By Mary Ann Pekara

It's tax time and you're getting ready to file your taxes. Have you had any debt forgiven this year? How much debt? Have you thought about how that affects your taxes?

Many people do not realize that forgiven debt is sometimes taxable income. Now, there are exceptions to every rule but it is important to look into if you had debt forgiven last year and what that could mean.

Certain types of forgiven debt are exempt from Federal taxes. Those include but may not be limited to:

• Debts discharged in bankruptcy
• Debts canceled when you are insolvent
• Mortgage debt forgiven in foreclosure
• Some student loan debt

Other forgiven debt, specifically if you saved over $600, may be considered taxable income according to the IRS. This must be claimed on your tax return, otherwise the IRS has grounds to come after you.

Credit and debt collectors are required to file 1099-C forms with the IRS for forgiven debts of $600 or more. Some collectors will send a copy of the form to their customer but it is not required that they do so.

The 1099-C is a very complicated form and it is important to double-check the form before submission to verify that all the information is correct.

The IRS is expected to get $6.5 million in debt forgiveness this year based on the 1099-C form.

If you're unsure of anything, contact a local professional as soon as possible.

Last year, the United States saw ecommerce spending jump to $194.3 billion, up 16.1% from $167.3 billion in 2010. The majority of these purchases were likely made on credit cards, and credit card debt is often cited as a reason why people file Chapter 7 and Chapter 13 bankruptcy.

Americans in general are definitely online shoppers, but which type of online shopper are you?

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The Seeker

• They’re on the lookout for specific items.
• Know exactly what they want, and are ready to buy.
• They’ll shop multiple stores until they find what they seek.

The Frugal Finder

• They’re always on the lookout for the best deal.
• They look for online coupon codes, sales, and free shipping promotions.
• They’ll comparison shop among multiple online stores to get the most bang for their buck.

The Researcher

• They have a goal in mind, but haven’t settled on a particular product or brand. Researchers browse with the intention of finding information until they decide on a product.
• They take their time, reading product descriptions and reviews to gather as much information as possible before making a purchase.

The Window Shopper

• The online equivalent to people who walk by a retail store without stopping.
• They don’t really have a product or purpose in mind.
• They could be looking to entertain themselves, or browsing to gather research for a future purchase.

The Mobiler

• They love shopping online, but rarely find themselves sitting in front of their computer. Instead, they use smartphones or tablets to take care of all their online shopping needs.
• They know what they want and where to get it. They make purchases with the app of their choice in just a few clicks.

The Hermit

• They avoid traditional brick-and-mortar stores as often as possible.
• They sign up for all the deals, newsletters and alerts to make sure they’re shopping at the right time and using the Internet to their fullest advantage.
• Serious Hermits sign up for auto-refill programs to make sure they always have stock on hand.

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By Mary Ann Pekara

Because higher income earners are less likely to qualify for Chapter 7 bankruptcy, Chapter 13 can provide a great alternative depending on your situation.

For example, let’s say you have $40K in credit card debt. As you continue to attempt to pay that off little by little, month by month, on your own, you’re racking up tons of additional dollars in interest. And the longer it takes you to pay it off, the more interest you’ll be paying.

By filing for Chapter 13 bankruptcy, you’ll essentially be freezing your credit card debt and cutting those interest payments off at the knees. Now, it is important to note that you will have to pay both attorney and trustee fees but those will be determined up front and, for the most part, included in your payment plan.

Your payment plan will be comprised of your total debt + attorney fee + trustee fee. Many attorneys will take a portion of their fee up front and put the remainder into your payment plan.

In our example, let’s say your attorney fee is $4K and the attorney requests $1K up front, the remaining $3K will go into your payment plan.

In regards to the trustee fee, that will be, at a maximum, 10% of your plan total (debt+attorney fee within the plan).

The maximum number of months per plan is 60 months.

It'll all break down like such for your plan total:

Total Debt	$40,000
Attorney Fee	$3,000
Plan Total	$43,000

Therefore your payment plan will look like:

Plan Total	$43,000
Trustee Fee	$4,300
Total Payment	$47,300

$47,300/60 (months) = ~$788/month

So, in 5 years, your $40K credit card debt will be paid off without having to deal with and worry about compounded interest.

