When debt is insurmountable, filing for bankruptcy may be preferable to getting a debt consolidation loan because of the downsides it presents. Addressing your financial problems through debt consolidation is not the same as doing so through bankruptcy. Debt consolidation requires people to take out additional loans. This might mean that you will have to pay interest for longer or be a victim of predatory lending practices, preventing you from repaying debts even through consolidation. Chapter 13 bankruptcy allows the consolidation of debts in a different form and can be more successful for debtors, especially if they have debts that are eligible to be eliminated by a discharge. Get in touch with Young, Marr, Mallis & Associates by calling (215) 701-6519 or (609) 755-3115, and schedule a free discussion of your case with our Pennsylvania bankruptcy lawyers today. Notable Downsides to Debt Consolidation While debt consolidation can seem like a fine alternative to filing for bankruptcy if you are struggling with debt, there are some notable downsides which debtors should consider before taking this route. For example, debt consolidation requires people to take out additional loans, which might cause them to pay more interest than initially anticipated. With debt consolidation, debts aren’t discharged, and debtors might deal with lenders that don’t have their best interest in mind, possible impeding their ability to improve their financial well-being. You Have to Take Out Another Loan If you are having a hard time paying off your debts, why would you put yourself in the position to have even more debt? For debt consolidation to work, you have to take out another loan. The lender will then consolidate your debt and lend you the money you have to pay them off. In turn, you pay back one lender over time instead of many. So, even if a debt consolidation loan helps you to pay off debts temporarily, you are still on the hook for those payments for, in all likelihood, a long period of time. You Might Pay More in Interest Because debt consolidation works through debtors taking out additional loans, interest rates become an issue. Although your initial monthly payment might be lower overall, interest will still accrue on the new loan you took out when you consolidated your debt. This means that there might be additional interest you have to pay that has nothing to do with your original debt. And, because all of your debt is consolidated, you can’t put payments toward specific debts. So, you could be paying off your debt consolidation loan for some time, resulting in more interest accruing. You Won’t Have Someone in Your Corner Banks, credit unions, and other lenders want to give out debt consolidation loans. They have little interest in your actual financial health but care more about the return they might be able to get on a loan they give you. Trusting that a lender has your best interest at heart is typically unwise when considering debt consolidation services. When you take another path, such as filing for bankruptcy, you will be able to work with our Upper Darby, PA bankruptcy lawyers to ensure that you properly deal with your financial troubles so that you can begin rebuilding your credit. In doing so, you will not have to take out another loan, even for debt consolidation. You Risk Missing Payments Debt consolidation can make things easier for debtors because debtors only have to be aware of one monthly payment date. Instead of having payment deadlines for various debts, you will work towards paying them all at the same time. While that has upsides, it also presents downsides. For example, if you miss even one payment toward your debt consolidation loan, you might risk incurring fees or running into other delays that inhibit you from paying off your debt. Because debt consolidation loans are typically for large sums of money, lenders generally react harshly to missed payments. Your Debt Won’t Be Discharged Debt consolidation is not always a solution to debt. Unlike in bankruptcy, your debts will not be discharged. Instead, they will be consolidated under the same interest rate, allowing you to contribute to paying off all debts with each monthly payment. Your debts won’t be erased, and you will still have to pay them off over time. Can You Consolidate Your Debt in Bankruptcy? If the idea of combining all of your debts under the same interest rate appeals to you, but you do not want to take out another loan, there may be a solution in bankruptcy. Bankruptcy has specific chapters, one of which allows for a different approach to debt consolidation. Depending on your income and expenses, you may be able to declare Chapter 13 bankruptcy. With this bankruptcy chapter, a person’s debts are consolidated. A fixed interest rate is then applied to all debts, and a repayment plan is designed. Using the requirements of this repayment plan as a guide, a debtor will make payments toward their debts over a period of three to five years. Prior to submitting a repayment plan, our attorneys can meet with your lenders to negotiate a possible reduction in debts or another agreement that might lower your repayment responsibility. In addition to making debt repayment easier, bankruptcy can also eliminate certain debts, namely unsecured debts. For most debtors, this refers to any outstanding medical or credit card debt, as well as other common debts. Eligible debts will be discharged once a debtor completes their repayment plan. If you are only eligible for Chapter 7, your debts will not be consolidated. Instead, they will be discharged, provided they are eligible, and you will then identify assets for liquidation to repay any remaining debts. Address Your Debt with Bankruptcy For help with your case from the Philadelphia bankruptcy lawyers at Young, Marr, Mallis & Associates, call us now at (215) 701-6519 or (609) 755-3115.

