Can tax debt be eliminated through bankruptcy? Most people would tell you, “No”. But that is not entirely true. The good news is that you can eliminate tax debts through bankruptcy, although not all of it. The question is which tax debts can bankruptcy eliminate and which bankruptcy cannot. To be able to distinguish which tax debts can be discharged through bankruptcy, you should consult a bankruptcy lawyer.
The fact is some tax debts can be discharged through Chapter 7 bankruptcy while others can be dealt with through Chapter 13 bankruptcy. The taxes that cannot be discharged through a Chapter 7 bankruptcy might be able to be paid off through a Chapter 13 bankruptcy without being penalized with interest payments.
There is a timing factor that determines the dischargeability of your tax debts. Generally, if you have been filing and paying your taxes honestly to the best of your capabilities through the years, then the tax debts that are longer than 3 years prior to the date of filing of bankruptcy can be discharged by the bankruptcy court. But your most recent taxes like you current year’s tax bill is unlikely to be discharged.
But the IRS will go through your old tax returns with very thoroughly. And if they do find any dishonesty or discrepancy in your tax submissions, the bankruptcy court will not allow you to discharge your old tax debts.
How you treat your taxes during your bankruptcy process also plays a role. If you fail to file a tax return or file one late during the course of your bankruptcy, you risk having the court throw out your entire bankruptcy case. So if you do not want to see your bankruptcy case dismissed altogether, you should stay current with your tax filings.
If you are living under a heavy load of debt, whether they be tax debts or other debts, consider bankruptcy as a way out. Call us at (813) 200 4133 for a free consultation.ted through bankruptcy? Most people would tell you, “No”. But that is not entirely true. The good news is that you can eliminate tax debts through bankruptcy, although not all of it. The question is which tax debts can bankruptcy eliminate and which bankruptcy cannot. To be able to distinguish which tax debts can be discharged through bankruptcy, you should consult a bankruptcy lawyer.
The fact is some tax debts can be discharged through Chapter 7 bankruptcy while others can be dealt with through Chapter 13 bankruptcy. The taxes that cannot be discharged through a Chapter 7 bankruptcy might be able to be paid off through a Chapter 13 bankruptcy without being penalized with interest payments.
There is a timing factor that determines the dischargeability of your tax debts. Generally, if you have been filing and paying your taxes honestly to the best of your capabilities through the years, then the tax debts that are longer than 3 years prior to the date of filing of bankruptcy can be discharged by the bankruptcy court. But your most recent taxes like you current year’s tax bill is unlikely to be discharged.
But the IRS will go through your old tax returns with very thoroughly. And if they do find any dishonesty or discrepancy in your tax submissions, the bankruptcy court will not allow you to discharge your old tax debts.
How you treat your taxes during your bankruptcy process also plays a role. If you fail to file a tax return or file one late during the course of your bankruptcy, you risk having the court throw out your entire bankruptcy case. So if you do not want to see your bankruptcy case dismissed altogether, you should stay current with your tax filings.
If you are living under a heavy load of debt, whether they be tax debts or other debts, consider bankruptcy as a way out. Call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Jan 23rd, 2012. Comment. 
For many people, filing for bankruptcy is the last resort to resolve financial woes. But this should not be so. Bankruptcy is a right of every citizen under the law. And believe it or not, under certain circumstances bankruptcy can be a more viable option than others. If you are weighed down under a mountain of debt, generally the only options open to you are to repay them outright, reduce your expenses and repay or file for bankruptcy. If you choose the first option, you will have to find the money to repay your debts. If your debts have piled up over the years, chances are your income has not been sufficient to sustain your financial obligations. If that be the case, you may resort to borrowing to repay your existing debts but that is obviously not the solution.
As for the second option, it can only work if you make some drastic changes to your lifestyle. If your spending habits continue to exacerbate your financial problems, there is no way you can find the money to repay your debts by yourself. For instance, if you tend to spend a lot on credit you need to reduce or stop doing so altogether. If you always resort to transferring one credit card balance to another as a means of paying, you need to stop doing so and pay off your credit card balances with cash.
