Duncan Law Blog

Do I Have to Pay Taxes on Debts Wiped Out in Bankruptcy?

Sep 22, 2010 No Comments by


The short answer is no, you do not have to pay taxes on debts that are wiped out in bankruptcy. Quite often those trying to decide between bankruptcy and some type of debt consolidation will look to see which option will be most advantageous for them when it comes to tax implications. Usually, filing bankruptcy will be most beneficial when it comes to taxes.

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Unlike debts that are consolidated or forgiven by a creditor, debts that are discharged in a bankruptcy are not subject to being taxed. Section 108 of the Internal Revenue Code explains that Title 11 (bankruptcy) cases are not subject to the traditional taxes on forgiven debt. This is important because other debts that are forgiven or wiped out outside of bankruptcy will be viewed as your gross income, which is taxable. Therefore, you could pay quite a bit of taxes on debts that were otherwise forgiven.

After wiping out your debt in a bankruptcy you may receive a Form 1099(c) from the IRS. If this were to happen, it is important that you fill out a Form 982 to tell the IRS that the debt was discharged in a bankruptcy and is, therefore, non-taxable.

This section of the Internal Revenue Code can be a big money saver for those trying to decide between bankruptcy and some other form of debt negotiation. When money is already tight it is almost impossible to pay the thousands of dollars that you may be required to pay on your forgiven debt outside of bankruptcy. Instead, liquidating your debts in a Chapter 7 bankruptcy or paying them back through a Chapter 13 bankruptcy will allow you to get rid of debt and avoid any tax implications.

Learn more about how bankruptcy can wipe out debt and save you money by contacting a Charlotte bankruptcy lawyer or Greensboro bankruptcy lawyer.

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Can I Still Get Workers’ Compensation Benefits If I Return to Work?

Sep 20, 2010 No Comments by

Returning to work after suffering an injury at work can be a risky move.  If your claim says that you are completely unable to work and then you return to work while you are still able to receive workers compensation benefits, then your employer no longer has to continue paying your workers compensation benefits.

Injury at Work | Charlotte, NC & Greensboro, NCThere is an option to have a trial return to work.  According to North Carolina Statute  §97-32.1, this is where you will return to work for a certain amount of time (up to 9 months), during this period you can still receive partial benefits from your employer.  You would have to file certain forms and paperwork to do this.  You want to make sure your employer and the Industrial Commission are fully aware that this is simply a trial period and you are not returning to work permanently at the current time.  If you make a full return to work then your compensation benefits will be terminated.  If during this trial period it is determined that you are still unfit to work then you can continue to receive full benefits that will be unimpaired by your trial return to work.  The trial period can only last for a maximum of nine months.

In summary, in most situations if you fully return to work you will no longer receive workers’ compensation payments.  However, you have a couple options other than fully returning to work. First, you can go back to work on a limited basis and receive reduced payments. A second option is returning to work for a trial period and, if you then decide you are not ready for a full return, then your full payments will resume and be unaffected.  The main point is if you and your doctor both feel you are not ready to return to work then you should consult your workers’ compensation attorney before deciding to return to work. Returning to work prematurely will cause you to lose any future benefits.

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What if I Accidentally Leave a Creditor Off of My Bankruptcy?

Sep 17, 2010 No Comments by


Under the stress of a bankruptcy filing, there are times when a creditor is inadvertently forgotten and left off of a bankruptcy filing. If you file Chapter 7 bankruptcy or Chapter 13 bankruptcy and realize that you accidentally left a creditor off of your bankruptcy, it may not be too late.

Bills in MailboxIf you realize before your creditors’ meeting that you have omitted a creditor, you will need to contact your attorney immediately. Generally speaking, you can add a creditor before your creditors’ meeting. Your attorney may charge a small fee and the court will charge a filing fee, but for most debtors these fees are insignificant compared to the amount owed to the omitted creditor. Your attorney will also send out the proper notices to the omitted creditor after the creditor has been added to the bankruptcy filing.

If you realize after your creditors’ meeting that you have omitted a creditor, there are more strict time limitations to adding a creditor and you will need to contact your attorney immediately to determine whether or not the time frame for you to add a creditor has lapsed.

The most important way to avoid accidentally omitting a creditor from your bankruptcy prior to the filing of your petition is to double-check your credit report from each of the three main credit reporting agencies: Equifax, TransUnion, and Experian (visit www.AnnualCreditReport.com to get your free credit report). You will also want to double-check your bills from your creditors to make sure that you have included all of your debts on your bankruptcy petition.

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How Much Debt Can I Have When I File for Bankruptcy?

Sep 16, 2010 No Comments by


Every potential bankruptcy client has a different amount of debt owed. Even the type of debt varies from debtor to debtor – some debtors have almost all credit card debt, while others may have almost all medical bills. A common question that potential bankruptcy clients have is whether their bankruptcy will be denied by the Court if they owe “too much money.”