By Law Offices of David M. Siegel Bankruptcy Attorney Chicago Feeling like you’re sinking in a sea of debt, juggling bills, and losing sleep over your financial situation? It might be time to consider seeking help from a local bankruptcy attorney. Here are five signs that it’s time to take action. Skyrocketing Credit Card Balance+ Click Here For Read More The post 5 Signs You Need to Find a Local Bankruptcy Attorney appeared first on David M. Siegel.

RBC Royal Bank has an article about the "5 Common Causes of Small Business Bankruptcy " The article can be found at https://discover.rbcroyalbank.com/5-common-causes-of-small-business-bankruptcy/Common causes cited by business owners for experiencing critical money issues:1. Unforeseen events and economic downturnsBusiness owners can’t predict or control external events — like natural disasters, economic recessions or pandemics, but these can devastate a business. Part of your business plan should include scenario planning — envisioning possible conditions that could affect your business and how you might be able to mitigate them.One option to consider is maintaining an emergency fund to help weather the storm during challenging times. Set aside a portion of your profits as an emergency fund to provide a financial buffer in case of unexpected expenses or downturns. This fund can help you bridge temporary gaps and avoid accumulating debt.2. Illness, injury, or health-related problemsAs an entrepreneur, no one can step in and do everything you do if you can’t work. And for many small business owners, if they can’t work, the business doesn’t make money. It’s important to have a plan in place to help minimize the impact of illness on your company. If you can still work, evaluate what you can do safely. Still, if you can’t, your contingency plan should include the necessary information so that someone you trust can run your business temporarily or communicate with stakeholders about the temporary disruption.3. Insufficient cash flowPicture this: your business is thriving, sales are soaring, and your products or services are in high demand. However, despite the apparent success, inadequate cash flow can swiftly bring down even the most promising ventures. Keeping a close eye on your finances and maintaining a healthy cash flow is crucial.Implement effective cash flow management strategies such as invoicing promptly, offering incentives for early payments, and negotiating favourable payment terms with suppliers.4. Gaps in financial management knowledgeManaging a business entails more than passion. With everything a business owner has to do, it’s possible to deprioritize tracking expenses, chasing payments, or even overall budgeting. Over time these can add up and produce can lead to severe financial distress.Consider working with a qualified accountant, financial advisor, or business consultant who can provide guidance on financial matters, tax planning, and overall business operations. They can also help you identify potential risks and opportunities.5. Excessive debt and borrowingDebt can be a useful tool for business growth, but excessive borrowing can create a financial burden that later becomes impossible to manage. Part of your business plan includes financing your enterprise: Before taking on debt assess your ability to repay it and develop a realistic repayment plan. Also, consider diversifying your funding sources — bank loans, grants, crowdfunding, etc. — to help provide additional support and reduce the risk of relying solely on debt to finance your business.Running a successful business requires careful planning, financial insights, adaptability, and resilience. You can steer your business toward long-term success by staying aware of how businesses get into financial trouble and by taking proactive measures to mitigate risks.Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15minWe held individuals & businesses with too much debt!

Business Bankruptcies Pick Up AgainCFO Drive is reporting that Business Bankruptcies have increased. The story can be found at https://www.cfodive.com/news/business-bankruptcies-pick-up-again/686049/Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15minWe held individuals & businesses with too much debt!

The SBA is offering a Hardship Plan for borrowers experiencing  financial challenges.Eligible borrowers are required to pay at least 10% of their monthly payment amount for six months. Interest will continue to accrue, which may increase payments due at the end of the loan term.Regular monthly payments  will be required after the six-month Hardship Program  period ends. Borrowers may be able to renew the Hardship Accommodation Plan after six months. The SBA Hardship Plan does not reduce the amount of money due the SBA for the EIDL loan, so at best the Hardship Plan is a temporary solution.For many SBA EIDL borrowers a bankruptcy filing or an offer in compromise may be a better solution.Jim Shenwick, Esq  Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15min------------------------------Index of Articles written on SBA EIDL Loans by Jim Shenwick Defaulted SBA EIDL Loans, Limited Liability Company (LLC) and Cancellation of Debt Income (COD) under Section 108 of the Internal Revenue Codehttps://shenwick.blogspot.com/2023/07/defaulted-sba-eidl-loans-limited.htmlOffers In Compromise ("OIC") for Defaulted SBA EIDL loans and Section 108 of the Internal Revenue Code ("IRC"), Relief of Indebted Income, a Trap for the Unwary!https://shenwick.blogspot.com/2023/05/offers-in-compromise-oic-for-defaulted.htmlEIDL LOAN WORKOUTS AND BANKRUPTCY   https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.htmlEIDL Loan Default Questions & Answers https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.htmlEIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMIS Ehttps://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.htmlEIDL Defaulted Loanshttps://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.htmlNew Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan"https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.htmlEIDL LOANS and SBA OFFER IN COMPROMISE PROGRA Mhttps://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.htmlPPP & EIDL Fraudhttps://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.htmlBetter to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA EIDL Loanshttps://shenwick.blogspot.com/2022/11/better-to-connect-what-small-business.html

