Archive for March, 2010
March 26, 2010
Discharge Tax Debt In Bankruptcy
Discharge Tax Debt In Bankruptcy
Many have questions as to whether you are able to discharge tax debt in a Chapter 7 or Chapter 13 bankruptcy. The short answer is YES and NO.
Tax debt to the Internal Revenue Service (IRS) and the Franchise Tax Board can be eliminated as long as you meet the relevant factors. The main factor is the age of the tax debt. If you have a tax debt that is a couple years old, you will not be able to discharge the debt. There are three factors one has to meet in order to successfully discharge a tax debt:
1. the debt has to be more than 3 years since the returns were last DUE (including extensions) to be filed
2. the returns were timely filed or it has been at least 2 years since the returns were filed, and
3. there was no fraud involved or attempts to evade the tax, AND
4. the taxes were not assessed within the last 240 days.
If you meet this criteria, the chances of you discharging your debt are extremely great. However, even if you cannot discharge tax debt in a Chapter 7 bankruptcy, you may be able to create a more favorable repayment plan for the taxes in a chapter 13.
Bankruptcy tax debt is extremely tricky and you must correctly determine whether it can be discharged in bankruptcy. To do so you must find an extremely experienced Bankruptcy Attorney with knowledge to analyze your situation. Remember, bankruptcy is an alternative to dealing with your tax debt. This is particularly true if it has been more than 3 years since the tax returns for the years you owe were last due to be filed.
Tags: Bankruptcy, Bankruptcy Attorney, Chapter 13, Chapter 7, discharge, IRS, Tax Debt
Posted in Los Angeles Bankruptcy Attorney and Bankruptcy Lawyer, Tax Debt | No Comments »
March 10, 2010
Debt Settlement – Not Truly An Alternative to Bankruptcy
Many consumers debate on whether they should file for bankruptcy. They seek out other alternatives such as debt settlement. A debt settlement is when a creditor is willing to take less than what the actual amount is owed. For example, you may owe Bank of America $10,000 on a credit card. However, they may be willing to take $3,000 in order to settle this debt.
Before going through this type of deal, always remember that the creditors are not on your side. I cannot stress this point enough. Creditors know that you have options – one option is to file for bankruptcy. This will leave the banks with nothing because the debt will be considered discharged. Therefore, they are willing to settle the debt for a lesser amount.
However, what banks do not tell you are the consequences of doing so. First, banks will not tell you that they will 1099 you at the end of the year for the amount that they have forgiven (the $7,000). This amount will be considered income on your tax returns and you will have to pay taxes on this amount.
The other issue with debt settlement is that one creditor may go forward and settle the debt for a lesser amount. However, you may have 5 other credit cards that are unwilling to negotiate a settlement. Therefore, you have already wasted $3,000 on settling one debt, and now you are back at square one.
Always consider your options before moving forward. However, also consider the consequences of your actions. Majority of Mr. Darvish’s clients are those that have attempted debt settlement or debt consolidation. Debtors like yourselves saw that it was hopeless to work with the creditors and were forced to file for bankruptcy. Although stressful during the process, his clients felt a large burden being lifted off their shoulders.
Mr. Darvish is a Los Angeles Bankruptcy Lawyer and has provided many consumers with Chapter 7 and Chapter 13 Bankruptcy assistances. Contact his office to learn more.
Tags: Bankruptcy, Chapter 13, Chapter 7, debt settlement, los angeles bankruptcy lawyer
Posted in Los Angeles Bankruptcy Attorney and Bankruptcy Lawyer | No Comments »
