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How do firefighters die?

By J. C. Bailey III

I’ve seen movies and television shows about firefighting and am acquainted with numerous first responders. I would think the biggest risks would be smoke inhalation or being trapped in a collapsed structure. I would be wrong. In their excellent book “Scarcity” Sendhil Mullainathan and Eldar Shafir point out that firefighters are dying in motor vehicle accidents at an alarming rate. They point out that although these professionals are wonderfully prepared for emergencies they become so focused on responding to the fire that they neglect to fasten their seat belts. They would never drive their personal vehicles without wearing seat belts, but the time scarcity of responding to the emergency causes them to “tunnel”, “to focus single mindedly on managing the scarcity at hand”.

The scarcity for those first responders is a lack of time. For many of us it is a lack of money. Our single minded focus on making this month’s payment can cause us to ignore the consequences of the further extension of credit, the cash advance, or the payday loan. One of the best ways to avoid this destructive and potentially financially fatal tunneling is to talk to a professional. A consultation with an objective party could help you stop the cycle of borrowing at punitive interest rates in order to survive the month. There may be alternatives to the vicious cycle you find yourself in and the professionals you speak to will not be surprised nor judgmental about your circumstances.

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The Conditions for Discharging Income Taxes in Bankruptcy

For an income tax obligation to be discharged (legally written off) in bankruptcy depends mostly, but not only, on the how old it is.

Discharging an income tax debt involves meeting all of four conditions. So it may sound easy to know whether you can discharge a particular tax owed — you just check off these conditions to see that they are all met.

It may sound easy, but often these conditions are not necessarily easy to apply. There is a good reason why people can be confused about taxes under bankruptcy — the laws are more complex than they may sound.

Here are the four conditions. But be sure to meet with a very experienced bankruptcy attorney about how these would apply to your personal situation.

1. The Three-Year Condition
Have three years passed since the tax return was due? Every income tax debt has a specific date when its tax return must be filed. That’s of course usually April 15 of the following year, or the Monday/first weekday after when that date when it falls on a weekend or holiday. Three years must have passed since that specific due date to meet the first condition.

But there’s an important twist. If you filed an extension of time to file the return for that year — usually extending the due date from April 15 to October 15 — the three-year period begins only at that extended due date. For example, the tax return for the 2009 tax year was due on April 15, 2010, but if you got an extension it was due on October 15, 2010. The three-year condition would then be met by filing for bankruptcy after April 15, 2013, if there was no extension, but only after October 15, 2013, if there was an extension.

2. The Two-Year Condition
Have two years passed since the tax return was actually filed, regardless of when that return was due?

To meet this condition, you must have in fact filed the tax return — a substitute-for-return (SFR) prepared by the IRS on your behalf doesn’t count.

3. The 240-Day Condition
Have 240 days passed since “assessment” of the tax? “Assessment” is the formal determination of your tax liability by the IRS or other tax authority. That usually occurs when the IRS reviews and accepts your tax return, generally within a few weeks after filing. However assessment can be delayed because of a disputed tax amount resulting from an audit or a challenge in tax court. In these situations, the above three-year or two-year time periods may have already passed by the time of the assessment. That relatively rare situation is when this third condition applies: the tax cannot be written off unless the bankruptcy case is filed more than 240 days after this assessment.

4. The Fraudulent Tax Return/Tax Evasion Condition
If you are dishonest on your tax return — not reporting some of your income or claiming nonexistent deductions — or if you evaded paying the tax in any way, that tax will not be discharged, even after meeting the other three time-based conditions.

Again, this blog is intended to give you an idea of whether a particular tax debt will get discharged in bankruptcy. But it is very important to understand that, beyond the challenges of applying these four conditions, there can be various other complications, like the effects of tax liens, a prior bankruptcy, amended returns and mistakes on returns. So if you owe taxes and are considering bankruptcy, there is no question that you should get legal advice from an experienced attorney.

So if you live in the Dallas-Fort Worth metroplex, please schedule a no-obligation, free, confidential consultation with us at Bailey & Galyen so that we can analyze your tax debts and advise you about your options. Call us today at 800-208-3104. Or you can reach us here. We look forward to helping you get beyond your current tax worries to a well-deserved peace of mind.

