Warrant in Debt Template

Here in Virginia, a lawsuit for money in General District Court is called a Warrant in Debt. This sounds a lot scarier than it is. It basically means someone, a person or a company, is claiming you owe them money.

The purpose is of the Warrant in Debt is to get a judgment. A judgment, on its most basic level, is a court order that says you owe them money. It is a legal document that gives them power. The reason people want to get a judgment is they can try more aggressive ways to collect, including garnishing wages or bank accounts. Before getting a judgement, most creditors can only call, send letters, report negative information to credit bureaus (certain creditors, such as IRS, state, federal student loans, etc. do not need a judgment to use other means to collect).

The Process of a Warrant in Debt

After a creditor files a Warrant in Debt in the court, you must be given notice. Most often defendants are served with the notice in two ways: personal service or posted service. With personal service, a sheriff or a process server, brings the notice directly to you or an adult resident at your home. The other way (and much more common way) you can be served is via posted service, when the notice is posted/taped to the front of your door. The creditor will also provide a mailed notice. The Warrant in Debt lays out the most basic information about the claim: the parties involved, addresses, lawyers, the amount of the debt, the reason for the claim, etc.. Additionally, the document will have a “Return Date” on the upper right corner of the document. This is the date and time that the court is setting a hearing about the debt.

If you do not show up at the Return Date, the court will enter a Default Judgment against you. A Default Judgment means no one appeared to defend against the lawsuit, and the court entered a judgment. You have every right to attend, but it is important to understand what factors the court will consider. Often, clients who get a Warrant in Debt want to go to court and explain to the judge that they just cannot afford to pay. The judge may sympathize with the situation, he or she is not there to determine whether you can pay, but to determine whether the debt is valid or not. The judge at the court date will ask if the debtor or defendants owes the money or disputes the debt. If you owe the money, then the court would enter a judgment.

Disputing the Debt

If you say you dispute the debt, a judge will set a trial date to allow the plaintiff and defendant a chance to prove their case. At trial, the creditor will present evidence and try to prove the debt is valid. After the creditor presents its evidence, the court will allow the defendant to present any evidence to show why the debt is not valid or owed. Common defenses are things such as, statute of limitation, previous payments not accounted for, amounts are incorrect, mistaken identity, etc. The court cannot consider arguments about inability to pay. After both sides present evidence, the court will then make a legal determination.

What Happens After a Judgment?

If you fight the debt and win, then there is nothing else to worry about unless the creditor appeals. If you lose or you allow a judgment to be entered, the creditor can attempt to collect. Since a judgment is valid for at least 10 years (can be valid up to 40 years in Virginia), creditors may wait to collect. However, some creditors will immediately start using their rights. Creditors can collect via garnishment of paychecks, garnishment of bank accounts, a lien on property, etc.

After a judgment is entered, creditors are often more difficult to deal with since they have many more rights. Stopping a garnishment is very difficult in Virginia; usually, the only option is bankruptcy. As a result, many individuals are forced to file bankruptcy after being garnished. This is why we highly recommend settling or negotiating with a creditor before a judgment is entered because you are more likely to succeed.

Attorney Ashley F. Morgan is a Virginia licensed attorney. She has been helping clients deal with debts and Warrants in Debt for most of her career. She helps clients settle or negotiate debts, along with defending against certain lawsuits, and discharging debts through bankruptcy.

Debt is weighing on a man and consuming all his money.

To Anyone Feeling Overwhelmed with Debt:

As a bankruptcy attorney, my office deals with people who are going through stressful moments in their lives. Every day we help educate people on bankruptcy and debt issues. Hardest part about talking with individuals about debt relief options is combating the significant misconceptions about debt issues and bankruptcy. If we are able to explain the correct information, we can help individuals truly understand the legal process and get a fresh start. But, it is not always easy because many sources promote bankruptcy as the worst option out there and that bankruptcy means you are a failure; these ideas are completely false and do not reflect the actual concept of bankruptcy.

I get asked all the time, is bankruptcy the right option for me? Should I file? I almost always respond that I can’t make that decision; it is a financial decision only you can make. On occasion, when it is the only reasonable option available to achieve their goal (like stopping a foreclosure or garnishment), I let them know it is likely your best option here. Sometimes, I can say — especially when the debt level is very low — I cannot recommend bankruptcy. Often with low debt, the bankruptcy fee could be better put to use to settle debts, make a few payments, or just use the money to live. But, often, the answer is that bankruptcy is a good option, but you need to figure out if it is the right option for you.

For many, whether bankruptcy is a right option comes to whether they can accept bankruptcy as a financial choice and not a reflection of his/her personal situation.

Bankruptcy myths and misconceptions

More often than not, individuals who are great candidates for bankruptcy have preconceived ideas about bankruptcy. Sometimes, the myths can make people wait to consider their options. Waiting can sometimes be the right decision, sometimes filing sooner means you are getting a fresh start sooner, it really depends. Too often, I hear people say:

1. Your credit will be ruined after bankruptcy.
2. You should only file if I have a lot of debt; filing for only $20,000.00 isn’t worth it.
3. I will lose everything, if I file.
4. I can’t have any assets if I want to qualify for bankruptcy.
5. I have a security clearance; I can’t file.

All those reasons for not considering bankruptcy are incorrect. Bankruptcy is a legal and financial option to help individuals and/or businesses manage their debts. Addressing each of those concerns:

Credit after bankruptcy

Six months to a year after bankruptcy discharge, most debtors’ have between a 600 and 650 credit score; some of my clients have even seen higher. This increase in credit is usually without too much effort. If you take good steps toward improving your credit and using credit responsibly, it can be even better.

Additionally, you will be receiving offers for credit (i.e. credit cards and car loans) immediately after filing Chapter 7 or shortly after any discharge. After bankruptcy, most people have no debts (or a limited number of debts) and there is a restriction on when the debtor may file bankruptcy again. After a Chapter 7, a debtor cannot file a Chapter 7 for at least 8 years. This makes you a better credit risk than someone with a similar credit score.

How much debt should you have before considering bankruptcy?