One thing to take note of is your tax refund during this time. Your trustee will take any/all of your tax refunds so it is in your best interest to adjust your holdings so they yield little to no refund and you’re getting the maximum amount possible on a per paycheck basis.

To find out if you quality for Chapter 13 bankruptcy, speak with a local bankruptcy attorney.

Source: Janet A. Lawson, Bankruptcy Attorney

By Bob Negele

New Years Day 2013 came and went.  Many of us have made resolutions to try to better ourselves over the next twelve months.  Depending on where you need to focus, this can be an excellent opportunity to try and tighten up your financial outlook.  With a few small changes, you have the potential to gain a new level of financial security (and hopefully find a way to stave off calling a bankruptcy attorney).

• Save a portion of every paycheck you earn- NO EXCEPTIONS

It sounds easy, take a small portion of every paycheck and set it aside for a rainy day.  If you can save $50 off each check, and you get paid by-weekly, you’ll have saved over $1,250 by the end of the year!  It’s a fair assumption that you won’t need to dip into your rainy day funds more than once every couple of years, so this can quickly add up to several thousands of dollars.  The only catch is, you need to do it every paycheck.  If you start to let this slip, you’ll lose the habit and have a drought stricken rainy day fund.

• Eat a light, homemade lunch

This can help your wallet as well as your waist.  Snacking on fresh fruit and celery during the day is cheaper than buying greasy fast food, and better for you.  If you invest your time preparing a proportioned meal for lunch, you won’t have to worry about waiting in line during your precious lunch break.

• Check your cell phone bill

There was a time where people were really concerned about how many minutes they have on their cell phone plans, but for many, that times has left.  With most carriers offering free cell to cell calls, and free nights and weekends (as well as the rise in texting), many people have an abundance of minutes left over each month.  Often times, you can do with less monthly minutes and save $10, $20 or even $30 a month.  This can really add up in the long term.

• Pay off credit cards when you have the money

Millions of Americans are in some sort of credit card debt.  And while everyone wants to be free of it, many don’t take the time to look at how much they owe.  If you have a credit card where you are making minimum payments of $50 or $60, you may be able to pay off the balance.  Don’t just continue making payments, the longer you do that the more you pay in interest to the credit card companies.  If you can pinch pennies and wipe out an entire card, you can save yourself interest you have to pay the credit card company, and instead use your money to earn interest.

While there are dozens of great ways to sure up your finances this year, these few easy to follow tips can help save you big time.

By Bob Negele

For many people, Thanksgiving starts the holiday gift giving season.  And while we have seen some improvement in the economy, for millions of Americans this time of year brings plenty of stress too.  When money is hard to come by, how can we save a few dollars while keeping everyone happy?

If you are buying for your kids, and they really want a video game system, consider getting them something retro.  Instead of shelling out hundreds of dollars for a new game system (not to mention the games, and internet subscriptions), you could consider getting your kids an older game system, like a Nintendo NES, or SEGA Genesis.  While these systems are a little harder to come by, they are still available and run much cheaper.

If you and your significant other are still contemplating gifts for each other, consider buying yourselves a present.  If you have a budget for each other’s gifts, let’s say $100, then why not buy one gift for the two of you for $100?  You treat yourselves to a nice date night, or, if your budget is a little higher, to a weekend trip somewhere.  If you get something for the two of you, then you could probably help save some money (of course, you still may want to consider getting a small side present, like flowers, to surprise your significant other).

And, while it may sound cold, really think about how much you spend on presents for the people you don’t see very often.  Do you really need to buy your second cousin a $75 sweater that they don’t want?  A few small presents that show you know what they like (specially picked out music, for example) may be much cheaper and more appreciate by them.

And that’s probably an important idea to follow for all of your gifts.  More money doesn’t mean a better present.  Instead of giving cash or a gift card, spend time thinking of a meaningful present.  Spending time deciding what to get someone can save you from spending a lot of money buying it later- and the odds are much better that they’ll like it too!

The final tip to help you avoid filing bankruptcy is, most obviously, to spend within your limits.  Everyone is aware that times are tough.  And anyone that you are buying gifts for would rather you spend a little less, as opposed to burying yourself in more debt.