It can be clearly seen that the first two options to clear your debts can be painstakingly slow. That is why you should not discount bankruptcy or keep it only as a last resort.
If you choose to file for bankruptcy, there are two types of bankruptcy filings open to you (you only choose one). Chapter 7 bankruptcy is also called liquidation bankruptcy. Under this type of bankruptcy, your non-exempt assets will be sold to repay your debts. Generally, your principal home and some other assets are exempted from liquidation. After all your non-exempt assets have been liquidated, whatever unsecured debts still outstanding are forgiven. This gives you the ability to start afresh financially.
The second type of bankruptcy open to individuals is Chapter 13 bankruptcy a.k.a. reorganization bankruptcy. Under this type of bankruptcy, you are subject to a payment plan to repay all your outstanding debts over a period that can stretch up to five years. Once your debts are paid off, you will be discharged from bankruptcy.
So realistically, bankruptcy provides you with a viable way out of your debt problems in a matter of a few months to a maximum of 5 years. Imagine within a few months from now, you can enjoy a new lease of life financially without any more stress and harassment from creditors. If you wish to discuss bankruptcy, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Jan 12th, 2012. Comment.
One of the most dreaded things anyone can face is the foreclosure of their home. This is because foreclosure threatens our basic need for security. But if debts are mounting and you fall behind in your mortgage payments, it is only a matter of time before your bank takes foreclosure action. Is there anything you can do about it? Yes. You can file for bankruptcy protection.
Depending on your situation, a bankruptcy filing may halt foreclosure proceedings. There are two types of bankruptcies for individuals. The first is Chapter 7 bankruptcy which is where your non-exempt properties are sold to repay your debts. Chapter 7 bankruptcy is useful if you are not behind in your mortgage payments but have run into unexpected financial problems like a huge medical bill that you need time to repay. Should you file for bankruptcy under such circumstances, there is a high chance that your Chapter 7 bankruptcy will stall your mortgage payments until you exit bankruptcy. After the discharge, your mortgage will continue as scheduled. This is how Chapter 7 bankruptcy can affect your mortgage and help you avoid foreclosure to your home.
The second type of bankruptcy for individuals is Chapter 13 bankruptcy or reorganization bankruptcy. Under this type of bankruptcy, your bankruptcy debts are put into a repayment plan that can stretch up to five years. Thus, your mortgage will be included in this plan. When you start repaying your bankruptcy debts according to the plan, you can avoid foreclosure. Chapter 13 bankruptcy will be more useful to you if you have fallen too far behind your mortgage payments and your bank has initiated foreclosure proceedings. But there is a proviso.
The bankruptcy court will only grant your mortgage to be included into your bankruptcy assets provided you are not too far into the foreclosure process. If the bankruptcy judge feels that you owe too much to the bank already and that the foreclosure process has gone on for too long, then he or she may strike out your mortgage from the rest of your bankruptcy assets. In such a case, there may be nothing you can do to save your home.
To decide whether you should file for bankruptcy and discuss how your home can be saved from foreclosure in bankruptcy, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Jan 11th, 2012. Comment.
When your bankruptcy is discharged it means you have successfully exited bankruptcy protection and you can start afresh financially. Discharges in bankruptcy take place under different circumstances. For each discharge, certain criteria must be met. Usually, this has to do with meeting financial obligations by the debtor in paying off his or her debts.
For example, a discharge in Chapter 7 bankruptcy happens when all non-exempt assets are liquidated to pay off your debts. Any other debts that are still outstanding after liquidating all non-exempt assets are generally forgiven. It is for this very reason that it is not easy to qualify for Chapter 7 bankruptcy. Only if your household income is below the median household income set by your state can you be eligible to apply for Chapter 7 bankruptcy. Otherwise, an applicant for Chapter 7 bankruptcy must take and pass a means test.