There is no legal amount minimum debt necessary to file bankruptcy. We usually recommend at least $15,000.00 before you start considering bankruptcy as an option. But, the amount of debt usually depends on your income. If, after reviewing your finances, you do not believe you can pay the debt back within 4 to 5 years, then bankruptcy is definitely an option to consider. A Chapter 7 would let you wipe most debt away and Chapter 13 lets you restructure the debt and often allows a payment based on your monthly disposable income.

Bankruptcy is a legal and financial decision; it is not an ethical or moral one. Congress included bankruptcy as an option to deal with debt. They understand people need help dealing with debt. It also isn’t a kiss of death like many people believe it is; your credit will improve and you are allowed to keep certain things.

What can I keep in bankruptcy?

You can keep various things in bankruptcy. In a Chapter 13, you almost always keep everything you want to keep. In a Chapter 7, you are not completely without assets. There are certain bankruptcy exemptions (or protections) that apply to anyone filing for bankruptcy. Your exemptions vary depending on what state and federal laws apply to your circumstances. Most individuals are allowed to keep some cash, up to a certain value of a car, retirement plans, a base amount of household goods, and various other things. The government understands you should be a zero when you have your fresh start, but they do not want you to keep more than a fair share of assets.

Do I have too many assets to file bankruptcy?

Your assets are not part of the analysis of determining if you qualify for bankruptcy; the court is considering your debts and incomes. Assets are a consideration in determining what you could lose in a Chapter 7 or how many needs to be paid out in a Chapter 13. Sometimes it is surprise what can be protected in a bankruptcy. For example, I have some clients who are able to protect $200,000.00 worth of equity in their home and others who cannot even protect $7,000.00 worth of equity. Assets vary dramatically from individual to individual; an experienced attorney can advise you on what could be at risk in your particular situation.

Security Clearance in Bankruptcy:

Being in northern Virginia, we regularly have individuals who file bankruptcy with security clearances. Filing for bankruptcy relief will not automatically prohibit you from obtaining a security clearance. But whether you have a history of financial irresponsibility will be considered during the evaluation process. If the debt was incurred due to a situation outside of the control of the debtor, such as divorce, illness, loss of job, etc., the concern of losing your security clearance is often a lot lower. The evaluation heavily concerns whether it is likely you will be in debt again.

Bankruptcy is a legal way to apply for debt relief. Handling your debt through a bankruptcy is a better option than just having outstanding debt. With substantial debt, the government can be concerned about the potential for being compromised or bribed. A bankruptcy means your debt has been discharged in a Chapter 7 and/or you have a reasonable repayment plan in a Chapter 13. In fact, getting rid of debt in a bankruptcy could increase your chances of approval. Filing shows that you are taking proper steps toward correcting your financial situation.

Options to manage debts:

The most important thing I tell my clients is that they should understand all options available to them. Bankruptcy is just one financial tool out of many that you can use when having financial problems. Only when you understand all of your options can you make the best decision for your situation. Other options we often at least want our clients to understand include: debt negotiation, debt consolidation, and waiting. Each option can have pros and cons, but will vary due to the specifics of a person’s situation.

Timing is also important when considering your financial issues. Some people come to talk about a bankruptcy months before filing. Others file within two days of filing. If you understand the pros and cons of a bankruptcy well before you file, you could make decision about when to file that is best for you. If you wait until the last minute to consider bankruptcy, for example when a foreclosure is schedule or a garnishment is pending, you have a limited timeline and may have not been able to full review any pros and cons. For example, we do not usually recommend filing bankruptcy within 90 days of any cash advance due to the fact a creditor can object to that debt being discharged.

We offer a free consultation to potential clients for many reasons; we want clients to understand the process, and to see if the client is comfortable with our office. Bankruptcy is a personal process; you must disclose a lot of personal and financial information. If you are not comfortable, you may leave some important information out. We tell our clients you need to be comfortable with us; clients need to be completely candid with your bankruptcy attorney. Many problems can be prevented during a bankruptcy with complete and exact information. Fixing problems after the fact can be difficult, especially when due to lack of information.

You are not alone.

Since the economic downturn of 2007, millions of individuals have filed bankruptcy. Some people have had to file bankruptcy twice in the last 10 years because of many factors, like difficultly finding work even after a bankruptcy, negative equity in real estate, and much more. Bankruptcy is one of many debt relief options; even if you do not need bankruptcy, you may find relief using other options, such as debt negotiation or settlement.

Bankruptcy is a financial tool; Congress included bankruptcy in the laws because the government understands that people can need help with their debts. To make the best decision for any situation, you should educate yourself on all available options. Bankruptcy is one option to help manage one’s finances, it may be or may not be the best option for you, but you owe it to yourself to at least understand the option.

If you want to talk about available options to deal with your debt in northern Virginia or DC, set up an appointment with our office. We want to help you understand your options and get on the right track.




Attorney Ashley F. Morgan is a Virginia licensed attorney. She has been helping clients deal with debts for most of her career. It is important for her that her clients are making the best decision for their circumstances.

Tax Numbers and Calculator

Tax Debt: A Debt Not to Ignore

Owing taxes may not seem like a big deal. Tax debt is not immediately reported on your credit and the IRS seems to only send collection letters. While it is true, the Internal Revenue Service (IRS) is not usually aggressive the first year you owe traditional income taxes, the IRS can ramp up collection efforts and be very aggressive if they are not satisfied you are trying to pay back the debt and/or get current going forward.

1. The Impact to your Credit Report

While not a direct action against your wages or bank account, a tax lien can have a more lasting impact on your life. They are public record and can be reported to your credit report.  You can see a credit hit of more than 50 points from a federal tax lien.  They attach to all property whether real or personal.  The IRS rarely goes after personal property, unless you are living a lavish lifestyle.  They will go after real property, especially if it is not your primary place of residence.  The lien is the way they have the right to take more aggressive action.

2. IRS Can Levy Wages up to 100%

A wage levy is a headache that nobody wants to deal with. The IRS has a chart that they use to determine how much of your paycheck is exempt from levy.  It is not a favorable chart for the taxpayer.  If you are paid hourly or salary you could see as much as 85% of your pay seized every pay period.  If you are an independent contractor who is paid via 1099 you could lose 100% of your income if a levy is issued to your source of income.  This affects truck drivers more than most.  Also, if you own your own business the IRS can go after accounts receivable with a levy.  Wage levies stay in place for wage earners until the tax debt balance is paid or the taxpayer takes the necessary steps to get it removed, typically agreeing to an installment agreement with the IRS.

