all day about how you are going to make the house payment this month, you are probably going to get mad and see if he can return the roses to get that money back. Even a gesture that was meant to show his love can be the start of a fight when finances are tight. The fact is, that having problems with money just gives couples one more thing to fight about and we all know with the rate of divorce in this county that the last thing married couples need is another reason to fight.
And when couples are drowning in debt they are wrestling with much bigger decisions than Valentine's Day gifts. They are forced to make decisions regarding whether to try to sell a house to get out from under the payment, whether a stay at home mom should go back to work to provide income for the family, whether the kids can participate in traveling sports teams, etc. These are not insignificant decisions and those whom have issues with debt for whatever reason have less financial resources and are therefore required to make tough decisions.
As the old saying goes, "Money can't buy you happiness, but it does let you pick your problems." To some extent I do agree with this saying. Having a lot of debt simply gives couples less options to solve their own problems and the resulting problems put more stress on them and their relationship.
So on this Valentine's Day I urge all of those who are suffering under the weight of significant debt issues to take the time to focus on the relationship. Focus on communication aimed at solutions instead of placing blame and keep in mind that home made presents are often much better than anything that can be bought at a store. Happy Valentine's Day All!
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Some of the couples I meet with are just stressed out from debt, some are stressed out and blaming each other for the debt (sometimes they are open with the blame and sometimes you can just tell), and sometimes they are going through divorce but want to file bankruptcy prior to finalizing their divorce. But one thing that they have in common is that debt has negatively effected or sometimes even ended their relationship. Sometimes I feel more like a marriage counselor than a bankruptcy attorney.
Think about it. If you are not living paycheck to pay check and have 9 months of emergency savings in the bank it probably wouldn't really annoy you if your spouse went out and bought 3 dozen long-stemmed roses for Valentine's Day. In fact, you would probably love it. However, if your spouse goes out and spends $150.00 on 3 dozen roses and you have been stressing out all day about how you are going to make the house payment this month, you are probably going to get mad and see if he can return the roses to get that money back. Even a gesture that was meant to show his love can be the start of a fight when finances are tight. The fact is, that having problems with money just gives couples one more thing to fight about and we all know with the rate of divorce in this county that the last thing married couples need is another reason to fight.
And when couples are drowning in debt they are wrestling with much bigger decisions than Valentine's Day gifts. They are forced to make decisions regarding whether to try to sell a house to get out from under the payment, whether a stay at home mom should go back to work to provide income for the family, whether the kids can participate in traveling sports teams, etc. These are not insignificant decisions and those whom have issues with debt for whatever reason have less financial resources and are therefore required to make tough decisions.
As the old saying goes, "Money can't buy you happiness, but it does let you pick your problems." To some extent I do agree with this saying. Having a lot of debt simply gives couples less options to solve their own problems and the resulting problems put more stress on them and their relationship.
So on this Valentine's Day I urge all of those who are suffering under the weight of significant debt issues to take the time to focus on the relationship. Focus on communication aimed at solutions instead of placing blame and keep in mind that home made presents are often much better than anything that can be bought at a store. Happy Valentine's Day All!
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Tuesday, February 7, 2012
Americans' "Normal" Spending Habits Stink
Today's post is a more about what I perceive to be "normal" in American society with respect to finance and less about the specifics of my bankruptcy practice at Halcomb Singler, LLP. One conclusion that I have drawn after working with bankruptcy clients over the years is that Americans have odd priorities when it comes to money. Notice that I am not saying people who struggle financially or people who need to file bankruptcy have odd priorities.....I think these examples equate to Americans. You may or may not agree with me and feel free to leave a comment to let me know.
In order to illustrate how I believe Americans have odd priorities when it comes to money I have compiled a list of examples:
1. Gadgets: Americans LOVE gadgets. I am talking about cell phones, navigation systems, ipods, ipads, game systems and any other little electronic thing with buttons. Americans must have the latest and greatest when it comes to gadgets. I cannot for the life of me figure out why. I do not have an iphone, ipad, ipod or really any electronic that would be considered cutting edge technology or even cool for that matter. I am surviving. But people look at me like I am crazy when I tell them I have never owned an ipod. Americans seem to value gadgets so highly that they will find the money to buy them. I have met with many, many people struggling to make a house payment who had an iphone sitting next to them on the table. Are these electronics so important that we should value them over something as fundamental to our lives as shelter? Why not scale back a bit on the gadgets and realize that we can live with less?
