This is the most common type of bankruptcy, and
the type most people think of when they refer to "filing
bankruptcy." With chapter 7, the debtor generally
loses all his assets (with the exception of certain "exempt" assets)
and wipes out (discharges) all his debts (with the
exception of certain "non-dischargeable" debts).
The
extent to which assets that can be claimed "exempt" from
the claims of creditors depends on the state
in which the debtor resides. Each state can either
elect to follow the federal exemption statutes,
or have its own set of exemptions. In Florida,
the exempt assets include the cash surrender
value of life insurance policies, annuities, certain
wages, one's homestead, and a few other things.
However, these items are not exempt from the
claims of the Internal Revenue Service!
Non-dischargeable debts include alimony and child
support obligations, student loans, debts incurred
by fraudulent means, and certain tax debts. Chapter
7 cannot discharge (i) an individual's debts
for "newer" income
taxes, or (ii) civil penalties relating to payroll
tax (regardless of age). Once income taxes age
enough, they change from non-dischargeable to
dischargeable. Therefore, it is imperative that before
anyone actually files for bankruptcy protection,
they consider the timing of their bankruptcy! Many
times taxpayers do not wait long enough before filing
such that, afterward, they may no longer owe
medical bills or money to credit card companies,
but they still owe large debts to IRS. We have personally
visited with a number of people who would have
discharged their tax debts had they waited as
little as two more weeks!
To find out if your income tax debts are old enough to be discharged, contact us for a game plan meeting. The way we approach tax bankruptcies is to realize discharging income tax debts is an important, difficult but possible THREE-STEP process.
The first step is to research the facts of your particular case to make sure the taxes are dischargeable. If they are, then your bankruptcy attorney can go to the second part and file bankruptcy. If not, we determine when they would be and wait until then.
The second stage is the actual bankruptcy.
The third and final stage occurs post-discharge when we show IRS why the tax debts were discharged and request a written release of your tax debts and liens.
Afterward, you will find yourself free not only
of credit card debt, medical bills, and judgments,
but free of IRS as well! Free of tax liens. Free
of bank account levies. Free of continuing wage
garnishments. Free to live your life again and
sleep soundly at night. Would you like that? Call
us today!
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