3. IRS Can Seize You Bank Accounts or Investment Accounts

Even if the IRS does not go after your wages directly, they can still get your income via a bank levy. The IRS can send notices to any financial institution that you may be banking with.  The institution then will set aside whatever funds are in your accounts at the time the bank receives the levy for 30 days.  After 30 days the bank will release those funds to the IRS if they have not received a levy release directly from the IRS. Even with those funds frozen you can still use your account with any additional money that gets deposited during the 30 day hold.  If you have previously gotten refunds from the IRS and gave them banking information for direct deposit of the refund, the IRS will go after that bank first if you owe debt in the future.

Investment accounts that are levied go through the same 30 day hold on the account before funds are send to the IRS. The major thing to remember here is that when those funds are sent to the IRS that creates a taxable event on most retirement accounts. So the taxpayer who has an investment account levied by the IRS, then gets hit with another tax liability because the IRS does not let you choose to withhold any of the investment funds for tax purposes.

To get your bank account unfrozen and save some of the money in there you have to show an undue hardship with the IRS. In the past I have been able to get funds saved on joint accounts where the other person was a child who was away for college, shown that some of the funds in the account are for an upcoming mortgage payment, and shown that the taxpayer has no ability to pay and the account was placed into Currently Not Collectible status.  However, this does not always work and it is sometimes determined by how nice of a collections agent you get on the phone with the IRS

4. Your Passport Can Be Suspended

The most recent attempt to force people into handling their tax situation is the suspension of passports. Congress passed a law that allows the IRS to tell the Department of State when a taxpayer is seriously delinquent with their tax debt.  Anyone with more than $51,000 in back taxes, who has not taken steps to pay back the debt, could be subject to their passports being suspended.  If you do not have a passport your social security number could still be sent to the Department of State and you will be denied a passport should you apply for one.

The IRS started implementing this in 2018 and some taxpayers are seeing their passports being suspended. There are ways to get your account back in good standing with the IRS.  Two most common ways are: 1) an installment agreement to pay back the debt over time or 2) having an offer in compromise accepted, not just filed.  The IRS will not simply remove the passport hold because a taxpayer pays their debt below the $51,000 threshold.  The taxpayer has to get into an agreement to repay the balances.




Arthur Rosatti, Esq. is a Florida licensed attorney authorized to represent clients with the Internal Revenue Service and the U.S. Tax Court. He has experience negotiating with various taxing agencies on behalf of individuals and companies. His goal with their tax debt and get them into the best plan possible to manage the debt. If you have concerns about your tax liabilities, schedule an appointment with our office.

Garnishments are just one way that a creditor can try to collect on a judgment. If you are facing a garnishment, you should understand your options. Understanding how to handle garnishments can save you time and money.

Garnishments are a scary thing. A creditor wants to take money out of your paycheck or your bank account. In Virginia, a creditor can perform either a wage garnishment or a bank garnishment. For a wage garnishment, a creditor can garnish 25% of your “disposable income,” which means they get 25% of your paycheck after deducting for requires taxes. If you are very low income, your income may be too low to be garnished; but, this is very low threshold. For a bank garnishment, a creditor can seize all money in a bank account up to the amount of the judgment. Some funds cannot be garnished, such as social security.

If you are being garnished, there is likely a judgment against you. Most creditors can only garnish you  if there is a judgment against you; the most common exceptions to this rule are tax debt and federal student loans.  Since federal student loans and taxes are owed to the government, they are given special rights to collect. A judgment could have been obtained without you ever having appeared in court or being personally presented with documents.

Some individuals come into our office unsure why they are being garnished or believe they can fight the garnishment. In Virginia, the law requires that a creditor served you at your last known address. Service does not have to be in person, like you often see in the movies (i.e., someone handing you papers and saying you were served). The sheriff or process server can post the notice on the front door of your last know address or hand the papers to any adult living in your residence. If you never got the paperwork, it does not matter — it’s still valid.

On occasion we are able to vacate (reverse) a judgement on grounds that you were served somewhere that was not your residence, but this is rare. Additionally, even if you can get the judgment vacated, you will likely be sued again by the creditor after the judgment was vacated. If the judgment was based on a valid debt, this may be a futile effort.

Guaranteed Ways to Stop a Garnishment

Only two guaranteed ways exist to stop a valid garnishment: satisfy the debt in full or file bankruptcy.

Pay the debt

If you can full pay the debt, a garnishment would stop. Creditors cqn only collect up to what they are owed. However, this can include interest and attorney fees, if they judgement allowed for those expenses. Depending on how old a judgment is, it may have increased dramatically due to interest. We have seen some clients with judgments subject to 30% interest!

Filing bankruptcy

Filing bankruptcy stops any and all collection activity; it is the trump card that debtors can play against handle garnishments and stop creditors from collecting. The moment you file a bankruptcy, as long as you haven’t had multiple bankruptcy cases pending within the last year, the federal court issues an order that says all creditors must immediately cease any and all collection activity. To ensure the creditor has knowledge of a bankruptcy, our office sends notice of the bankruptcy to any creditor attempting to garnish you and the court where the creditor obtained the judgment. Sometimes, we are even able to get some of the garnished funds back.

Bankruptcy is often the only guaranteed way to stop a garnishment. Often, we recommend bankruptcy as the only viable way to stop garnishments. Often, our clients often spend less to file bankruptcy than to pay or settle a judgment.

Ways to Attempt to Stop a Garnishment

There are two other ways that can either potentially handle garnishments. We rarely recommend these two other options, but in certain circumstances they may help; these options are negotiate the debt or file a Homestead Deed.

Negotiate the Debt

We occasionally can recommend trying to negotiate a debt; but, creditors are less likely to negotiate after a judgment is obtained. Creditors get certain rights when they obtain a judgment, these rights include garnishments, interrogatories (getting you to answer questions under oath), etc. If the creditor is getting more through the garnishment process than you are offering, it is not very likely they will take the settlement.