 Defaulted SBA EIDL Loans, Limited Liability Company (LLC) and Cancellation of Debt Income (COD) under Section 108 of the Internal Revenue Codehttps://shenwick.blogspot.com/2023/07/defaulted-sba-eidl-loans-limited.htmlOffers In Compromise ("OIC") for Defaulted SBA EIDL loans and Section 108 of the Internal Revenue Code ("IRC"), Relief of Indebted Income, a Trap for the Unwary!https://shenwick.blogspot.com/2023/05/offers-in-compromise-oic-for-defaulted.htmlEIDL LOAN WORKOUTS AND BANKRUPTCY   https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.htmlEIDL Loan Default Questions & Answers https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.htmlEIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMIS Ehttps://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.htmlEIDL Defaulted Loanshttps://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.htmlNew Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan"https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.htmlEIDL LOANS and SBA OFFER IN COMPROMISE PROGRA Mhttps://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.htmlPPP & EIDL Fraudhttps://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.htmlBetter to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA EIDL Loanshttps://shenwick.blogspot.com/2022/11/better-to-connect-what-small-business.html

 Defaulted SBA EIDL Loans, Limited Liability Company (LLC) and Cancellation of Debt Income (COD) under Section 108 of the Internal Revenue CodeAs many readers of our emails and blog posts know, Shenwick & Associates  has developed a specialty helping borrowers, who have defaulted on SBA EDIL loans. Jim Shenwick, Esq  has an LLM in taxation from NYU Law School and is familiar with many tax issues involving SBA loan defaults.Provided at the end of this email are links to many articles he has  written about defaulted SBA EIDL loans.There are actually two issues involved in Limited Liability Company SBA EIDL loan defaults, the first one involves  a workout with the SBA to cure the loan default (or a bankruptcy filing by the LLC)  and the second which gets much less focus and attention are the tax consequences to the borrower  or members of the LLC, when an SBA loan  goes into default.An LLC  is a pass-through entity for tax purposes, which means no taxes are paid by the LLC, they are paid by the members who own the LLC.Section 108 of the Internal Revenue Code pertains to income from the discharge (non payment) of indebtedness and is also known as cancellation of debt income (COD).  Section 108 provides that if an individual or a business borrows money and the loan is not repaid, the individual or business  are enriched by the amount of the non-payment. The amount of no-payment is deemed ordinary income for tax purposes.As an example, assume an LLC borrows $100,000 from a bank and does not repay the loan. The bank sends the IRS and LLC a Form 1099-C, reporting $100,000 of ordinary income. Since the LLC is a pass through entity, that $100,000 of ordinary income is reported by the LLC members (owners of the LLC).If those members are in a  24% tax bracket, they would have to pay $24,000 in federal income tax on income from discharge of indebtedness.If the member or owner of the LLC does not report that income on their tax return and pays tax on that income, the IRS will audit them. It will then assess penalties and interest on the unpaid taxes.Many clients, accountants and lawyers are unaware of this issue or do not focus on the income from indebtedness issue (COD), regarding SBA EIDL loan defaults. WHAT CAN BE DONE TO AVOID INCOME FROM DISCHARGE OF INDEBTEDNESS?Section 108 of the IRC provides two exceptions to COD income.The first is that  if the LLC or a member files for Bankruptcy (IRC 108(a)(1)(A)) then no COD income is reportable or payable.  The second is the Insolvency Exception (IRC 108(a)(3)). Insolvency means that the taxpayer's liabilities are greater than their assets.  Individuals using the  Insolvency Exception need to attach Form 982 to their  federal income tax return.This email provides a brief  overview of EIDL loan default tax issues. Clients are advised to consult with a specialist in this area of law and a tax adviser. Jim Shenwick, Esq. is available to speak with client’s or their advisors.Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15minWe held individuals & businesses with too much debt!--------------Jim Shenwick, Esq/Shenwick & Associates Blog Posts on SBA EIDL LoansOffers In Compromise ("OIC") for Defaulted SBA EIDL loans and Section 108 of the Internal Revenue Code ("IRC"), Relief of Indebted Income, a Trap for the Unwary!https://shenwick.blogspot.com/2023/05/offers-in-compromise-oic-for-defaulted.htmlEIDL LOAN WORKOUTS AND BANKRUPTCY    https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.htmlEIDL Loan Default Questions & Answers https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.htmlEIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMIS Ehttps://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.htmlEIDL Defaulted Loanshttps://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.htmlNew Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan"https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.htmlEIDL LOANS and SBA OFFER IN COMPROMISE PROGRA Mhttps://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.html

