File Bankruptcy on Your Taxes
Many of my clients assume that they cannot file bankruptcy on their taxes and go on for years paying taxes that they could have eliminated by filing bankruptcy. This notion may stem from the prevailing belief in the United States ever since Benjamin Franklin uttered the famous quote: "In this world nothing can be said to be certain, except death and taxes."
Tax liability is often a very stressful issue, especially for business owners. Employees usually have their taxes taken out of the paychecks each pay period, so they are prepaid come April 15th. But when it comes business owners, they pay themselves and usually do not set aside the necessary savings to cover their anticipated liability. So tax time rolls around and they stress about how they will meet their obligations to Uncle Sam.
The good news, for many people, is that if you have gotten yourself into a situation where you incurred a tax liability that you cannot pay, you may be able to discharge your liability in bankruptcy. Generally speaking, you can file bankruptcy on taxes and eliminate your income tax liability if your taxes are more than 3 years old.
More specifically, if your taxes were (1) first due more than 3 years ago, and (2) two years has passed since you filed your return, and (3) if an assessment has been made then 240 days has passed since the assessment, you can file file bankruptcy on your taxes and your tax liability to the IRS can be discharged in bankruptcy.
If the IRS has not made an assessment before you file bankruptcy, it may make an assessment after you file bankruptcy, in which case that may pose an obstacle to you eliminating your income tax liability depending on your particular circumstances.
If there is fraud alleged to be involved in connection with the filing of your returns (or possibly based on a total failure to file), then your income taxes may not be dischargeable even if you meet the above described test.
As part of the pre-bankruptcy planning process, an experienced bankruptcy Lawyer can properly advise you as to whether your tax liability would be dischargeable in bankruptcy in light of your particular circumstances and when you should file in order to be able to discharge your tax liability. Contact Mark Aalam of Bankruptcy Legal Center, he can help.
Note: this article does not address cancellation of debt income attributed to you, for example, when a mortgage lender writes off a debt and issues you an IRS Form 1099-C. Income tax liability based on cancellation of debt income is beyond the scope of this article. Suffice it to say, such liability is generally dischargeable in bankruptcy regardless of the year the liability was incurred.
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More debtors are turning to debt consolidation services, which promise on those daytime and late-night television ads to lower your monthly payments into one manageable fee. However, what if your situation is so desperate that these options will not be enough to ease your burden? As Texan debtors and others throughout the United States are deciding, filing for bankruptcy protection may be the best option in these troubling economic times.
The consumers are required to first qualify for bankruptcy and if they fail, they will have to look for alternative methods of debt elimination.
Businesses that are faced with overwhelming fact that their debts have full-fledged to such a huge amount that they might have to settle for bankruptcy filing might not have a clue about how to go about this path.
Bankruptcy is not debtor's prison, you can survive and you can come out of it better. It can be the light at the end of the tunnel.
The statistics show that bankruptcy filings are on a rise. There are some myths surrounding filing bankruptcy that need to be corrected. With the aid of an experienced bankruptcy attorney a person can discharge his debts, keep his possessions and have a second beginning.
In recent times, several men and women are undergoing major financial hassles since existing credit problems and also stuck with much personal debt. Personal arrears combined with many other situations for example marital concerns, health problems, as well as task damage, all these greatly damage your option to do prompt payments of your house loan.
Students from both private and public universities all over the country may also provide low cost or free advice. The sessions will only achieve directing clients to the right legal path in filing the right papers. Note that with the new bankruptcy laws taking into effect making the bankruptcy filing process more difficult than usual, an experienced bankruptcy attorney will be worth your money.
Many people who enter the bankruptcy process worry about the fate of their credit. This is actually unnecessary as the bulk of credit damage happens before the bankruptcy process is even initiated. While no one wants the added hassle of rebuilding their credit after resolving debt troubles, doing so can put you leaps ahead of others in the credit game.
Americans are now filing Chapter 7 or 13 Bankruptcy to get their debts under control. Bankruptcy in itself is designed for debt elimination. Chapter 7 bankruptcy functions to cancel out unsecured debt such as utility or medical bills, credit card, etc. Chapter 13 Bankruptcy on the other hand is designed to give individuals more time in repaying all their debts.
Filing for bankruptcy is good news whenever you are struggling with your credit card debt, mortgage or medical bills. Bankruptcy laws help families and individuals in their debt struggles. You have two options on how to deal with your debt problems, Chapter 7 (debt elimination) and Chapter 13 (reorganization). Always remember that you can regain credit again after successfully filing your bankruptcy.
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You can keep your car when you file chapter 7 bankruptcy and you can even rebuild your car loan.
The limits on filing multiple bankruptcies primarily relate to the number of times that you can obtain a discharge as opposed to the number of times that you can file a Chapter 7 or Chapter 13 bankruptcy.
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