File a Homestead Deed

One other option to handle garnishments that we rarely recommend is to file a Homestead Deed, but it can serve a limited purpose. After a garnishment has been filed you will be served with the garnishment summons. On the garnishment summons, there will appear a “return date.” This date is when the judge will determine if the creditor is owed the funds or not. A homestead deed, which is a document particular to Virginia, advises the court that you are using your lifetime exemption under Virginia Code § 34-4 to protect up to $5,000.00 (or $10,000.00 if you are over 65). You must file the document in the land records.

We do not recommend a Homestead Deed because it offers a temporary solution. This protection is a lifetime exemption. This means that if $3,500.00 has been garnished from your wages during the past 6 months and you file a Homestead Deed to protect the funds, then you have used the $3,500.00 to get the funds release. Following the Return Date, the creditor can just file another wage garnishment immediately and start the garnishment all over again. Eventually, you will exhaust the the $5,000.00 protection. Using up this exemption also result in limited protections in any future bankruptcy; debtors must also use a Homestead Deed in bankruptcy to protect cash, or cash like assets.


Attorney Ashley F. Morgan is a Virginia licensed attorney. She has been helping clients manage various types of debts for years. Ashley focuses on helping her clients finding the ideals solution to their debt problems. Ashley reviews each person’s personal situation to determine his/her best options. She regularly helps clients handle garnishments and other collection activity.

Divorced couple fighting over dollar bills

If you are considering getting divorced, you must speak with a divorce attorney immediately. There may be potential tax consequences of divorce.

During what could be the most trying part of one’s life, it may be hard to think about how getting a divorce can affect your taxes.  There are many things that a person who is attempting to finalize a divorce this year has to think about.

Alimony/Spousal Support may be taxable

First, let’s take an example of where there is no tax debt in the relationship.  This allows the couple to only have to worry about one major thing about taxes moving forward: alimony payments or spousal support.  In the past, alimony payments made by one spouse was a tax write off, while the spouse that received the payments had to pay a tax on the amount of alimony received.  This law was changed with the passing of the Tax Cut and Jobs Act of 2017.

The new law said that starting in 2019, alimony payment will no longer be a tax deduction for those making the payments and those receiving the payments will no longer have to claim the payments as income.  Importantly, one can get “grandfathered” in to the old system if they finalize their divorce in 2018. What that this new law essentially means that if spouses finalize their divorce in 2018, the alimony payments fall under the old law; this allows a tax deduction for the spouse making payments and requires the spouse receiving the payments report the payment as income.

As long as your divorce is final before January 1, 2019 – and if Congress doesn’t change the provision again – the payments will be deductible for the payer and taxable for the payee for the life of the existing agreement. However, if you or your spouse modify your agreement in the future, the new laws would control; thus, resulting in change in the tax liabilities.

It is important that couples that are going through divorce understand this change in the law.  One spouse may try to drag things out to 2019 while the other will want to finalize in 2018.  This change is law has resulted in many contentious divorces during 2018.  If you have a divorce attorney, please do not hesitate to have them discuss this provision with a tax professional; this helps ensure they can draft the settlement properly and know your exact tax consequences of divorce .

Tax Debt

Second, the more cantankerous situation during a divorce occurs when there is debt owed jointly between the two spouses when the divorce is finalized.  It is even more difficult to manage joint tax debt.

The first thing figure out in a divorce is who is responsible for repayment of the debt.  Keep in mind that the Internal Revenue Service does not honor what the divorce decree says. The divorce decree only affects the rights of the spouses; it cannot alter the rights of third parties. For example, if the divorce decree states that one spouse must pay the joint debt, the IRS can and will go after both spouses for the debt after a divorce.  With that in mind, for the spouse that is not responsible for repaying the debt in the divorce decree, it is important to have language in the decree/property settlement agreement that gives that spouse the right to reimbursement of any money that goes towards the outstanding tax liability; whether it is future tax refunds, payments as part of a repayment plan, or levy/garnishment payments.


Arthur Rosatti, Esq. is a Florida licensed attorney authorized to represent clients with the Internal Revenue Service and the U.S. Tax Court. He has experience negotiating with various taxing agencies on behalf of individuals and companies. His goal with their tax debt and get them into the best plan possible to manage the debt. He has experience dealing with divorce spouses dealing with their joint tax debt. If you have concerns about your tax liabilities, schedule an appointment with our office.

Schedule C: Property Exemptions

Bankruptcy Exemptions are the laws that allow you to keep assets in a Chapter 7 Bankruptcy

The most common type of bankruptcy is a Chapter 7 bankruptcy, aka a liquidation bankruptcy.  The process usually takes approximately three to four months for a standard case. During this process you file a petition that provides information about your life. This information includes your income, expenses, debts, assets, and personal information. The bankruptcy process allows you to keep certain items. If you have more then the minimal items the bankruptcy trustee sells the debtor’s nonexempt assets and uses the proceeds of such assets to pay creditors. Understanding bankruptcy exemptions can help you determine the right debt management option for you.

Who can file

Chapter 7 is an option for individuals or businesses. An individual gains fresh financial start after filing a Chapter 7 — only select debts remain after discharge. A business uses a Chapter 7 to close the business after it is no longer profitable.


How to qualify

When a debtor files Chapter 7, the court looks at the household income. If the household income is below the median for your state, you can qualify for Chapter 7. If your household income is above the median income for your state, you may still qualify. The court analyzes all income under the “Means Test.” This test is basically used by the court to determine if you have any disposable income at the end of every month to pay over to your creditors. The court determines the disposable income by deducting specific monthly expenses from your “current monthly income” (your average income over the six calendar months before you file for bankruptcy). Some of these expenses are actual expenses, such as car payments, mortgage payments, taxes, etc. Other expenses are based on the Internal Revenue Service standards for your county, such as utilities, food, etc.