Times are tough for everyone, and no one is going to judge you if you spend a little less this year than you did ten years ago.  And if, on the off chance, someone does judge you for the amount of money you spent on them, then they probably weren’t worth the present in the first place.

By Mary Ann Pekara

Doomsday myths have propagated the world for centuries, and yet we’re still here.

With December 21, 2012 quickly approaching, preppers from near and far are busy preparing for the worst, and spending hundreds of thousands dollars doing it.

Halley's Comet: 1910

When astronomers discovered the Earth would pass through the tail of Halley’s comet that year, mass hysteria ensued thanks to tabloids.

Many thought a poisonous gas would penetrate the atmosphere and end the world. Entrepreneurs capitalized on the craze, selling products that would protect people from a gas that never materialized.

December 21, 1954

Housewife Dorothy Martin founded a cult known as the Seekers. She informed her followers aliens from another planet, Clarion, were sending her messages that indicated massive apocalyptic flooding would begin on December 21, 1954.

She and her cult followers gathered to await a spaceship to be “rescued” from the supposed cataclysmic danger. When nothing happened, she maintained the group had convinced the “God of Earth” to spare the planet, but the cult disbanded shortly after.

Nostradamus: July 1999

The 16th-century French astrologer and physician is well known for his predictions.

Many of them have been tied to historic events, but Nostradamus’ prediction that a “king of terror” would come from the sky and destroy the planet in July 1999 was false. Many believed he was referring to a meteor, but nothing happened at all.

Y2K: December 31, 1999/January 1, 2000

Many believed computers programmed with two-digit years rather than four would revert to 1900 rather than rolling over to 2000 at the start of the year.

While there was some panic (such as a CNN report of a milk shortage due to failing farm equipment), and even warnings of nuclear war as a result of the programming error, the hysteria didn’t reach the expected level.

Harold Camping

Harold Camping is a famous for his failed doomsday predictions going back to 1978. In 2011 alone, he had two failed predictions: May 21, 2011 and October 21, 2011.

His May 2011 predictions drew a lot of media attention, thanks to billboards and mass advertising. He gained a large following of people, many of whom drained their life savings to prepare for the return of Christ. When his May prediction failed, he claimed his math was off and changed the date to October 2011, a date that was also uneventful.

December 21, 2012: Why it Won’t Be the End

There are many reasons why the world won’t end in just a few weeks. The Mayans believed the Earth runs in cycles. December 21, 2012 marks the end of a cycle, and a re-birth. As time renews, so does the world. Some say a breaking away of the continents will destroy the world this year, but scientists say any shift in continents will be subtle, and not drastic enough to end civilization.

Some say the galactic alignment that only occurs once every 26,000 years spells doom for our planet.

National Aeronautics and Space Administration (NASA) experts say there’s nothing out of the ordinary about the alignment we’ll be entering. A planetary alignment occurs with every winter solstice, which happens on or around December 21st each year.

Others maintain a “planet X” is on its way to colliding with Earth and will cause mass destruction. NASA says there’s no object out there. Still others claim solar activity will end the world, but once again, NASA experts say solar flares are not following the typical 11-year cycle, and therefore aren’t expected to make any impact in 2012.

Rather than risking bankruptcy preparing for the end of the world, it is far wiser to prepare financially for personal disasters such as job loss and illness.

By Bob Negele

Hurricane Sandy caused havoc and devastation for millions of people in the US recently.  It has left many wondering if they would be financially prepared to handle such an emergency.  Times like this can be important points of reflections and preparation for future trouble.

In June, the Chicago Sun Times ran an article with important tips to build a financial emergency nest.

One of the first things to understand is that there is no secret trick, or “magic wand” as the article calls it, that will fill your bank account with money.

A good tip is to take a very small portion of each paycheck and set it aside in a traditional savings account.  It’s not the sexy thing to do any more, and it sure won’t earn you a lot of interest, but it is easily accessible and highly liquid funds.  You have the ability to dip into it when you need it, and the security of having it in the bank.

If you don’t think you have the discipline to save a portion of you income, you can have your employer withhold more from your income in your taxes.  It is essentially an interest free loan to the government, but you’ll get a nice surprise around tax season.

