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 gameplan 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. Afterward, we do the third and final stage, which is to deal with IRS to show them why your tax debts were discharged and obtain a written release of your tax debts.
Afterward, you will find yourself free not only of credit card debt, medical bills, and judgments, but free of the 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!
We know the answers and we can help solve your tax problems!
Contact us now to get your life back.