When filing a Chapter 7, most people are most concerned about what assets you can keep. There are certain bankruptcy exemptions (or protections) that apply to anyone filing for bankruptcy. Your exemptions vary under state and federal laws. The exemptions you can use depend on state law and where you have resided for the past two years.
In Virginia, there are various exemptions that apply for residents. Some of the most common exemptions include:
Clothing: up to $1,000 of the value of clothing. Used clothing have a very low resale value; we use thrift store prices to value clothes. The only issue that ever arise are if there are a significant amount of newer designer clothes.
Vehicles: each debtor may keep up to $6,000.00 in equity in a car. If a car is jointly owned, this means a couple can have up to $12,000.00 worth of equity in the car. This means that if you have a car worth $20,000.00, but there is a $18,000.00 loan on the vehicle, there is only $2,000.00 worth of equity.
Household good and furnishings: each debtor can keep up to $5,000.00 on household goods. Generally, there is no issue with these items unless you have valuable antiques or collectibles.
Wedding and engagement rings: debtors are allowed an unlimited exemption for wedding and engagement rings. This means there is no limit on the value you can have for an engagement and/or wedding ring.
Tenants by the Entirety: there is an unlimited exemption for property titled Tenants by the Entirety (TBE) when there is no joint debt between the spouses. In Virginia, the law allows property (usually a marital home) to be titled in a specific manner between a married couple, but also requires that no joint debts exist between the parties. If you think this may apply to you, then I recommend speaking to an experienced bankruptcy attorney. Steps have to be taken to ensure there is no joint debt and that needs to be proven to the trustee in your case.
Federally-qualified retirement plans: traditional retirement plans, such as your 401(k), IRS, Thrift Savings Plan (TSP), etc. are all 100% exemption.
Tools of the trade: there is a $5,000.00 exemption for assets that are directly related to your primary profession.
Wildcard: Virginia bankruptcy exemptions are generous for everything exception a potential wildcard. A wildcard applies to any asset that has no other exemptions available, including cash in the bank and equity in a house. A debtor may also use this exemption to supplement any other exemption if more protections are needed.

Virginia’s wildcard is also called a Homestead Deed; it has this name because a document must be filed in the land records in the county in which you reside. This exemption is a $5,000.00 lifetime exemption. Debtors receive additional $500.00 exemption for any dependents.The exemption increases to $10,000.00 at the age of 65. However, since this is a lifetime exemption, if you file bankruptcy and use $1,500.00, you only have $3,500.00 remaining for any future bankruptcies filed in Virginia (until you turn 65).


NOTE: The above list of Virginia bankruptcy exemptions is NOT complete or exhaustive list. It includes only the most common exemptions. Additionally, these exemptions may change. 


Warnings about assets, exemptions and transfers 

It is also important to note that transferring assets to avoid including them in your bankruptcy is a bad plan. All transfers of property within two years of filing bankruptcy must be disclosed. The case trustee can reverse transactions. If the court determines you did the transfer with the intend to avoid a bankruptcy or to hide assets from creditors, the court may also deny you a discharge of your debts.


The court may review all debts that a debtor paid back within the last year. If you have paid back family, friends, or business partners, the court can actually sue those individuals for return of the funds. The court believes that a debtor must treat all creditors the same; as a result, you must treat American Express the same as Uncle Joe. Paying one creditor more money than another is considered a preference because you are giving preferred treatment to one creditor over another.
Once a Chapter 7 bankruptcy is filed, you cannot voluntarily dismiss the case.  A judge must review any request to end a debtor’s case. A judge will not dismiss your case just because a debtor is losing property or a trustee sues a debtor’s  family member.


An experienced Virginia bankruptcy attorney will be able to review your situation and help prevent potential problems in your case. Having an lawyer handle your case properly from the start can prevent problems later on.


Alternative options

If Chapter 7 is not right for your situation, there can be other options. Many people who qualify for Chapter 7 due to their income, choose to file a Chapter 13 because there are not adequate bankruptcy exemptions to protect all of their assets. If you have nonexempt assets, a Chapter 13 is another option to consider. In a Chapter 13, you are allowed to keep all nonexempt assets because debtors are required to pay out the value of these unprotected assets over the course of three to five years. Additionally, sometimes debt negotiation is a better option. If you have limited amounts of debt or cannot qualify for a Chapter 7, sometimes having an attorney help you settle a debt, is a better option.




Most individuals want to keep as many assets when possible, if you are filing bankruptcy.  Having an experienced bankruptcy attorney can help ensure your case goes smoothly and can help protect as many assets as possible. Attorney Ashley Morgan has experience dealing with all the above issues.
Sign for United States Bankruptcy Court

Having financial problems? Think bankruptcy may be an option for you? To help ensure you keep your options open and available, understand there are things you should or shouldn’t do. In many cases, if you take certain action, such as transferring a house into the name of a family member before filing bankruptcy, you may either limit your options available or put your asset at risk.  There are even some actions that could completely jeopardize your ability to get a bankruptcy discharge. Here is a list of dos and don’ts for bankruptcy.

Here are the Top 17 Dos and Don’ts for bankruptcy:

