Bankruptcy can eliminate a host of debts that you are genuinely unable to pay, ranging from credit card debts, medical bills etc. But you have probably heard that income tax debt cannot be discharged by bankruptcy. However, this statement needs to be qualified.
If you file a Chapter 13 bankruptcy, then your tax debt will be paid off through your monthly payment plan. But if you file a Chapter 7 bankruptcy, then your tax debt will be discharged under certain conditions:
• The IRS has assessed your tax debt at least 240 days before bankruptcy filing
• Your tax debt is at least 3 years old
• You have filed your tax returns for the past 2 years prior to filing for bankruptcy
• You have not committed any tax fraud or tax evasion
If you do not fulfill all the above conditions, then the best way to settle your tax debts is through Chapter 13 bankruptcy.
But if you have a tax lien filed against your property, the lien is not lifted just because you file for bankruptcy. If you file for Chapter 13 bankruptcy, you need to settle the outstanding tax debt through your payment plan before the lien can be removed. If you file for Chapter 7 bankruptcy, the lien is generally not lifted unless you satisfy the lien in some way.
Other ways to settle your tax debt include an Offer in Compromise or making an installment payment plan with the IRS. An Offer in Compromise allows you to pay less than your total outstanding tax liability yet receive full discharge. But there are stringent conditions to fulfill in order to qualify for an Offer in Compromise. Hence, the first thing you should do is to apply for an installment payment plan with the IRS by filling and submitting Form 9465 Installment Agreement Request.
For further information about how bankruptcy can help eliminate your tax debts, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on May 1st, 2012. Comment. 
The purpose of filing a bankruptcy petition is to have your debts discharged. There are certain types of debts that are exempted from discharge through bankruptcy. The most common ones are child support, alimony, certain tax debts and student loans. All other types of debt can be discharged through bankruptcy. But there are times when the bankruptcy court disallows dischargeable debt from being discharged.
If you have incurred debt through fraud, these debts will not be discharged. These would include debts incurred through deceit or writing a fraudulent check. Likewise, if you have incurred debt through any form of illegal activity such as Criminal Breach of Trust or harmful acts that brought damage to someone else’s property, these debts would not be considered dischargeable through bankruptcy.
Any type of divorce settlement debt besides alimony and child support is also not dischargeable. If the divorce court decides you have to pay a certain sum of money to annul your marriage, then such a debt cannot be discharged through bankruptcy.
If you wish to file for bankruptcy or discuss which of your debts can be discharged, contact us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Apr 13th, 2012. Comment.
Is it possible to wipe out all your debts and live debt-free? Yes, it is. But this is somewhat of a pipe dream for 99.9% of people in the world. Yet if you are smart, you can have all your debts wiped out in a short length of time. How? Through filing for a bankruptcy petition.
If you are already sold on the idea of finally wiping your financial slate clean through bankruptcy, do not rush headlong into it so quickly even though I’m sure you cannot wait to end your ordeal of debt. You should consider the following matters first.
Where your debts come from
There are certain types of debt that cannot be discharged by bankruptcy so filing a bankruptcy petition would be of no use. If most of your debts are in the form of student loans, child support or alimony, tax debts then bankruptcy may not be the ideal solution as these debts are typically non-dischargeable by bankruptcy.
However, if your debts are mostly credit card debts, medical bills, mortgage debts and car loans, then it would make sense to file for bankruptcy because these debts can be discharged by a bankruptcy filing.
Which type of bankruptcy to file
For most individuals, the two types of bankruptcy that apply are Chapter 7 and Chapter 13 bankruptcy. There is another type of bankruptcy open to individuals called Chapter 11 bankruptcy but it is generally too expensive for most individuals and as such is only used for businesses.
The choice between Chapter 7 and Chapter 13 is crucial so that you can go through the bankruptcy process as smoothly and quickly as possible. Generally, you should weigh your income against your debts. If you are generally able to repay your debts in installments over a period of time with your present income, then Chapter 13 bankruptcy is suitable for you. Chapter 13 bankruptcy also allows you to keep your assets (they do not have to be liquidated to pay your debts) and generally has a shorter period where the bankruptcy stays on your credit record.