The main benefit to having the government withhold more of your income is to never be caught owing the IRS any money.  The biggest drawback is the frequency of the payout.  You only get it once a year, and you can’t easily dip into it when an emergency happens.  That being said, it does help you once a year, and you could use it as a great start to a savings account.

When it comes to savings, a little bit saved at regular intervals can really add up.  Don’t get overwhelmed with how long it will take to save up a reasonable sum.  Instead, focus on the little steps.  Even if you only put $10 a week aside, you’ll have over $500 at the end of a year.

And with an emergency fund, you (hopefully) won’t need to dip into it every year.  It doesn’t take much to see how minor contributions every week, without fail, for a couple years, can build up into a very respectable reserve that you can dip into when a crisis occurs.

Hurricane Sandy has affected many people, and millions will have to take some time off of work.  Wage earners will not be able to earn their money, and hopefully, if it happens to you, you can now be prepared.  An emergency fund doesn’t need to be your retirement nest egg, but if it can help get you through a tough time it has done its job.

By Bob Negele

Kelly Kraft is a former TV news reporter and spokeswoman for Illinois Governor Pat Quinn.  She is a journalism and political science graduate from Indiana University.  She is also Governor Quinn’s pick to be the executive director of the Illinois Sports Facilities Authority.  Despite her qualifications, Kraft is sparking an intense debate; she also filed for bankruptcy in 2009.

According to reports, when Kraft was working in media relations for the state of Illinois she filed for bankruptcy protection.  Kraft had more than $102,000 in credit card debt.

Governor Quinn is now attempting to put her in charge of a multi-million dollar budget.  Her appointment is opposed by many, most notably, Chicago Mayor Rahm Emanuel.

This leaves Kraft squarely in the middle of a political battle.

Mayor Emanuel has not cited her bankruptcy as a factor for his opposition.  Instead, the mayor claims that Kraft has a lack of experience for such a prestigious position.

“That board and that staff is the thin blue line protecting the taxpayers of the city of Chicago from paying, in case there’s something’s mismanaged… And I think we should find the best-qualified people for that, which is why I- given the board I inherited- replaced them, put in place a whole new board with backgrounds in financial management, and expect the staff to meet that standard.”

According to other reports, Governor Quinn, “has accused Emanuel of ‘character assassination’ against both himself and Kraft, accusing the mayor’s office of leaking information that Kraft declared for personal bankruptcy in 2009.”

While Kraft’s fate is left to the politicians, it does bring an interesting question to the forefront: Should Kraft’s bankruptcy factor into her appointment?

Eric Zorn, journalist for the Chicago Tribune, broaches this topic in a recent opinion article.  His overall assessment? No, her personal finances shouldn't be an indicator on her professional abilities.

“[M]essy personal finances and attentiveness to job duties aren't necessarily or even usually related; that many lives are compartmentalized and bankruptcy shouldn't be held against her,” wrote Zorn.

Zorn has it right.

Many would argue that a personal bankruptcy shows evidence that Zorn is bad with finances and, therefore, shouldn't be trusted with a major state budget.

Without knowing more of the details of her situation, there shouldn't be an automatic presumption that her personal finances are evidence of poor budgeting.  There is no background into why she filed bankruptcy or what factors lead to that decision.

Bankruptcy is a tool available to all of us.  For thousands of Americans a year, bankruptcy is the smartest financial decision they can make.  Kraft made a decision three years ago to file bankruptcy, but she shouldn't be punished now because of it.

This is a guest blog post written by Danielle Rodabaugh at SuretyBonds.com. The opinions expressed do not necessarily reflect the opinions of TotalBankruptcy.com.

To improve their ability to establish a solid career, some young entrepreneurs have taken on a lot of student loan debt. Starting an enterprise can be stressful enough on its own; doing so while struggling to make ends meet only exacerbates the situation. As a professional who works with new business owners every day, one piece of advice I offer young entrepreneurs is this: if you have student loans, pay them off in full before trying to start a business. Doing so can improve entrepreneurs' financial stability in two key ways.

1. Paying off student loans will take less time and cost less.

It's no secret that new business owners typically don't turn a profit right away. As such, entrepreneurs usually don't have much cash to live on when starting their businesses. Failing to pay student loan bills on time can severely damage an entrepreneur's credit.