  1. Do talk to a bankruptcy attorney immediately. Most bankruptcy attorneys offer free consultations, so you should take advantage of that. Talking to an attorney doesn’t mean you will definitely be filing bankruptcy. It allows you to understand how bankruptcy would apply to your situation. There are many different types of bankruptcy and it is important to understand how each option could apply to your situation; individuals primarily file Chapter 7 or Chapter 13. Additionally, you want to find a bankruptcy attorney that makes you feel comfortable. You will only be completely honest with someone if you trust him or her.
  2. Don’t transfer property or money. It is important for you to be aware that transferring title to property before declaring bankruptcy is not an option. Do not sell or transfer assets to your friends or relatives to hide them from creditors or the bankruptcy court. The trustee will ask you about such transfers at the first meeting of creditors, and has the power to recover those assets. The trustee can basically undo any transaction you have done within a certain time frame. In Virginia, it is two years. Also, don’t transfer money into your kids’ bank accounts. They have you as a co-signor or guardian and are subject to the same review as your accounts. Hiding assets can be a reason for the court to deny you a discharge, and you can be subject to criminal prosecution.
  3. Do tell your lawyer everything. Even if it is embarrassing it is better if your attorney knows everything about your situation. If you have made major purchases recently, then it may be important to wait to file. Or if you have an existing medical condition, it may be important factor to consider in the timing of your bankruptcy. Additionally, it is important to list all assets and debts. Anything that isn’t listed in your petition may not be discharged. Additionally, failure to list all your assets and your debts may result in not getting a discharge.
  4. Don’t leave out income. People think that a second, part-time job does not count as income. All household income must be included. The court will look back at least six months to see what your household income has looked like. Similarly, even if your spouse is not filing, you must list his/her income unless you are legally separated. The court needs a picture of your household. The court cannot require a spouse to pay a debtor’s debts, but they can require a spouse contribute to the household. If you want to claim somebody as a dependent in your bankruptcy, you must include their income. Additionally, social security does not count in qualifying you for bankruptcy, but it still must be listed.
  5. Do keep track of expenses. Part of a bankruptcy filing is disclosing expenses. Many individuals do not always realize where their money is going. But we want to be as accurate as possible with our accounting. If you are sending your mom, $300 per month, we want to make sure we account for that. Some expenses may be questioned or deemed unreasonable. If you are spending $1,000.00 per month on food for a household of one, the court may not allow the full amount unless there is a good justification. Other expenses may be allowed, but could be questioned if higher than average. For example, if you are paying $700.00 per month for medical expenses, it is important to keep documentation in case you need to prove it later on.
  6. Don’t pay back preferred creditors or family/friends. Many consumers want to pay certain creditors in full before filing for bankruptcy. The court doesn’t want you to play favorites and pay money to some creditors and not pay the rest. The court believes all creditors should be treated the same; however, there are exceptions for secured creditors, like your mortgage or car loan. The Trustee can reach back ninety days to recover money paid to general creditors and spread it out more evenly to all of your creditors. The Trustee can take back funds paid to your family and friends, if you have paid them back within a year.
  7. Do make sure to list all debts. Bankruptcy does not allow you to pick and choose which debts to list or not list. You must list all debts, from the credit card with American Express to the personal loan from Aunt Sally.
  8. Don’t incur any new debt without first asking your attorney. It might be a good idea to get a secured car loan before the bankruptcy filing hits your credit profile, but it is a bad idea to buy non essential assets like laptop, plane tickets, TVs, etc. It is important to talk about the pros and cons to opening a new account before filing. Additionally, any new accounts may delay your filing or complicate your case.
  9. Do keep current on payments for non-dischargable debts. Bankruptcy usually cannot discharge student loans, taxes, child support, etc. This means these debts will be around even after your discharge. Talk to your bankruptcy attorney about your specific situation, but generally, you want to keep paying these debts
  10. Don’t make any last minute charges or purchases. When the creditor gets the notice that you filed, it takes a look at your account history. If it sees a bunch of charges right before filing, it will get suspicious. Additionally, creditors can object to any major purchases within approximately three months of filing bankruptcy. The creditor can basically file a separate lawsuit with the bankruptcy court and ask it to not discharge that part of your debts.
  11. Do keep track of deposits and withdrawals. The trustee in your bankruptcy will review your bank statements. He or she may have questions about large cash withdrawals or deposits. It is important to remember what the money was from/for. For example, if you pay your rent in cash every month, try to make sure you get a receipt and keep it.
  12. Don’t take any cash advances. Do not make any major cash advances off of credit cards prior to filing for bankruptcy. A creditor can object to the discharge of debts incurred as cash advances before filing.
  13. Do disclose all assets. Anything that you own needs to be listed in your petition; this includes your 15-year-old furniture and the bank account with 25 cents. Additionally, even if you are on title of an asset, like a house or a bank account, it still means you have an ownership interest. Many families add parents or children to bank accounts to make transferring assets easier, this still means under the law it is yours. It is important to disclose this to your attorney up front to prevent any problems.
  14. Don’t borrow or withdraw from your retirement. Federal and Virginia law protects your tax retirement accounts from creditors. But funds in these accounts lose this protection the moment you withdraw them. You could also be liable for taxes and penalties for an early withdrawal. These taxes and penalties may not be dischargeable in bankruptcy and could cause a hardship down the road.
  15. Do separate money. If you have money that may be protected, for example, social security, settlement from a personal injury lawsuit, etc., you want it to be clear where the money came from. Put all the funds in a separate account that you own with the same type of funds, for example, have an only social security account where money is deposited in and no other funds go in. This will make it easier for an attorney to advise you if there is a way to protect the money during a bankruptcy.
  16. Don’t file until your medical conditions are stable. If you are considering filing bankruptcy due to medical debt or expect to have major medicinal procedures in the near future, you usually do not want to file bankruptcy until those are taken care of. Unexpected complications can occur that can cost significant amounts of money. You may limit expenses, if you have insurance coverage; but, insurance does not always cover all treatments and procedures and there is often a deductible and out of pocket to consider. Filing bankruptcy to just have more medical debt occur soon after is not a good outcome.
  17. Do file your taxes. It is important to make sure you are current with your tax filings before filing bankruptcy.  When filing a Chapter 7, the court will require you to provide your most recent tax filings; the court may hold your case open until the tax return is filed and you have received any refund. If you file a Chapter 13, court will require you to file the last four years of returns in order to be compliant with bankruptcy laws.

The bankruptcy court review’s a debtor’s financial situation. This list of dos and don’ts for bankruptcy should help you understand that making financial decisions before filing can impact your case. Most bankruptcy courts can look back at least two years to review transactions completed by the debtor; the trustee in your case can also undo certain transactions. It is important to not take any actions that could jeopardize your assets or even your discharge. Talking to an attorney as soon as you are facing financial difficulties can help. Just talking to a bankruptcy attorney does not mean you are agreeing to file bankruptcy, but can help you understand the option if you need to in the future.



It is important to preserve your rights in a bankruptcy.  Having an experienced bankruptcy attorney can help ensure your case goes smoothly and you come out with a fresh start. Ashley F. Morgan Law, PC helps many individuals manage their debts every month. Attorney Ashley Morgan has experience dealing with all the above issues.

Court ruling of a divorce can lead you to bankruptcy.

Bankruptcy and Divorce

We get many people in our office post-divorce. Going from a two-income household to a one-income household is never easy; one person now pays bills previously split between two individuals. Sometimes, you may have been a house supported by one income, but now that same income is supporting two households due to support payments. Tack on attorneys fees, moving expenses, and related costs, many people are swimming in debt after a divorce. These issues are hard enough to deal with alone, but combine bankruptcy and divorce and the equation gets even more complicated.