For potential Chapter 7 bankruptcy clients, there is not a specific limit to the amount of debt that can be owed. However, the Bankruptcy Court will always do an analysis in each case to examine the amount of household income in relation to the amount and type of debt owed to ensure that the debtor is not abusing the bankruptcy system.

Bankruptcy InformationFor potential Chapter 13 bankruptcy clients, there are some limitations to the amount of debt that is allowed. Under Section 109(e) of the Bankruptcy Code (also known as the federal bankruptcy laws), an individual with regular income cannot owe more than $250,000.00 in unsecured debt and $750,000.00 in secured debt. In some bankruptcy courts, the bankruptcy Judge will hold a hearing for confirmation of your Chapter 13 Plan if there is more than $100,000.00 in consumer debt (credit cards and personal loans). These limitations are set to ensure that the debtor is not abusing the bankruptcy laws.

One way to avoid having issues with the amount of debt you owe is to stop using your credit cards as soon as you consider filing bankruptcy. In some cases, the Court may ask you when the last time you used your credit cards was. The Court asks this question to make sure that you did not run up your credit card charges immediately before filing bankruptcy.

You should contact a Charlotte bankruptcy attorney or Greensboro bankruptcy lawyer to get a more specific analysis of your own situation, but you can use these general guidelines to prepare yourself for whether or not the court will deny your bankruptcy if you owe “too much money.”

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Do I Have To Be A U.S. Citizen to File for Bankruptcy?

Sep 13, 2010 2 Comments by


In short, no. Surprisingly, being a citizen of the United States is not required to file for bankruptcy. The U.S. Bankruptcy Code does not have a citizenship requirement. However, you still need to establish residency in the state where you plan to file bankruptcy. That means you need to live in the state for the greater part of 180 days or three months. If you do not reside in the United States or the state where you plan to file bankruptcy, but own property here, you may be able to file for bankruptcy protecting that property against your creditors. You will have to show that there is regular and consistent contact in the jurisdiction you are looking to file.
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If you are not a U.S. citizen but need to file bankruptcy, you will be required to prove your identity to file a bankruptcy case and must have a valid photo ID and a valid Social Security Card or Individual Tax Identification Number (ITIN).

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Will Bankruptcy Stop Creditor Phone Calls & Harassing Contact?

Sep 10, 2010 No Comments by

Yes, once a person has case number after filing either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, a creditor is prohibited from trying contact the debtor in any attempt to collect a debt.  With the bankruptcy in place creditors cannot initiate or continue any lawsuits against you or pursue any wage garnishments.  In the event that a creditor is trying to contact you or attempt to collect a debt after the bankruptcy has been filed, they would be in violation of the automatic stay bankruptcy code.  If this were to happen it would be in your best interest to document every type of contact by writing down the dates, times, people that you spoke with, and the company they are affiliated. Afterwards, contact your attorney and let them know that the bankruptcy’s automatic stay was violated.

The Fair Debt Collection Practices Act (FDCPA), is a law that protects the debtor from being harassed by a creditor or bill collector.  Examples of creditor harassment is when a debt collector threatens to send you to jail if you don’t pay your bills, constant phone calls harassing you to pay the bill, or a threat of bodily harm in anyway.  However, if the debt collector calls and doesn’t get you and calls back in an attempt to reach you, this scenario does not constitute debt collection harassment.

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However, you do have the ability to stop harassing phone calls and other creditor harassment by filing bankruptcy. The bankruptcy will create an automatic stay that makes it so the creditor may not continue to contact you. To learn more, contact us today to set up your free, no strings attached, bankruptcy consultation.

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How Do Attorney’s Fees Work in a Worker’s Compensation Case?

Sep 08, 2010 1 Comment by


Most attorneys’ fees in a workers’ compensation case are based upon a contingency fee arrangement between the attorney and the injured worker. A contingency fee arrangement is when an attorney agrees to provide legal services to the injured person and is usually only paid in the event the injured worker is successful in their case. If the injured worker is unsuccessful and receives no compensation, then the attorney is usually paid no money for their time and effort on the workers’ compensation case.

In North Carolina, the North Carolina Industrial Commission, sometimes called the worker’s compensation board, determines the attorneys’ fees paid to the attorney.  The Commission usually makes this determination based upon the retainer contract between the attorney and the client/injured worker. The Commission must approve all settlements to injured workers and the fees that are paid to the attorney.

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Most attorney-client retainer agreements specify a percentage of the total payment of the claim that is to be paid to the attorney. The percentage paid to the attorney in most workers’ compensation cases is somewhere between 25% and 33%.  This is usually determined by the complexity of the case. To learn more about how we can help you with your workplace injury contact us today.

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Can I Get Fired From My Job For Filing Bankruptcy?

Sep 06, 2010 1 Comment by

The short answer is, no.  Federal law prohibits an employer to discriminate against you for your declaring bankruptcy.  According to 11 U.S.C § 525 (a) and (b), no governmental unit or private employer may “…terminate the employment of, or discriminate with the respect of employment someone who is or has been a debtor under this title…” In other words, you can’t be fired from your job simply because you have filed for bankruptcy.

