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Simon, Fitzgerald, Cooke, Reed and Welch
Simon Fitzgerald, LLC
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Shreveport Bankruptcy Law Blog

National Association of Realtors advocates for debt relief

When Louisiana homeowners sell their properties at a gain, they may receive waivers from capital gains taxes. However, the National Association of Realtors has recently stepped up to say that equivalent debt relief should be permanently included in tax laws for homeowners whose investments do not turn out so well. NAR representatives speaking on the topic recently stated that the scales are currently tipped against homeowners facing financial crises; in other words, the Internal Revenue Code favors those doing well and penalizes those who lose their homes to mortgage debt.

Temporary policies were implemented in 2007 that relieved people from tax obligations when they obtained mortgage debt forgiveness. Such policies expired last year, although a retroactive extension was applied. The NAR has called for permanent inclusion of tax obligation protection in the tax code to increase fair treatment between those who enjoy gain on home sales and those who default on their loans.

The importance of a credit score versus debt: The truth

You've been struggling with money, and you know that something has to give. You're living paycheck to paycheck, barely making ends meet. Sometimes, you can't.

One thing you've been worried about is your credit score. You know that a bad credit score hurts your chances of getting credit, loans or mortgages in the future. Remember, though, your financial security is more important. Here's what you need to know about how your credit score is affected by bankruptcy.

Getting back on track when credit card debt is unmanageable

You'd likely be hard-pressed to find a Louisiana resident who hasn't encountered financial difficulties at some point in life. Economies fluctuate as do personal finances, as well as employment situations and other life dynamics that can quickly impact a financial status in positive or negative ways. Many people who have experienced money woes say it was credit card debt that tipped the scales in the wrong direction.

Credit is a convenient form of payment if you're faced with an expense you were not prepared to meet, such as a medical bill or car repair, etc. The problem for some is that it's easy to fall into the habit of treating credit like cash. If the balance is not paid in full every month, things can get out of hand rather quickly.

Can paying taxes help with debt relief?

Farmers in Louisiana may be among others in the nation who say that letting potential tax breaks pass them by has helped them in the long-run from an economic standpoint. Many farmers have high financial obligations for machinery. To overcome such issues, some have taken to holding off on new purchases as a creative form of debt relief.

By running older machines longer, and avoiding new purchases until existing equipment is paid for in full, many farmers say they have improved their overall financial stability. Where taxes are concerned, some farmers say it is often less expensive to forgo tax breaks that may be available by purchasing new machinery than to get the latest, greatest equipment, but accrue more debt. The farmers say it simply costs them less to pay the taxes outright.

Company files for Chapter 7, closes doors

Owning and keeping a Louisiana business afloat is definitely not for the fainthearted. While there's a natural ebb and flow that occurs with most businesses; a cycling of profitable times with fiscal seasons that aren't as successful. There are also many other challenges that can unexpectedly occur to make or break a business. Sometimes, business owners make decisions to liquidate their assets as a means of seeking immediate debt relief when they can't seem to get things back on track. A business in another state has determined that Chapter 7 bankruptcy is its most viable option.

The construction management company reportedly owes debts to hundreds of creditors. Its assets are currently estimated between $100,000 and $500,000. However, the company's current liabilities are in the tens of millions.

Credit card debt doesn't have to mean permanent financial ruin

It's understandable that even a moderately serious financial crisis can cause a homeowner to worry. In fact, many Louisiana residents are currently facing such problems. Some are no doubt hoping to have favorable tax seasons in order to use their refunds to pay off credit card debt. Recovering after a major financial setback is much easier if the person involved knows where to turn for support ahead of time.

Some people are concerned about possible foreclosures on their homes. Worrying about losing one's home is stressful, often leading those affected to feel overwhelmed and helpless. It's easy for spending to get out of hand, especially when people fall into the bad habit of treating credit as cash. However, many financial crises have nothing to do with frivolous spending.

Post-bankruptcy lifestyle changes can avoid future debt

The reason many people declare bankruptcy is simple -- their lifestyles don't match their finances. This doesn't always mean it's your fault. Maybe you have high medical bills for which you clearly couldn't plan. Perhaps you lost your job due to a reduction in force at the company, even though you were a stellar employee.

Having a lifestyle that's incompatible with your finances isn't assigning blame to you for that mismatch. But, realistically speaking, if your spending doesn't align with your take-home pay, you need to make some changes.

Financial problems often temporary with appropriate debt relief

It's not uncommon for Louisiana residents or others across the country to encounter bumps in their roads to financial stability. Any number of issues from unexpected medical bills and job loss to frivolous spending can negatively impact finances. The good news is that most financial problems are temporary, especially if the person involved knows how to access immediate debt relief support.

In some situations, those with debt wind up needing outside assistance to protect their rights against aggressive creditors. Others find relief by filing for certain types of bankruptcy according to their individual circumstances. For instance, someone who can show proof of income may be able to apply for a restructured payment plan while retaining ownership of his or her assets.

Questions to ask to determine whether Chapter 7 is viable option

When facing serious financial crises in Louisiana or elsewhere where filing for bankruptcy appears to be the best solution, it's always good to have several debt relief options available. There are two main types of consumer bankruptcy, and one may prove a better option over another in a particular situation. Chapter 7 is known as a liquidation bankruptcy, while Chapter 13 is referred to as a debt reorganization. 

Most people considering Chapter 7 bankruptcy are currently at risk for creditors to take their property or garnish their wages. Since Chapter 7 typically involves liquidation of nonexempt assets, a person considering this type of debt relief will want to ascertain whether he or she stands to lose a particular asset in such a proceeding. The bankruptcy process protects filers by granting exemptions for specified assets at the state and federal levels. 

Company hopes debt relief measures will help it get back on track

Many Louisiana business owners know what it's like to face serious financial challenges that threaten the bottom line. The good news is that most financial crises are temporary. How long it takes to rectify a particular situation often has to do with what type of approach the business owner takes with regard to debt relief solutions.

A company in another state has received state economic development loans dating back to 2009 that amount to more than $3 million. The marketing company says it has hit upon some troublesome financial times due, in part, to the economic struggles its clients (retail stores throughout the nation) are experiencing. Creditors are reportedly honing in on the company, demanding payments for debts that the company is not currently able to meet.

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