2. Gigantic Houses: Gone house-hunting lately? It seems to me that Americans value square-footage over the quality of their home. Think about all of the people you know who live in a home so big that they have at least 2 rooms without any furniture that they never use. At the same time, their giant home is likely within spitting distance of their furthest neighbor and sitting on a postage stamp size yard. Finally, the house is finished with low-grade everything because the builder put all of the money you spent on the house into making it 5,000 square feet. Once the gigantic house is purchased it costs a small fortune to heat, cool, paint, remodel, and maintain.
3. Eating Out: Okay. If you have read more than 2 of my blog postings you know that I cannot figure out why people spend so much money eating out. I am not saying that it is never okay to eat out. But most Americans will still eat out if they don't have health insurance, life insurance, or estate planning documents. This is an example of how I perceive that our society values instant gratification over long-term stability. I am not saying that most Americans would rather order a pizza than have their loved ones taken care of should they unexpectedly pass away. What I am saying is that our society doesn't stop to think that if we didn't eat out, stopped smoking cigarettes, stopped buying a starbucks every day (or insert your other fairly useless spending here) that they could afford the health insurance premium that they believed to be unaffordable, etc.
4. New Cars: Every American knows that when you buy a new car that once you drive it off the lot you owe more than the car is worth unless you put a massive amount of money down or paid for the car outright. I am not saying that no one in this country should ever buy a new car....but I am saying that if you are going to buy a new car you better be the one who drives off of the lot owing less than the car is worth even after that massive depreciation hit. Americans love new cars so much that they will spend more money on payments for 2 cars than they do for their gigantic house each month. Better yet, as soon as the big payment on that car ends after 60, or even worse, 72 months they will often go out and buy another brand new car to replace it. It's almost like Americans don't sleep well at night without a car payment. Why not buy a slightly used car and hopefully be able to pay cash due to the savings over a new vehicle? Or if you cannot pay cash fiance over 36 months instead of the dreaded 72?
5. Valuing Stuff over Savings: This illustration goes back to what I believe to be true about Americans and instant gratification. We all want what we want right now and therefore many Americans are not good savers. Americans add up their monthly income and subtract their monthly expenses and so long as the final number isn't negative we think everything is just peachy. However, when your budget doesn't take saving money into account or putting money away for retirement it should set off some red flags. I know many people approaching 50 who have yet to save for retirement and others who saved until they were 35 and then found a reason to stop saving for retirement. Americans seem to value buying stuff now over being able to take care of ourselves in our elderly years. It seems Americans believe that they can survive on social security when the time comes. However, if you have watched the news more than once in the past year you know that there is no guarantee that social security will even be around in a few years. Why not put some money away now to give yourself peace of mind that even if the government fails in fixing social security that you have provided for your future self?
I am not trying to insult anyone who fits into the examples above, as I see these spending habits as driven into the minds of American society from birth. I believe that Americans are subconsciously trained during their lives to spend in the ways mentioned above and that it is really difficult to break out of the mold of spending the way that you have been taught your entire life. But my hope is that with the hard times that have been facing America since 2008 that Americans will question these habits and change them. What spending or financial habits do you believe Americans hold? Have you been able to break out of the mold? Please share your story in the comments.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
In order to illustrate how I believe Americans have odd priorities when it comes to money I have compiled a list of examples:
1. Gadgets: Americans LOVE gadgets. I am talking about cell phones, navigation systems, ipods, ipads, game systems and any other little electronic thing with buttons. Americans must have the latest and greatest when it comes to gadgets. I cannot for the life of me figure out why. I do not have an iphone, ipad, ipod or really any electronic that would be considered cutting edge technology or even cool for that matter. I am surviving. But people look at me like I am crazy when I tell them I have never owned an ipod. Americans seem to value gadgets so highly that they will find the money to buy them. I have met with many, many people struggling to make a house payment who had an iphone sitting next to them on the table. Are these electronics so important that we should value them over something as fundamental to our lives as shelter? Why not scale back a bit on the gadgets and realize that we can live with less?