But if your debts are insurmountable compared to your income, then you should consider Chapter 7 bankruptcy. But in order to qualify for Chapter 7, you need to pass a means test. A means test is to determine if your household income is below the average income set by your state. If you pass the means test, then you are eligible for Chapter 7. In Chapter 7 bankruptcy, you do not have to repay all your debts. Those which you cannot repay will be forgiven. But the downside to Chapter 7 is that your non-exempt assets will have to be liquidated to pay off your debts. And your bankruptcy generally stays longer on your credit record than Chapter 13.
If you are considering filing for bankruptcy protection, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Mar 14th, 2012. Comment.
Bankruptcy is a provision in the bankruptcy code that allows the bankruptcy court the right to declare your personal debts (or business debts) resolved either through liquidation of your assets or gradual payment via a payment plan. With the prolonged economic recession more and more people are contemplating filing for bankruptcy to overcome their tremendous financial debts. For most people, a bankruptcy filing would be a once-in-a-lifetime experience as you would not want to have to do it multiple times. In view of that, if you are contemplating filing for bankruptcy, it would be natural to have some questions about the process. Here are some of the most common questions about bankruptcy.
Can bankruptcy relieve me of all my debts?
Most of your debts can be resolved either through payment from the sale of assets or payment plan, but some debts cannot. Some examples are child support and certain tax debts.
What are the types of bankruptcies that apply to individuals?
The bankruptcies that apply to individuals are Chapter 7 and Chapter 13 bankruptcies (named according to the sections of the bankruptcy code that govern them).
What are the differences between Chapter 7 and Chapter 13 bankruptcies?
Chapter 7 bankruptcy is known as liquidation bankruptcy and it is where the court orders you to liquidate your non-exempt assets to pay of as much of your debts as possible. The remaining debts after liquidation are forgiven. Chapter 13 bankruptcy is known as the wage earners’ bankruptcy and is technically a court-ordered payment plan where you get to keep your assets but repay your debts over a period of up to 5 years.
What effect will filing for bankruptcy have on my credit rating?
Your credit rating will show that you have filed for bankruptcy before and such a rating will be on your record for between 7 to 10 years. However, this does not mean that you would not be able to obtain credit. If you keep up your payments promptly, you will repair your credit rating and will be able to obtain credit in due course, often even before the expiry of 7 years.
Which type of bankruptcy should I file for?
There are certain prerequisites you have to fulfill in order to qualify for each type of bankruptcy. So which type to file for would depend on your personal financial situation. Generally, the prerequisite to be eligible for Chapter 7 bankruptcy is more stringent than Chapter 13. The best thing to do would be to discuss your situation with an experienced bankruptcy attorney. Call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Feb 13th, 2012. Comment.
Automatic stay in bankruptcy is the provision in the bankruptcy code that puts into effect an immediate cessation of collection efforts by creditors on you once you file for bankruptcy. When you bankruptcy filing is confirmed, the court will inform your creditors accordingly and enforce the automatic stay. Sometimes, a creditor may try to collect payment outside the automatic stay but to do so he would need the judge to grant permission for these collection activities. In general, the automatic stay will be in force until the court reverses it or you exit bankruptcy.
Automatic stay gives you more time to handle finances. The provision is especially useful for those who are at risk of eviction, foreclosure, utility disconnection and or wage garnishment as it prevents you from being evicted or your property foreclosed, your utilities cut or wages garnished.
Certain payment obligations on your part are exempted from automatic stay, such as alimony payments and child support. When it comes to tax debt many people mistakenly classify it together with alimony and child support thinking that collection efforts by the IRS cannot be stopped by automatic stay.
But this is only partially true. The fact is automatic stay can prevent liens or property seizures by the IRS. And while alimony and child support payments are usually not dischargeable under Chapter 7 bankruptcy, certain tax debt may be dischargeable depending on the circumstances. Your tax debt may be eligible for discharge if it has been assessed by the IRS at least 240 days before filing, you have income tax returns filed for the last 2 years and the debt was due at least 3 years prior.
But if the bankruptcy court decides your tax debt is not dischargeable under Chapter 7 bankruptcy, you can opt for filing for Chapter 13 bankruptcy instead where you pay off your tax debts (along with other debts) under a payment plan. And as long as you abide by the terms of the payment plan, it is unlikely the IRS would make collection effort on you as long as automatic stay is in effect.
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Filed under Chapter 7 (Tampa) by on Feb 6th, 2012. Comment.
