Friday, August 17, 2012

Is Bankruptcy right for you?
by Jennifer A. Blanc
Attorney & Counselor at Law

Wednesday, August 8, 2012


If you are in foreclosure or have a mounting mortgage default you need to be aware of a law that can save you or penalize you. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.
1.     The limit is $1 million for a married person filing a separate return.
2.     You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.
3.     To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.
4.     Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
5.     Proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion.
6.     If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.
7.     Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions – such as insolvency – may be applicable. IRS Form 982 provides more details about these provisions.
8.     If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
9.     Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.

10.  A certified public accountant is qualified to help you interpret the form, assess the implications of it on your overall tax liability, and prepare your tax return. A local tax return preparer is not qualified to deal with this issue. Visit the experts.

It is important to note that The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debts forgiven in connection with a foreclosure qualify for this relief.  

While these ten points may bring about a sigh of alleluia for many taxpayers in mortgage default, it’s important to note that the exclusion of cancelled debt from income does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition and it doesn’t cover investment properties.  

If a mortgagor doesn’t expect to get a 1099 C from its lender for default on the primary residence for mortgage debt forgiven in 2012, in 2013 this mortgage debt forgiveness relief will not be available.
Individuals in this situation may want to consider filing for Bankruptcy in order to escape taxation.      
Jennifer A. Blanc
Attorney at Law

Jennifer A. Blanc is a qualified Chicago Bankruptcy Attorney, located in Westchester, IL and helps consumers file bankruptcy to avoid tax liabilities.  She is a go to professional for helping people solve their financial problems.  Visit Jennifer A. Blanc at or call 708-848-LAW1.

Is a Chapter 7 Bankruptcy the  Answer
to  Your  Prayers?
It most definitely is if you pray to…...
Eliminate all Credit Card Debts
Eliminate all Medical Bills
Recover from failed businesses
Get rid of d/b/a debts
Get the IRS off your back
Get out of bankruptcy in as little as 5 months
Get rid of Mortgage obligations
Surrender Assets, including vehicle
Get Rid of Repo Collections
Redeem Assets
Get rid of negative credit history
Retain all of your future earnings
End creditor harassment
Restore Your Credit, Fast
Deal with all my creditors all at once
Get Rid of Payday Loans
Get Rid of Most Divorce Expenses
Restore Driving Privileges due to car accidents
So say Alleluia!!!….
Free me from the shame of needing to borrow from my relatives
No more borrowing from Peter to Pay Paul
Get back my sanity, my dignity, and start fresh   
Re-Establish my priorities: I want to give my attention to God, my kids, my spouse, not a bunch of bills no way in hell I can afford.
Jennifer A. Blanc
Learn about the legalities of Bankruptcy from an accomplished Chapter 7 Bankruptcy Attorney located in Westchester IL.  The Law Offices of Jennifer A. Blanc has filed consumer bankruptcies successfully for more than a decade. She will help protect you from your creditors too. Visit or call 708-848-LAW1 (5291).

1. Get a pre-paid debit card. These cards can be found at your local Currency Exchange. You simply present the Currency with cash and they load it on to a card.  Its that simple.  You will have to pay a small fee with every deposit transaction you make.  You are not charged for your debits.  You cannot spend more than what's on the card. This should curb frivolous spending and give you the advantage of seeing all your transaction charges on-line.  Knowing what you spend your money on and how much you're spending will ultimately give you the advantage of creating a budget that you can live within. 

2. Go on a diet. Cutting calories also cuts the fat out of your food budget. 

3. Move-in with family. In a bad economy family members that live together and share expenses are more likely to be individually financially secure and independent.  So swallow your pride and work out your differences.

4. Exercise. You can become more financially fit, if you exercise at least five times a week.  How?  When you work out your body releases a hormone called epinephrine. It produces a natural high.  Exercise has also been linked with increased serotonin levels, which is a chemical released in your brain that prevents depression and helps you focus.  With heightened levels of these stress fighting agents in your blood stream you are less likely to spend money on comfort foods and engage in self destructive, maladaptive behaviors as a form of dealing with your financial stress, such as resorting to drugs or binging on alcohol or worst yet- gambling.  So go for a bike ride, walk, or jog while its still free to walk or down the street in America.

5. Hide your credit cards from yourself.  Need I say more...

6. Get Credit Counseling.  There are many not-for-profit companies such as Money Management and the Debtorwise Foundation that help consumers learn to budget and re-prioritize their spending.

7. Get Marriage Counseling.  If you and your spouse have difficulty communicating about financial matters or have different financial priorities, you both need counseling.  Understanding each other and learning how to do better can actually save your marriage in the long run.  Financial stress ranks high on the list of reasons why couples divorce in America. Divorce is generally more expensive than a few counseling sessions.

These seven tips do work. If you are doubtful, just think for a moment and do a self assessment.  Next, implement these strategies over a month's period of time and I am sure you will see a positive difference in your spending habits.

Jennifer A. Blanc

Jennifer A. Blanc is an attorney who has successfully resolve the financial stress of more than a thousand individuals in just the last decade and files Chapter 7 Bankruptcies and Chapter 13 Reorganizations for individuals in order to help them get a fresh financial start.  Call Jennifer at 708-848-LAW-1 (5291) or visit