Can I Get Fired From Job for Filing Bankruptcy?

In most cases, your employer will never even know that you filed for Chapter 7 bankruptcy or Chapter 13 bankruptcy unless you tell them.  Also, as you are aware, bankruptcy has nothing to do with how well you can perform your job duties.  Once you are hired, they must have a different, legitimate reason to let you go (such as being late, not showing up at all, or not properly performing your job duties).

Although the law states that employers cannot use your credit against you; simply put, they sometimes do.  You may not be able to be fired from a job because you filed bankruptcy, but it could possibly prevent you from being hired for a job (or in some cases a promotion).  Normally, this only applies to your employment with private companies that deal with handling money like banks and other financial institutions. Federal, state, and government agencies cannot refuse employment due to bankruptcy.

Many companies have begun completing background checks, which include checking someone’s credit score. As unfortunate as it is, potential employers may use this to gauge your responsibility.  Do you pay your bills on time?  Are you over extended?  Someone with a high debt to income ratio could potentially be looked at as someone who might be more likely to steal from a company.  Is this fair?  No, not necessarily but it is more common than you think.  Many states are in the process of trying to ban credit checks used to determine employment, in an effort to protect citizens’ civil rights.

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Can I Eliminate a Second or Third Mortgage by Filing Bankruptcy?

Sep 03, 2010 1 Comment by

If you are like many people, your home is not worth what it was a few years ago.  With the downturn of the economy, the value of your house has decreased.  Suddenly, you are “upside down” on your home and the sales price is not enough to pay off the first, second and sometimes third mortgage on your home.

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When the real estate market was strong, many people capitalized on the fact that their home was worth more than their first mortgage and obtained second and even third mortgage loans against their home.  Often this money was used to pay off credit cards or medical bills, and in some cases it was used to update or upgrade the home.  Regardless, the house is not worth what you owe on it today, and there is no way for you to sell the home without a short-sale or possible deficiency balance.

If the value of your home is less than what you owe on your first mortgage, you may be able to file Chapter 13 bankruptcy in a North Carolina bankruptcy court and “strip” the lien of the second mortgage.  In other words, if you file Chapter 13 bankruptcy you may be able to either file a lawsuit (adversary proceeding) or file a Motion to Value Realty and eliminate a great deal, if not all, of the amount owed on the second and/or third mortgage.  Obviously, the mortgage company has the right to argue the value placed on the property.  However, if you have obtained a market assessment by a licensed real estate agent or an appraisal by a licensed appraiser, it will be more difficult for the mortgage company to argue the value.

The adversary proceeding or Motion to Value Realty must be filed in addition to your Chapter 13 bankruptcy case.  For the lien of the second and/or third mortgage to be “stripped” or voided, you must have a bankruptcy court order canceling the lien on the second and/or third mortgage and you must receive a discharge in your Chapter 13 bankruptcy.

If you have questions on how you may be able to “strip” a lien on your home by filing Chapter 13 bankruptcy, please do not hesitate to contact us.

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Can I See My Own Doctor If I’m Injured at Work?

Sep 01, 2010 2 Comments by

In a workers’ compensation case you are not able to choose your own doctor.   As a general rule, your employer has the right to choose a doctor to treat your injuries.  The doctor chosen does not have to be your own personal doctor and is, instead, likely to be a doctor that your company regularly uses.

There are, however, three exceptions to this rule:

1) Where the employer neglects or refuses to provide prompt and adequate services;

2) Where the employee is confronted with an emergency; and

3) Where the statute itself authorizes the employee to procure a physician of his own choosing.

The North Carolina General Statute § 97-25 says that the employer is allowed to choose the physician but the employee can, at any time, request a change in the treatment, but this change must be approved by the North Carolina Industrial Commission.

If you refuse to receive treatment from a doctor approved by the Industrial Commission then your employer does not have to pay for your treatment until you accept the pre-approved doctor’s services.  Therefore, initially you must go to the doctor assigned to you if you have a worker’s compensation claim, but if this doctor is providing insufficient care, then you may request to see another doctor of your choice but that physician must be approved by the Commission.

The reason North Carolina has set the system up this was is doctors have a lot of power in a workers’ compensation claim.  They will determine a disability rating and, eventually, what’s called a maximum medical improvement. These are the major factors in determining what type of compensation you can receive in a workers’ compensation case. The fear is people will go to their own personal family doctors who they have built a relationship with over time and that doctor will give them a more beneficial payout then they deserve.

The inability to choose your own doctor is something you must be aware of during a workers’ compensation claim. Although you will be unable to hand pick your initial doctor, you may ask for a second opinion from another physician. The previous doctor has the right to sit in on this second opinion.

It is important that when an employer sends you to get treatment by a certain doctor that you go. If you feel as though your treatment is inadequate or you don’t agree with their diagnosis then you should contact a workers’ compensation attorney who can help you navigate your way through the workers compensation laws.

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