Even those who think they could still make student loan payments while starting a business should realize they won't be able to do so quickly. The longer it takes to pay off loans, the more interest accumulates. By fully repaying a student loan within five years (before launching a business), an entrepreneur will pay much less than if that same loan was repaid over a 15-year period.

For example, paying $500/month toward $25,000 in student loans financed at 5% means an entrepreneur will have repaid the loans in four years and 9 months while accumulating $3,092 of interest. However, only paying $200/month toward the same $25,000 in student loans financed at 5% means an entrepreneur will have repaid the loans in 14 years and 9 months while accumulating $10,087 of interest.

2. Starting a business is easier to do with high credit scores.

Financial institutions review business plans, and they consider credit history as an indicator of a person's ability to manage finances. As such, establishing a new enterprise is much easier for entrepreneurs who have a strong credit history under their belt. If student loans have left an entrepreneur with a high debt-to-credit ratio, his or her credit scores will reflect that. To put it simply, without the additional burden of student loans on their shoulders, entrepreneurs have an easier time securing the business credit they’ll need in the future.

Furthermore, many entrepreneurs need to be legally licensed and bonded before they can open for business. Credit issues can affect their ability to qualify for licensing and bonding in certain industries. For example, at least once each week I encounter individuals who wholeheartedly believe they have the experience required to start their own construction company, but their poor financial credentials disqualify them from getting the surety bonds required to work on certain projects. Entrepreneurs must realize that the financial decisions made today can force them into less-than-ideal decisions later on.

Paying off student loans quickly might seem impossible for some young entrepreneurs, but doing so will improve their financial situation immensely as they prepare to start a new business. Although it takes time, the resulting financial stability is worth it.

Danielle Rodabaugh is the director of educational outreach at SuretyBonds.com where she tracks developments within the surety industry. A graduate of the University of Missouri School of Journalism, Danielle has a special interest in entrepreneurship, insurance and finance.

By Bob Negele

Zynga, the company responsible for many casual and social video games like “Words With Friends” is having financial difficulties.

According to a recent article by Reuters, Zynga has been in an “inexorable decline over the past six months, capped by a sharp reduction in its 2012 outlook.”

The company went public in 2011.  It was riding the wave of social media gaming.  It has since plummeted to less than 25 percent of its initial offering price.  The company debuted at $10 per share, but is now down to a low of $2.21 per share.

To make matters worse, some of the companies most innovative and successful game creators are leaving the company.  Perhaps the most notable of them are the two creators of the game “Words with Friends.”

But those two were not alone.  The article reports that over a dozen key employees have left in the past six months.

Aside from Words with Friends, the company is also responsible for notable games such as: Farmville, Zynga Poker, The Ville, and ChefVille.

Zynga, however, does not appear to be in danger of bankruptcy.  Despite the slipping stock performance, the company has a considerable amount of cash holdings, nearly $1.6 billion.  On top of that, the revenues are still substantial.  The tourmoil in the company is due to under performance, and not a complete lack of revenue.

Wall Street speculations about a takeover are on the rise.

According to the article, “the names of potential acquirers being bandied about have included Amazon, Yahoo and Activision, the game publisher that has a small presence on Facebook and smartphones, two platforms where Zynga has invested heavily.”

Despite these prospects, it is possible that Zynga will have a hard time moving forward.

Due in part to the inherent uncertainty of social gaming, Zynga may have a hard time surviving long term.

PopCap Games was a similar, but smaller, company.  In July it was acquired by Electronic Arts for $650 million in cash plus stock.  After the EA took over, all the employees were laid off and the company closed.

Because of the success Znyga has seen in the past, it is unlikely that it will become a PopCap Games within the immediate future.  If Zynga gets bought out, the new owner would likely wait to see if Zynga can reboud.

Richard Greenfield, an analyst for this industry, said, “Everyone who has tried to make a purchase in this sector is losing money.”

With analysts portraying the industry so bluntly and pessimistically, it’ll be interesting to see if Zynga can adapt and evolve when many others have failed.  Zynga seems to be on a precipice, and the next few years should tell what kind of company it becomes.