2. Gigantic Houses: Gone house-hunting lately? It seems to me that Americans value square-footage over the quality of their home. Think about all of the people you know who live in a home so big that they have at least 2 rooms without any furniture that they never use. At the same time, their giant home is likely within spitting distance of their furthest neighbor and sitting on a postage stamp size yard. Finally, the house is finished with low-grade everything because the builder put all of the money you spent on the house into making it 5,000 square feet. Once the gigantic house is purchased it costs a small fortune to heat, cool, paint, remodel, and maintain.
3. Eating Out: Okay. If you have read more than 2 of my blog postings you know that I cannot figure out why people spend so much money eating out. I am not saying that it is never okay to eat out. But most Americans will still eat out if they don't have health insurance, life insurance, or estate planning documents. This is an example of how I perceive that our society values instant gratification over long-term stability. I am not saying that most Americans would rather order a pizza than have their loved ones taken care of should they unexpectedly pass away. What I am saying is that our society doesn't stop to think that if we didn't eat out, stopped smoking cigarettes, stopped buying a starbucks every day (or insert your other fairly useless spending here) that they could afford the health insurance premium that they believed to be unaffordable, etc.
4. New Cars: Every American knows that when you buy a new car that once you drive it off the lot you owe more than the car is worth unless you put a massive amount of money down or paid for the car outright. I am not saying that no one in this country should ever buy a new car....but I am saying that if you are going to buy a new car you better be the one who drives off of the lot owing less than the car is worth even after that massive depreciation hit. Americans love new cars so much that they will spend more money on payments for 2 cars than they do for their gigantic house each month. Better yet, as soon as the big payment on that car ends after 60, or even worse, 72 months they will often go out and buy another brand new car to replace it. It's almost like Americans don't sleep well at night without a car payment. Why not buy a slightly used car and hopefully be able to pay cash due to the savings over a new vehicle? Or if you cannot pay cash fiance over 36 months instead of the dreaded 72?
5. Valuing Stuff over Savings: This illustration goes back to what I believe to be true about Americans and instant gratification. We all want what we want right now and therefore many Americans are not good savers. Americans add up their monthly income and subtract their monthly expenses and so long as the final number isn't negative we think everything is just peachy. However, when your budget doesn't take saving money into account or putting money away for retirement it should set off some red flags. I know many people approaching 50 who have yet to save for retirement and others who saved until they were 35 and then found a reason to stop saving for retirement. Americans seem to value buying stuff now over being able to take care of ourselves in our elderly years. It seems Americans believe that they can survive on social security when the time comes. However, if you have watched the news more than once in the past year you know that there is no guarantee that social security will even be around in a few years. Why not put some money away now to give yourself peace of mind that even if the government fails in fixing social security that you have provided for your future self?
I am not trying to insult anyone who fits into the examples above, as I see these spending habits as driven into the minds of American society from birth. I believe that Americans are subconsciously trained during their lives to spend in the ways mentioned above and that it is really difficult to break out of the mold of spending the way that you have been taught your entire life. But my hope is that with the hard times that have been facing America since 2008 that Americans will question these habits and change them. What spending or financial habits do you believe Americans hold? Have you been able to break out of the mold? Please share your story in the comments.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
Friday, February 3, 2012
Indiana Bankruptcy and Tax Refunds with Non-Filing Spouse
One of the most popular blog postings I have written is about what happens to income tax refunds when a Chapter 7 or Chapter 13 bankruptcy is filed in the Southern District of Indiana. That blog is the most read of any blog posting ever written for Indiana Bankruptcy Blog. As a result, I have been thinking about what else I could explain about income tax refunds and bankruptcy. One of the issues I have not discussed which comes up fairly often is how is an income tax refund treated when only one spouse files.
In a recent ruling of the case In re Anthony Peter Page Judge Coachys discussed this issue. In the Page case, the debtor filed a Chapter 7 bankruptcy on July 19, 2010. At the time of the filing the debtor was married, but his wife did not file bankruptcy. Mr. Page was the primary breadwinner and his non-filing wife was a homemaker who took care of the couple's two children. The couple's 2010 tax return resulted in a $22,626.00 federal and $4,194.00 state refund. Yeah....almost $27,000.00 total. The trustee in the Page case argued that since the debtor was the primary breadwinner that the refund was attributable mostly to the debtor's income and that the debtor should be required to turn over the majority of the return to the trustee for distribution to creditors. Specifically, the trustee argued that the non-filing spouse should be allowed to keep 200/365th of the income tax refund (pro-rated to the date of filing).