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Rebuilding after bankruptcy

When many people think of bankruptcy they often think it is the end of their financial futures. Not only does bankruptcy need not be the end of your financial future, it can truly be the fresh start that gives you and your family a chance at a brighter financial future. Rebuilding your financial life is a puzzle that can be put together if you know how the pieces of your financial life work together. Here are some tips to make the most of your fresh start:

  1. STEADY INCOME IS KING: One of the first things creditors look at when considering a loan is your income and work history. The better your income and steadier your work history, the more likely you are to get a loan, even after a bankruptcy.
  2. GET A CREDIT CARD (BUT JUST ONE!) As long as you have a job, you will probably start getting pre-approved credit cards within months of getting a bankruptcy discharge. Here are the rules on rebuilding your credit with a credit card- (1) make a purchase on the card every month but never let the balance exceed 20% of the available credit, and (2) pay the card down to a $1.00 balance every month. You are probably saying “Shouldn’t I pay it off completely every month?” The answer is “NO!” The reason is that the credit scoring system gives you fewer points if you pay off a credit card completely every month vs. leaving a small balance.
  3. DON’T HAVE ANY POST BANKERUPTCY BAD CREDIT: This one speaks for itself.
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Bankruptcy Reform for Student Loans is Needed


Many years ago, student loan debt could be discharged in rare situations. A person had to make a good faith effort to pay the loans for a period of about seven years. If they had done that, then they could discharge the student loan debt just like they could credit card debt. Most people, just as today, made their payments. However, for those not lucky enough to find income to sustain the debt they had obtained it gave them an option to get out from under the debt. Bankruptcy is hard on the credit in return for the fact that a person gets to start over. The problem is that the law changed and the student loan debt became non-dischargeable except in extremely rare situations. Now, somebody with huge student loan debts may file bankruptcy to take care of other debt situations, but when they get out they do not get a fresh start. They get to have a fresh start for all debts except student loans. It seems that we have eliminated part of the reason that the bankruptcy laws exist. People now can come out of bankruptcy still financially devastated.

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Bankruptcy Warning Signs


When most people think about bankruptcy, they think it must apply to the other person. They have been responsible for their finances and the general belief has been that only people who are careless file a bankruptcy. Actually, that is about as far from the truth as anyone can get. In most situations, bankruptcy is a result of a series of events that happen to people that is beyond their control. True, just as in any situation in life one can look back and say maybe they ought to have done something differently, but that is actually asking to have the ability to see the future. None of us has an accurate crystal ball.

Many people have lost income as a result of the “Great Recession” of the last few years. In order to survive, savings have begun to dwindle as most of their money needs to go towards the day-to-day expenses. One of the earliest indicators that a person is in financial trouble is that they don’t have savings. What often results after the depletion of savings is that people begin using credit cards to cover the usual emergencies that hit every household. Also, there is no room even for the maintenance items we all need in life.

The next sign is that you are not able to make it to the next pay day without running out of money. That is a sign of two things. Either you are spending too much money or you do not make enough money or both. One has to be able to make it to the next pay check on a regular basis or there is a collapse in the future. Usually it is because our credit card payments begin to creep upwardly until we are actually paying for items we bought some time ago. An interesting statistic says that the average American is paying debt on items that they have long since broken or outgrown. That leaves nothing for future purchases.

If your charges exceed the amount you pay every month, you are heading toward trouble. The long term cannot be sustained. Normally, one can continue with this pattern just long enough to get into trouble. If you are reduced to paying just the minimum on your cards, be ready for some depression. If you have a significant balance at all, it can take as long as 39 years to pay off debt if all you are doing is paying the minimum.

Another trick people often use to delay the final inevitability of bankruptcy is to ask for an increase in credit so they can continue charging more than they need. This is obviously going to get you into trouble, but people do what they have to do to survive. It is only when credit cards are “maxed” out that people truly realize what they have done to themselves financially. The depression leads to avoiding creditors and buying impulsively because deep down you know you can’t pay anyway.

The final sign that you need to file bankruptcy is the willingness to do business with payday loan companies. In the writer’s opinion, this is legalized organized crime. It is almost a certainty that if you cannot quickly extricate yourself from the use of these loans, you will need to file bankruptcy. Dealing with these companies is such a desperation move that it almost equals a cry for help.

We ALL make mistakes in our investments, debts and lives. Bankruptcy very often lets us get back on our feet without shutting down everything we have built. If you have made mistakes or even if life has taken directions that cannot be predicted, talk to a qualified bankruptcy attorney. At Bailey & Galyen, we care about the situation you are in and will try very hard to help you out. Will bankruptcy work for everyone?

Absolutely not. That is why we offer a free, no-obligation appointment. We will go over the facts of your individual case and let you know what options are available. We will give you non-bankruptcy options as well.

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