While not everyone facing bankruptcy has a tax problem,
almost everyone with a tax problem could be helped
with a bankruptcy! Using bankruptcy to resolve a tax
problem is what I call a "tax bankruptcy" -
a term of art I coined because someone with a tax problem
who is also contemplating filing bankruptcy for other
reasons, should NEVER do one without realizing the
impact of the other.
Generally, "older" income taxes
and related penalties and interest CAN be discharged
through a bankruptcy. It is the TIMING of the bankruptcy
that is crucial. To learn more about bankruptcies
in general, please read below, then call me.
Chapter
7 Bankruptcy
- The most common type of bankruptcy
- Debtor generally
loses all his assets (except "exempt" assets)
- Debtor
generally wipes out (discharges) all his debts
(except certain "non-dischargeable" debts
)
- Still available if debtor's debts are not "primarily" consumer....
- Read
More
Chapter 13 Bankruptcy
- Increasing in popularity
- Debtors generally keep
their assets
- Debtors generally pay their debts according
to a "plan"
- Debtors commit their income,
in excess of necessary living expenses, to repay
all or a portion of their debts
- Plan life is 3-5
years depending on debtor's income
- At end of plan life, unpaid debts are discharged
- Useful
for mortgage foreclosure
- Still discharges tax debts
that would have been discharged in a 7
- Read More
Do I Have A Choice?
Do I have a choice between chapters 13 and 7?
Usually no. Under the "new bankruptcy law" (called the "Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005," but referred to as BAPCPA),
most debtors are forced to go through chapter 13 (a repayment arrangement) rather
than the faster chapter 7 process. > Read more
How Soon Can I get a Mortgage after Filing BK?
5 years after BK Discharge for a conventional mortgage
at conventional rates
3 years after BK Discharge for an FHA mortgage at decent
rates
1 year after BK 13 Plan payments begin (subject to certain
conditions).