 Biden's Plan B on student loan forgiveness relies on Higher Education Act: What to knowSee article at https://abc7chicago.com/joe-biden-student-loan-forgiveness-plan-higher-education-act/13465176/Jim Shenwick, Esq  917 363 3391  jshenwick@gmail.com Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15minWe held individuals & businesses with too much debt!

Not Clear for Takeoff: How a Lawyer Loses an Airline Lawsuit for Using ChatGPT You may have read the story of the lawyer who filed a brief using artificial intelligence. Representing his client in a personal injury suit against Avianca Airlines, the lawyer presented a brief to the judge, which contained falsified cases written by Open AI’s ChatGPT. Oops! The cases cited by ChatGPT simply don’t exist. The lawyer was fined $5,000, publicly humiliated, and may even face disciplinary proceedings against him by the State Bar. Why? Well, a lawyer has the duty to represent their client competently. It is incompetent to rely on artificial intelligence to write your briefs. It is incompetent not to read the cases that you cite. It is incompetent not to check and verify the citations that you provide to the Court. Beyond that, a lawyer has the duty of candor to the court. This lawyer had the gall to tell the court that he asked ChatGPT to verify its work and that he relied upon ChatGPT when it told him that the citations it had provided were authentic. As a fellow lawyer, this was stupid. How AI Improves the Quality of Our Legal Services We at Lakelaw have used ChatGPT to help us work more effectively. For example, it is good at doing complex calculations quickly. It is also good at helping us to identify people and places. ChatGPT is not good at practicing law. And let me tell you this, every word that you see in any of our articles is written by lawyers at Lakelaw. We may sometimes ask ChatGPT to rewrite things we wrote to make they are easier to understand.   So, how do we use artificial intelligence at Lakelaw? Well, for one thing, we subscribe to Case Text and CoCounsel. This tool is a large language model that has access to just about every legal decision ever decided in the United States. It has a robust understanding of questions that we might ask about the legal issues arising in your case. It has the capability of summarizing and analyzing complex legal documents.  We don’t rely on the output from Case Text and CoCounsel as the final product, but we do regard it as a decent starting point. We have found its skill set like that of a third-year law student. We also use this tool to effectively represent our clients using the latest technology. Under the Model Code of Professional Conduct as well as the Illinois Code of Professional Conduct, we lawyers have the obligation to be up-to-the-minute from a technological standpoint. After all, we are required to assimilate data, organize it, think about it, and communicate about it effectively. Today, we can no longer rely on paper, pens, and pencils. We must leverage our abilities with every computational and electronic tool available.   Even though we used typewriters and carbon paper when we started our practice almost 50 years ago, being a small and nimble firm using the latest in technology, we can run circles around our more hide-bound competition in giant law firms. They need committees to make the slightest change. When we find innovative tools, we put them to work for you immediately. And we do so efficiently and effectively. The Future Starts Here at Lakelaw From embracing digital transformation like artificial intelligence to providing high-quality and ethically-sound legal services, Lakelaw is the leading law firm for personal and business bankruptcy in Chicago.  Count on our lawyers to represent you zealously and fearlessly. Our firm has been named one of the best law firms by U.S. News & World Report, voted among the top 500 US bankruptcy and restructuring lawyers by Lawdragon, and peer rated for highest level of excellence by Martindale-Hubbell. Get a free confidential consultation today. The post Evolution of AI: How Our Law Firm Uses Artificial Intelligence appeared first on Lakelaw.

 Commercial Chapter 11 Filings Increased 68% Y/Y in the First Half of 2023 see the article at https://www.monitordaily.com/news-posts/commercial-chapter-11-filings-increased-68-in-the-first-half-of-2023/