The debtor, on the other hand, argued that the "50/50 rule" should be applied. This rule states that just as a non-filing spouse would be liable for income tax liability on joint tax filings, he or she should also be able to share in the good fortune of a large income tax refund and that it should be presumed that an income tax refund should be split 50/50 between the spouses. Keep in mind that this ruling does not apply in every state, only the Southern District of Indiana, where folks living in Indianapolis, Carmel, Noblesville, Kokomo, Anderson, Zionsville, and the other surrounding areas of Indianapolis file their bankruptcy petitions.
The judge ruled that there is a 50/50 split presumption on joint income tax refunds and the debtor was ordered to turn over half of the federal and state income tax refund pro-rated to include January 1, 2010, through the date of filing. Therefore, the debtor and his wife were able to keep a much more significant portion of the income tax refund than if the judge had agreed with the trustee.
Confused yet? The bottom line is that this ruling can be harmful or beneficial to your non-filing spouse if you file bankruptcy. If you are the majority breadwinner, it is a great rule. However, if the filing spouse makes a minimal amount of money it will result in more than the debtors "fair share" being turned over to creditors. The tax refund issue is a bit complex and usually much easier to explain in person, but an experienced bankruptcy attorney can tell you when the best time to file your petition would be to maximize your ability to keep your refund.
To schedule a free initial bankruptcy consultation at Halcomb Singler call our office at 317-575-8222 or click here to fill out our information sheet and we will call you to schedule an appointment. We will spend about an hour reviewing your finances, income, assets, debts and expenses and answer your questions about bankruptcy. Until then, Happy Tax Season :)
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
In a recent ruling of the case In re Anthony Peter Page Judge Coachys discussed this issue. In the Page case, the debtor filed a Chapter 7 bankruptcy on July 19, 2010. At the time of the filing the debtor was married, but his wife did not file bankruptcy. Mr. Page was the primary breadwinner and his non-filing wife was a homemaker who took care of the couple's two children. The couple's 2010 tax return resulted in a $22,626.00 federal and $4,194.00 state refund. Yeah....almost $27,000.00 total. The trustee in the Page case argued that since the debtor was the primary breadwinner that the refund was attributable mostly to the debtor's income and that the debtor should be required to turn over the majority of the return to the trustee for distribution to creditors. Specifically, the trustee argued that the non-filing spouse should be allowed to keep 200/365th of the income tax refund (pro-rated to the date of filing).
The debtor, on the other hand, argued that the "50/50 rule" should be applied. This rule states that just as a non-filing spouse would be liable for income tax liability on joint tax filings, he or she should also be able to share in the good fortune of a large income tax refund and that it should be presumed that an income tax refund should be split 50/50 between the spouses. Keep in mind that this ruling does not apply in every state, only the Southern District of Indiana, where folks living in Indianapolis, Carmel, Noblesville, Kokomo, Anderson, Zionsville, and the other surrounding areas of Indianapolis file their bankruptcy petitions.
The judge ruled that there is a 50/50 split presumption on joint income tax refunds and the debtor was ordered to turn over half of the federal and state income tax refund pro-rated to include January 1, 2010, through the date of filing. Therefore, the debtor and his wife were able to keep a much more significant portion of the income tax refund than if the judge had agreed with the trustee.
Confused yet? The bottom line is that this ruling can be harmful or beneficial to your non-filing spouse if you file bankruptcy. If you are the majority breadwinner, it is a great rule. However, if the filing spouse makes a minimal amount of money it will result in more than the debtors "fair share" being turned over to creditors. The tax refund issue is a bit complex and usually much easier to explain in person, but an experienced bankruptcy attorney can tell you when the best time to file your petition would be to maximize your ability to keep your refund.
To schedule a free initial bankruptcy consultation at Halcomb Singler call our office at 317-575-8222 or click here to fill out our information sheet and we will call you to schedule an appointment. We will spend about an hour reviewing your finances, income, assets, debts and expenses and answer your questions about bankruptcy. Until then, Happy Tax Season :)
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
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