Bankruptcy and Other Options

When a debt is charged-off by a lender the IRS and SFTB will treat the charged-off portion of the debt as income for determining how much income tax you owe.  This is called Cancellation of Debt tax.  Debts eliminated in bankruptcy are not subject to this tax.

May 5, 2014 What’s New?

Thomas B. Hjerpe, Esq.

Jocelyn M. Godniho, Esq.

Barbara Voss, Legal Secretary

Nicole Alcorn, Legal Secretary

350 E Street, Suite 403

Eureka, CA  95501

Telephone:  707 442-7262

Law Office of Thomas Hjerpe

We are a debt relief agency.  We help people to file for bankruptcy relief under the Bankruptcy Code

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What Happens If you Can’t Pay Credit Cards?

If you have to stop paying your credit card debts, the credit card companies do not immediately garnish your wages or seize your property.  Credit card companies call and write and demand payment and they damage your credit rating, but it often takes 9 months or more before they start filing lawsuits.    

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If you owe more than your house is worth and you can’t afford the payments your options are foreclosure, short-sale or bankruptcy.  A foreclosure will eliminate your liability on a first mortgage but often leaves you vulnerable to being sued by any second mortgage.  In a short sale it is possible to negotiate a release of liability on both a first and a second mortgage.  In either case, the “debt relief tax” may be a concern.  A bankruptcy may allow you to stop a foreclosure, repay past-due mortgage payments and remove and eliminate a 2nd mortgage.

Foreclosure, Short-Sale or Bankruptcy

Foeclosure Information>>

Is there credit after bankruptcy?

Yes.  Credit will be available - but at bad terms.  Interest rates and credit limits will improve quickly.

What is a “Debt Relief Tax”?

The IRS and SFTB treat charged-off debts as “income” for assessing income tax liability.

Credit Reporting Information>>

Debt Relief Tax Information>>

What is “Judgment Proof”?

Someone who is “judgment proof” has nothing that a judgment creditor is allowed to take.

Judgment Proof Information>>

We are your Eureka bankruptcy attorneys.  We have been providing bankruptcy assistance and other debt relief services to individuals and small businesses in Northern California since 1996.  Our bankruptcy law office is in Eureka.  We regularly help people with bankruptcy issues in Fortuna, Arcata, McKinleyville and throughout Humboldt County.  We help people in Crescent City through Del Norte County.  We represent individuals with bankruptcy and alternatives to bankruptcy in Trinity County, Shasta County and any of the communities in the Redding area.  We have many bankruptcy clients in Lake County, Mendocino County, Sonoma County and into the Bay Area.  We offer free consultations either in-person or by telephone.  This has allowed us to provide excellent bankruptcy representation for individuals who live in remote areas and would otherwise have to drive hours to meet with an attorney.  

This website is intended to provide general information about bankruptcy and alternatives to bankruptcy.  Bankruptcy laws are applied differently in different jurisdictions.  You should not apply this information to your particular situation without meeting with us so that we can be certain of how the law would be applied in your particular case.


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Options and Solutions

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