It is no wonder why people consider bankruptcy when facing a difficult financial situation post-divorce. The good news is that bankruptcy can help many individuals with debts after divorce, but not all. When dealing with child support or alimony, the obligation will never go away with bankruptcy. That is considering a type of support and an obligation that has been determined important to ensure that your child or ex-spouse can survive. But obligations that are not considered “in the nature of support” can be discharged in a Chapter 13 case, although not in a Chapter 7 one. Non-support divorce debts are usually obligations related to the division of property and the division of debts. This is sometimes the reason we consider that clients should file a Chapter 13 case instead of a Chapter 7 one (even if they can qualify for a Chapter 7).

Chapter 7

We often talk about a Chapter 7 bankruptcy for individuals who are having trouble post-divorce. Debtors file a Chapter 7, which is also called a liquidation bankruptcy, to receive a discharge that cancels unsecured debts. However, it a Chapter 7 doesn’t discharge any divorce-based debts. For example, if you credit card debt owed after your divorce or your own attorney’s fees, a Chapter 7 will usually help to cancel out these debts. However, if you owe your ex-spouse’s attorney’s fees or owe a debt because the divorce decree says you will pay the debt, then a Chapter 7 will not help.

A common scenario is when a joint credit card owed by both spouses prior to the divorce. The divorce decree says that wife will pay the card balance and indemnify the husband going forward. However, the divorce court cannot dictate that a credit card company cannot go after either liable party. As a result, if wife files a Chapter 7 bankruptcy, it would likely discharge the credit card company’s right to seek payment. However, wife’s obligation to indemnify husband in the future would not be discharge. Wife would still have to pay on the debt. This type of situation also occurs regularly with joint tax debt.

Chapter 13

Chapter 13 has a key advantage over Chapter 7. It has what is called a “Super Discharge.” This means certain additional things can be discharged after completion of a Chapter 13 plan. The major benefit to a Chapter 13 is that you can discharge some obligations arising out of a divorce decree.  You can discharge debts dealing with the division of property and the division of debt, often called equitable distribution. You can never discharge child or spousal support — under either Chapter 7 or 13. This means,  if a debtor owe non-support divorce debt, the debt would be discharged at the end of your Chapter 13 case. But, all support debt would need to be paid as normal during the bankruptcy plan. If you are behind on your support, Chapter 13 can be a useful tactic to catch up on the payments.

Attorney Fees

Many times in a divorce case, attorney’s fees are very high. Like previously stated, your own attorney’s fees are usually just considered an unsecured debt that can be discharged in a Chapter 7. However, attorney’s fees owed from your ex-spouse that get awarded can be tricky. The bankruptcy court reviews why the divorce court awarded the fees. If the divorce court awarded fees for work on obtaining support, the bankruptcy court will usually follow the rule of those fees being non-dischargable under all circumstances. If the divorce court awarded fees for work done on an equitable distribution issue, then the bankruptcy court usually allows the fees to be discharged in a Chapter 13. This can be a contentious question, and sometimes requires a hearing in bankruptcy court to determine the proper classification if there is a dispute.

Support Arrearages

If you are behind on your child support or alimony, Chapter 13 does allow you to catch up on that obligation over a period of three to five years. The court requires debtors make all support payments going forward; however, the you could spread catch-up payments out over months or years.

Filing Bankruptcy Before Divorcing

If you are just considering divorcing, sometimes couples can avoid some of the above problems by filing bankruptcy together. Some divorcing couples  file together before the divorce because it can be more efficient. For example, filing a joint bankruptcy will discharge most debt of both spouses. It also usually costs less to file bankruptcy together as a couple as opposed to apart.

Regardless of your situation, you should consult with an experienced bankruptcy attorney. Any Chapter of bankruptcy comes with benefits and risks. Sometimes the difference of support and equitable distribution is unclear. Depending on the factors, there could be arguments supporting varying arguments. Attempting to discharge non-support divorce debts through Chapter 13 can get complicate and require a hearing or trial. Additionally, the bankruptcy codes includes many complicated requirements for Chapter 13 plans; debtors must meet these requirements in order to get a plan confirmed and eventually a discharge.



Attorney Ashley Morgan is an experienced bankruptcy attorney in northern Virginia.  Ashley has helped many individuals handle debts through bankruptcy and divorce. Reach out to Ashley F. Morgan Law, PC if live in northern Virginia and you are struggling managing your debts for a free bankruptcy consultation.

Hand writing payment owed for taxes

Guide on Tax Debt in Marriage and Divorce

Being married comes with the allure of additional tax benefits. With the passage of the new tax bill at the end of 2017, married couples who file a joint return can take advantage of a $24,000 standard deduction. This can help many couple who never itemized their returns in the past. However, you do lose your individual exemptions with the new law. Overall, the new tax bill was supposed to make filing your taxes easier; the law attempts to eliminate the number of people who would qualify to itemize on their taxes. However, the new law does not change the possibility of couples incurring tax debt.

However, trouble arises when during the course of the marriage the couple, or either spouse in a community property state, ends up with a tax debt. From that point, many different scenarios can happen whether the couple stays together or divorces. The easiest and most often occurring situation is that the couple has some tax debt, they are both aware of it and both agree to take the necessary steps to deal with it. In these situations a simple payment plan with the Internal Revenue Service can keep both spouses in a protective status with the IRS and away from collection activity such as levies and garnishments.

Innocent Spouse

Things can get significantly more complicated, even for couples that are still married, when one spouse claims that they are not responsible for the debt. The IRS denies most innocent spouse claims. The “innocent” spouse has to meet very specific criteria to state a successful claim, such as duress at signing, forged signature, and other things that basically point to the fact that they were not responsible for the debt. Now, the IRS can check income records and determine whether the “innocent” spouse would have owed if they filed a Married Filing Separate return, which would make the innocent spouse claim moot. When dealing with debt from taxes the occurred in a marriage, this option is just very rarely viable.