If you do not pass the means test, chances are you would be eligible for Chapter 13 bankruptcy. Chapter 13 bankruptcy is where you pay off your debts according to a payment plan approved by the bankruptcy court. This payment plan is meant to be affordable to the debtor to enable him or her to pay debts according to the bankruptcy trustee’s prioritization schedule. Discharge from Chapter 13 bankruptcy comes about when the debtor keeps to the payment plan and pays off all the debts according to plan.
But what if despite the payment plan, you still cannot afford to keep up with the installments? The bankruptcy trustee will revise your payment plan to make it more affordable but sometimes due to unavoidable circumstances like a drastic drop in financial income, no payment plan is going to work.
This is where hardship discharge comes in. The debtor can seek to file for a hardship discharge. In order to be granted a hardship discharge, the debtor must have at least paid some amount towards the payment plan, typically at least the amount they would have paid if they had filed a Chapter 7 bankruptcy. If the bankruptcy judge is satisfied with the payments made thus far, a hardship discharge may be granted under the circumstances.
The rationale behind it is that if the person were to transfer to a Chapter 7 from their Chapter 13 they would be unfairly subject to seizure of their assets, which is more than they would have been required to pay under either chapter.
The only other option besides a hardship discharge is to cancel the Chapter 13 bankruptcy and file for Chapter 7 instead.
In any case, the best thing to do would be to discuss these options with an experienced bankruptcy attorney. If you wish to speak to a bankruptcy attorney on your situation, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Jan 5th, 2012. Comment.
When filing for bankruptcy, the best thing to do to make the process as seamless as possible is to hire a bankruptcy lawyer. A bankruptcy lawyer will do a lot of things for you, not least of which is guide you through the entire process (which can be very complicated, unless you are very well versed with the bankruptcy code). One of the most common types of bankruptcies chosen by individuals is Chapter 13 bankruptcy.
Here are some helpful pointers for your Chapter 13 bankruptcy filing.
Firstly, Chapter 13 bankruptcy is only for individuals and sole proprietors, not for companies or partnerships. If you wish to file for bankruptcy for your company or partnership, you need to file it under Chapter 11 bankruptcy.
Secondly, Chapter 13 bankruptcy is preferred by the bankruptcy court and is easier to gain approval compared to Chapter 7 bankruptcy (the other type of bankruptcy filing for individuals). This is because Chapter 13 bankruptcy is involves a payment plan stretched out over a period of time (up to 5 years) whereas Chapter 7 is liquidation bankruptcy where your non-exempt assets are sold off to pay for your debts.
Thirdly, there are some prerequisites to filing for Chapter 13 bankruptcy. For instance, you need to be earning a steady income. It does not have to be a high income but it must be consistent. If you only earn income sporadically it may not be considered good enough to qualify you for Chapter 13. The consistent income requirement is to ensure that you and your family have enough finances to sustain a reasonable living while repaying your debts under Chapter 13. If your income is inconsistent, the bankruptcy court may decide you do not have enough to survive while undergoing bankruptcy and hence your bankruptcy plan will not be approved.
Fourthly, you must not have debts exceeding the limit set by the bankruptcy court. If you do, your bankruptcy filing is not likely to be approved. This limit may change from time to time.
Fifthly, you must be current with your tax filings. If you have not filed your taxes for certain years, you need to bring it up to speed before filing for bankruptcy. You may still have tax debts but you must not be behind in your tax filings.
Finally, you must fulfill the residency requirements of your state. Depending on which state you live in, there are certain requirements set by the state government. Generally, you file for Chapter 13 bankruptcy in the state you reside in, but certain states have a time requirement in that you must have been living in that state for longer than a certain time to be permitted to file for bankruptcy there. Otherwise, you would be required to file for Chapter 13 in the last state you lived in (or the one you lived in for the longest time).
For more information regarding Chapter 13 (or Chapter 7) bankruptcy, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Dec 28th, 2011. Comment.
