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Richmond Virginia Family Law Blog

How divorce can impact a tax return

Virginia couples who are thinking about separating should understand that a divorce has several tax implications. For instance, it may be necessary for an individual to change his or her filing status from married to single. If a couple has merely separated, they could file taxes jointly or separate. Those who pay or receive alimony may need to acknowledge this on an income tax return.

The alimony receiver must pay taxes on the payments while the payer gets a deduction. However, these roles will be reversed for divorces filed after 2019 due to the new tax reform law. It is important to note that neither of these deduction guidelines apply for child support payments. Capital gains and other taxes may need to be paid when assets are divided or sold in a divorce. In many cases, the amount each person pays will be determined in the divorce settlement.

Court rulings may change Chapter 13 bankruptcy rules

When Virginia residents file for Chapter 13 bankruptcy, they may have the ability to modify their mortgages. However, if the lien is a primary lien on a primary residence, the debt is generally fully secured even if the homeowner is underwater on the loan. This is usually not the case if a property is a vacation or investment property. In such a scenario, the property owner could be entitled to a "cram down."

What this means is that the secured portion of the loan represents its current market value. Any balance left remaining can be converted to unsecured debt. Recent court decisions may give debtors the ability to do this on their primary residences as well. In a decision made by an Ohio judge, a mortgage held by SunTrust was ruled more than just an interest in the property. Therefore, no protection against a mortgage modification existed.

Chapter 13 cram downs could come to some primary residences

Many people in Virginia who are unable to repay a large debt burden but want to preserve their mortgages, car loans and similar agreements make use of the provisions of Chapter 13 bankruptcy. Under a Chapter 13 bankruptcy, people have the ability to modify mortgages on investment properties and second homes, as well as car loans and similar secured loans for personal or real property, in a process known as a "cram down."

A Chapter 13 cram down applies when the amount of the loan is greater than the value of the secured property to which the loan applies. In a cram down, the loan is divided into two parts: a secured portion that is equal to the current value of the property and the remainder of the loan, which is grouped with other unsecured debts like credit cards.

What to consider before taking out a 401(k) loan

The average household in America that carries a debt owes a total of $131,431. This includes mortgage debt, and other common obligations include student and auto loans and credit cards The average credit card balance is $15,654 while the average student loan debt is $46,597. Americans have an average auto loan debt of $27,669. One way for Virginia consumers to pay off that debt may be to dip into a 401(k).

However, this may not necessarily be the best way. Prior to taking a 401(k) loan, individuals should consider whether they can get that money from another source. It may also be wise for them to create a budget or otherwise look at what money is being spent on each month. Ideally, they will be able to both cut down on debt and save for retirement at the same time. Cutting spending may make it easier to do both.

Study reveals insights into attitudes about domestic violence

Virginia victims of domestic abuse often look to emergency responders to provide protection in their time of need. However, first responders generally have the same attitudes as other segments of society as it relates to their perceptions of abuse victims. This was the takeaway from a study conducted by Florida State university and University of Windsor researchers.

The study asked 403 emergency personnel workers in Florida a series of questions about domestic violence. Of the respondents, 33 percent said that domestic violence was a normal response to stress. Furthermore, 35 percent of respondents said that the victim was to blame if he or she stayed in an abusive relationship. Many of those who took part in the survey believed that the victims were responsible for what happened to them.

Most people do not expect to ever pay off debt

Some people in Virginia might feel it is not possible to pay off all their debt. According to a survey by, more than two-thirds of adults think they will never be able to pay debts in full.

Both the type of debt and the age of the debtor affected how pessimistic the person was likely to be. People who owed money on student loans, auto loans, credit card bills and mortgages were more likely to think they could pay off their debts while people who owed on payday loans and medical debt were less likely to think so.

Credit card debt: Should consumers be worried?

Consumer debt has hit an all-time high, and much of the credit goes to charge cards used by individuals in Virginia and across the U.S. Some consumers may be looking at Chapter 13 bankruptcy filings for relief from overwhelming debt while others might be able to pay off creditors before diving in for another round. The new records in credit card debt agree with other measures of economic stress, including a lack of savings to ride out any unemployment and the ever-worrisome threat of a new recession.

The Federal Reserve recently estimated that such revolving credit rose over the past year to $1.023 trillion, about $55.1 billion more than the year before. This new figure is an increase of 5.7 percent and about $2 billion more than the credit card load amassed by consumers in 2008 just before the recession caused by the implosion of the housing bubble.

How a 401k may help with debt relief

Virginia residents or others may find themselves in a financial emergency for any number of reasons. One way to possibly get out of that hardship is to apply for a 401k hardship withdrawal. A person may be eligible for such a withdrawal if he or she faces an emergency expense related to a medical issue or a home repair. It may also possible to qualify if making a payment will help the employee to avoid eviction or provides funds to pay for funeral expenses.

Those who are interested in taking a hardship withdrawal from their 401k should first see if their plan allows for one. It is also critical that an individual have no other way to pay for the expense. In some cases, the plan a person has will be stricter about how and when a withdrawal may be taken. Those who don't meet the criteria for a hardship withdrawal may still qualify to take out a 401k loan instead.

Some couples may use spyware, trackers during divorce

A 2012 study by the Justice Department found that around 1.5 percent of all adults reported experiencing stalking compared to 3.3 percent of people who had gone through divorce or separation. Individuals in Virginia and throughout the country may also experience this in the form of electronic surveillance. This could include both GPS trackers and spyware installed on smartphones.

One woman experienced stalking after her ex-husband always seemed aware of her whereabouts. She was unable to locate a GPS tracker on her car, but a mechanic found one a few weeks later. She reported the tracker, but law enforcement said her ex-husband had not done anything unlawful since the car was still in his name as well. When the woman suspected spyware had been placed on her smartphone as well, a store replaced it instead of looking for the spyware, so she did not have any evidence.

Why divorces surge in January

It seems as if more people in Virginia and around the country file for divorce in January than in any other month. While studies have shown that more divorces are filed in August than in January, there is normally a surge at the beginning of each year. There are several factors that contribute to this.

One of the leading reasons that divorce filings spike in January is that people may simply want to wait until after the holidays. This is especially true for couples who have children and who don't want to spoil their vacations.

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