Financial News & Information.

If you have a tax lien on your credit report, you should take immediate action to remove it. This is a very bad mark and will lower your score considerably.

The first step is to request validation from the bureaus. This is done through sending a dispute letter directly to each.

It is not uncommon for wrong information to be reported on your report. This is because mistakes do happen and it is as easy as dialing a wrong phone number.

Once your letter is received an investigation will occur. The bureaus will contact the government and ask them to verify your debt. If it is verified you are going to have to make payment to remove it from your report.

It may be in your best interest to talk with a tax negotiator to work out a settlement with the government. You can often pay a reduced amount, and once paid you can remove it from your report.

A tax lien can be collected upon for 10 years, and will stay on your report for 7 years once it is paid. If not paid then you can be reporting a tax lien on your report for a considerable amount of time.

Upon payment you should wait around 3 months and then send another dispute letter to the bureaus asking for validation. We have learned that once the government has received payment they often will ignore a bureaus request for validation.

This means your tax lien will not be verified and the bureau will erase it from your report. However if this mark is incorrect to start with you can demand proof that the account is yours, and send any documentation you have to prove your side.

Repayment

The state and federal government are willing to negotiate and settle on a reduced payment. It is called an OIC (offer in compromise), this just means that the government is accepting partial payment.

The government will look at; your ability to repay, your income, your assets, and what they expect to recover. Additionally it will help your chances of acceptance, if you attach a letter showing financial hardship.

It may be in your interest to hire a tax negotiator to help with this. However you do not have to just live with this mark on your report.

In sum, take action today and get this lien off your report. It will be hard to be approved for credit with decent terms as long as this mark is on your credit. Don’t just wait seven years.

The New Bankruptcy Laws Make it Harder to File Chapter 7 Bankruptcy

The most recent changes to bankruptcy laws might cause it to be more challenging for you to file bankruptcy. If you’re in a higher income bracket you’ll no longer be allowed to utilize Chapter 7 bankruptcy. Instead, you’ll have to file under Chapter 13 bankruptcy and pay off at least a few of your creditors. If you would like to file bankkruptcy, you must take part in credit guidance prior to filing. You’re also required to go to additional counseling in the area of budgeting and debt management. The extra counseling is a prerequisite to acquire a release of your debts. And, since the law imposes new demands on attorneys, you might have a tougher time getting a attorney to accept your bankruptcy case.

Modified Eligibility for Chapter 7 Bankruptcy

Under the past bankruptcy laws, you were allowed to select the type of bankruptcy that seemed best for you. In almost all cases that would be a Chapter 7 bankruptcy liquidation rather than a Chapter 13 bankruptcy repayment. But, if you’re in a high income bracket, the new bankruptcy laws won’t permit you to file Chapter 7 bankruptcy.

To find out whether you’re able to file Chapter 7 bankruptcy under the new bankruptcy laws, you must first evaluate your “current monthly income” against the median income for a family unit of your size in your state. If your income is lower than or equivalent to the median, you’ll be able to file for Chapter 7 bankruptcy. If it’s more than the median, however, you must pass a new test to file for Chapter 7 bankruptcy. The other test is known as “the means test.”

The purpose of the means test is to ascertain whether you have sufficient free income, after deducting certain permitted expenses and mandatory debt payments, to make payments on a Chapter 13 plan. To find out whether you pass the means test, you deduct certain allowed expenses and debt payments from your current monthly income. If the money that’s left over after these computations is under a specific amount, you’ll be able to file for Chapter 7.

Counseling Prerequisites

Prior to filing for bankruptcy under either Chapter 7 or Chapter 13, you must complete credit counseling with an agency sanctioned by the United States Trustee’s office. The reason for this counseling requirement is that it assists you in determining whether you actually want to file for bankruptcy or whether an informal repayment plan will help you reclaim your financial stability.

Counseling is necessary even if it’s evident that a repayment plan isn’t workable for you. You’re required merely to participate in the counseling. You don’t have to go along with any repayment plan the agency proposes. Even so, before you’ll be able to file bankruptcy, you’ll have to introduce any repayment program the agency offers along with a certificate showing that you finished the counseling.

Near the end of your bankruptcy lawsuit, you’ll have to go to a new counseling session. This counseling session is fashioned to teach you personal financial management skills. You can’t receive the discharge that cancels out your debts until you submit proof to the court that you accomplished this requirement.

Lawyers May Be Harder to Locate — and a Lot More Pricey

The new bankruptcy laws do add numerous complicated requirements to bankruptcy filings. Some of these brand-new requirements impose more duties on attorneys leading to bankruptcy cases being more time intensive. Among the major new demands on lawyers is that they must now personally ensure the accuracy of all the info their clients give them. That extra demand means that attorneys must spend significant amounts of time on every bankruptcy suit. Thus, they’ll charge more to handle each bankruptcy suit. The new bankruptcy law requirements have actually squeezed a few bankruptcy attorneys out of the field totally.

Some Chapter 13 Filers Will Learn to Survive on Less

When you filed Chapter 13 bankruptcy under the previous bankruptcy laws, you had to dedicate all of your available income to your repayment plan. The old bankruptcy laws defined usable income as that which you had leftover after paying your actual living expenses. The new bankruptcy laws have changed this computation. While you still must hand over all of your disposable income, if your income is greater than the median in your state, you don’t get to figure your available income based on your real expenses. Instead, you have to calculate your spendable income using allowed expense sums prepared by the IRS. And these allowed expense numbers must be deducted from your average income during the six months before filing bankruptcy, not from your pay every month.

More Changes

There are more modifications that can impact you negatively if you’re filing or planning on filing bankruptcy. Do your research on the new bankruptcy laws and make sure you know the impact they have on your bankruptcy filing.