Injured Spouse

A relationship can also get tense when one spouse brings debts into a marriage. Sometimes, one spouse will have tax debt that he/she incurred pre-marriage. If the couples file a joint tax return, the IRS will seize the entire refund. Then the IRS will apply the funds to help satisfy the debt owed by only one spouse. For example, if a husband owes $5,000.00 in back taxes, any refund generated by the filing of a joint tax return, may be withheld by the IRS and applied toward tax arrearage, even if the refund is entirely attributable to the wife’s over-withholding.  The IRS may consider the wife an “insured spouse,” since the IRS seized money that she solely contributed.

The injured spouse then must prove that he/she has no responsibility to the debt and can request a refund of his or her allocation of the joint return refund. Injured spouse claims can also apply to other debts, such as: child or spousal support, delinquent federal student loan debt, or state income tax. Conversely, some couples file “Married Filing Separately” to ensure the injured spouse receives his/her refund. But the IRS limits certain deductions for couples filing taxes as “Married Filing Separately.” Talk to your tax professional about benefits to both options.


Another situation we see here at the firm is when one spouse files for bankruptcy protection when the couple has joint tax debt. This gives protection to both spouses during the bankruptcy but causes the balances to be “mirrored” at the IRS after the bankruptcy is discharged or dismissed. Mirroring of the balances means that the joint debt is split and each spouse is individually responsible for the debt. Bankruptcy will reduce the interest and penalties due by the filing spouses; this means there will be two different balances for both parties. Additionally, debtors may discharged certain taxes during a bankruptcy; however, in most cases, there will still be tax debt after only one spouse files for bankruptcy. When that happens, the IRS will start collection activity against the non-bankrupt spouse.  When a spouse in bankruptcy pays the priority tax debt in the bankruptcy and/or the balance is discharged, then only one spouse may owe taxes. These are things to consider when dealing with debt issues and whether to file bankruptcy jointly or separately.


If the marriage falls apart and the couple decides to get a divorce, things with the IRS become more complicated. Not only does the jointly held debt become mirrored but the couple’s divorce decree and property settlement agreements can come into play. Divorce decree does not control collection by the IRS; the divorce decree only controls issues between the two spouses, not outside parties. If that document says the husband is completely responsible for the tax debt, but he does not do anything and the wife has to get herself into an agreement to pay the debt, she cannot argue to the IRS that she doesn’t have to pay it because of the divorce decree.

If you are filing for divorce and have joint debt there a things to keep in mind. You need to clearly define who is responsible for the debt and the remedies that available to the other spouse if they are the ones who end up paying some or all of the debt.

Handling your Tax Debt

Tax debt can be a serious issue if not handled properly. It is important to understand your rights and responsibilities in reference to the debt. It is also important to understand why the tax debt occurred and prevent it from happening in the future. Additionally, if you have outstanding tax debt, the taxing agencies can garnish, levy accounts, or issue tax liens. Talk to an experienced tax professional today.




Calculating tax

Tax Penalties

The deadline to file your federal income tax return is fast approaching. Normally falling on April 15, this year it is on April 17 due to the fact that April 15 is on a Sunday and April 16 is Emancipation Day in Washington D.C., which gives everyone across the nation an extra day to file. With the deadline just days away many Americans will submit extensions to file, pushing the date the tax return is due to October 15. This is a great tool if you know you do know have all of your tax documents in time to prepare an accurate return. An extension, however, is simply for filing of your return, not paying any tax owed. If you do not pay your tax by the April deadline you may incur additional tax penalties on top of the tax owed.

Failure to File

Failure-to-File penalties are one of the harshest tax penalties the Internal Revenue Service can issue against an individual taxpayer. The way they are calculated is as follows: 5% of the taxes you owe for each part of a month you’re late, up to a maximum of 25% of unpaid taxes. So for your 2017 taxes, if you file on April 18th you are hit with a 5% penalty. On May 18th it is another 5% until you reach your maximum of 25%, at which point it doesn’t matter how late you file you will get that 25% penalty.

Failure to Pay

The other type of penalty is the Failure-to-Pay penalty. This tax penalty happens if you owe taxes after the initial filing deadline, April 17, 2018 for your 2017 taxes. The calculation for that is 5% of unpaid taxes for each part of a month you’re late, up to 25% of unpaid taxes due. There is a way to avoid this penalty if you pay 90% of your tax owed when you file an extension to file your return, you are entitled at that point to pay the remaining 10% by the extension deadline without incurring the failure to pay penalty. This penalty doesn’t seem like much but if you have a balance for a long period of time it can cause your balance to sky rocket into something you may not be in a position to handle properly.

Filing Late

It is never a good idea to file your taxes late, but even more so if you owe. Even if you do not owe and are due a refund, it is important to file your taxes as close as to the date they are due as possible. The IRS only grants refunds for the previous three years worth of tax returns. So, before 2017 is officially due on April 17, 2018, you can get your refund if you have not filed and are entitled to it as far back as 2014. The IRS has reported that there are hundreds of millions of dollars that the tax payers are not getting back by not filing their 2014 tax return. After April 17, 2018, the IRS only distributes refund from your 2015, 2016, and 2017 returns. As a result, if you have not filed and are due a refund, please file ASAP.

If you have not filed and expect to owe for 2017, please file before April 17 even if you can’t pay your total tax bill because as noted above, the failure to file penalty is more severe than the simple failure to pay penalty.

Planning Ahead

If you find yourself owing year after year please speak with a tax professional regarding changing your withholding or saving money on a quarterly basis. It is always better to plan ahead with taxes than to be caught on April 14th with no game plan. If you have accumulated substantial tax debt, there are options to deal with the debt.

With the new tax laws in place, withholdings have changed. Many individuals will owe less in taxes as a result of the change in laws, but some may owe more. It is very important to review your paychecks regularly. You should review your paycheck whenever there is a change in income to ensure you are not paying too much or too little in. The IRS has a calculator to give you a starting point in figuring out potential tax liability. Planning for the next tax year will help avoid unnecessary tax penalties whenever possible.



Arthur Rosatti, Esq. is a Florida licensed attorney authorized to represent clients with the Internal Revenue Service and the U.S. Tax Court. He has experience negotiating with various taxing agencies on behalf of individuals and companies. His goal with their tax debtand get them into the best plan possible to manage the debt. He also works with business owners to address Estimate Tax Payments and helps people get on track with their payments.