Bankruptcy - Can taxes be eliminated, Do I have to be broke to file bankruptcy

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Bankruptcy - Can taxes be eliminated, Do I have to be broke to file bankruptcy

Posted On : Oct-17-2010 | seen (1137) times | Article Word Count : 701 |

Bankruptcy myths explained. Is it true that taxes cannot be eliminated in bankruptcy? Must I be broke to file bankruptcy?

Is it true that taxes cannot be eliminated in bankruptcy?

That is not true. In fact, we have seen several cases where taxes were eliminated in bankruptcy.

The key is how old the taxes are, when the returns were filed and whether the taxes have been assessed. That is really the test for income taxes.

For example, you have taxes that you filed over three years ago, and they have been assessed, meaning there’s a determination as to the amount owed and the penalties that were going to be incurred for what is owed. And they are income taxes. Then you could put them into the bankruptcy and request that they be discharged.

Now it also depends on other factors. What kind of taxes are they? Income taxes versus say property taxes or corporate taxes…they each have their own criteria for when they can be discharged.

For most people the concern is income taxes.

So age is important and the assessment, which comes from the IRS, is the most important.

With that, also, on the federal taxes and the state taxes, they both could be eliminated in bankruptcy. If you weren’t able to eliminate them, you may want to consider a Chapter 13, which would allow you to discharge your unsecured debt. For example, you credit card debt and only pay your taxes.

That can really help people when their taxes have been assessed by the IRS or they’re not old enough or a combination of both and they also have a lot of credit card debt. They’ll receive the protection of the bankruptcy court, which means the IRS couldn’t garnish them. Then they pay their taxes through the bankruptcy plan. After five years or three years, depending on how much is owed, they would be done with it and there wouldn’t be any other debt they’d owe.

So there’s usually a very good solution. To say they can’t be eliminated…that’s simply not true.

Is it true that I must be broke to file bankruptcy?

That’s such a good question. Everyone’s definition of “broke” is something different. But you don’t have to be flat-out broke without a job. You should be at your lowest financial point, which we have seen clients who were making $250,000 a year and now they’re making $100,000 a year. I can tell you they think they’re broke. Absolutely.

There have also been people who’ve gone from making $80,000 a year to making $30,000 a year. They also think that they’re broke.

Depending on what your definition of broke is, you don’t have to be flat out without a job, but you should be at your lowest financial point.

If you feel that you’ve met that or the other issue is… for example, a single person. I’m making $45,000 a year, which is going to qualify me for a Chapter 7 automatically. I have about, $20-25,000 of debt. That’s almost half of my income.

Now my income’s pretty healthy at $45,000 for a single person, but I simply can’t get over that hump of $20-25,000 of credit card debt. Is it a good idea that I file, even though I have an income and it’s on-going?

Yes, it is.

So don’t think you need to be unemployed or homeless or not own any property, by no stretch of the imagination. What’s really sad is when people let themselves get to that point because they think that’s where they need to be before they file bankruptcy.

Or sadly, they liquidate all of their retirement because they believe that they can’t have a retirement protected in bankruptcy. Or they allow their house to go into foreclosure rather than attempt to protect it in bankruptcy.

So really bankruptcy is about protecting your assets, getting rid of your debt, and getting a fresh start. But it’s not about being without anything or not having a job. You don’t even have to hit that low point because that’s not where bankruptcy wants you to be.

So, no, you don’t have to be broke to file bankruptcy.

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<h1>Bankruptcy - Can taxes be eliminated, Do I have to be broke to file bankruptcy</h1> Author: <a href='http://www.articleseen.com/profile_Christy Thompson.aspx'>Christy Thompson</a> Is it true that taxes cannot be eliminated in bankruptcy?

That is not true. In fact, we have seen several cases where taxes were eliminated in bankruptcy.

The key is how old the taxes are, when the returns were filed and whether the taxes have been assessed. That is really the test for income taxes.

For example, you have taxes that you filed over three years ago, and they have been assessed, meaning there’s a determination as to the amount owed and the penalties that were going to be incurred for what is owed. And they are income taxes. Then you could put them into the bankruptcy and request that they be discharged.

Now it also depends on other factors. What kind of taxes are they?  Income taxes versus say property taxes or corporate taxes…they each have their own criteria for when they can be discharged.

For most people the concern is income taxes.

So age is important and the assessment, which comes from the IRS, is the most important.

With that, also, on the federal taxes and the state taxes, they both could be eliminated in bankruptcy. If you weren’t able to eliminate them, you may want to consider a Chapter 13, which would allow you to discharge your unsecured debt. For example, you credit card debt and only pay your taxes.

That can really help people when their taxes have been assessed by the IRS or they’re not old enough or a combination of both and they also have a lot of credit card debt. They’ll receive the protection of the bankruptcy court, which means the IRS couldn’t garnish them. Then they pay their taxes through the bankruptcy plan. After five years or three years, depending on how much is owed, they would be done with it and there wouldn’t be any other debt they’d owe.

So there’s usually a very good solution. To say they can’t be eliminated…that’s simply not true.

Is it true that I must be broke to file bankruptcy?

That’s such a good question. Everyone’s definition of “broke” is something different. But you don’t have to be flat-out broke without a job. You should be at your lowest financial point, which we have seen clients who were making $250,000 a year and now they’re making $100,000 a year. I can tell you they think they’re broke. Absolutely.

There have also been people who’ve gone from making $80,000 a year to making $30,000 a year. They also think that they’re broke.

Depending on what your definition of broke is, you don’t have to be flat out without a job, but you should be at your lowest financial point.

If you feel that you’ve met that or the other issue is… for example, a single person. I’m making $45,000 a year, which is going to qualify me for a Chapter 7 automatically. I have about, $20-25,000 of debt. That’s almost half of my income.

Now my income’s pretty healthy at $45,000 for a single person, but I simply can’t get over that hump of $20-25,000 of credit card debt. Is it a good idea that I file, even though I have an income and it’s on-going?

Yes, it is.

So don’t think you need to be unemployed or homeless or not own any property, by no stretch of the imagination. What’s really sad is when people let themselves get to that point because they think that’s where they need to be before they file bankruptcy.

Or sadly, they liquidate all of their retirement because they believe that they can’t have a retirement protected in bankruptcy. Or they allow their house to go into foreclosure rather than attempt to protect it in bankruptcy.

So really bankruptcy is about protecting your assets, getting rid of your debt, and getting a fresh start. But it’s not about being without anything or not having a job. You don’t even have to hit that low point because that’s not where bankruptcy wants you to be.

So, no, you don’t have to be broke to file bankruptcy.
About the Author: To get additional information on debt settlement and bankruptcy options please visit our web site. We would also like to offer you a free online debt evaluation. You can claim your free online debt evaluation at <a rel="nofollow" href="http://arizonalegaladvocacy.com"> http://arizonalegaladvocacy.com</a>.

Christy Thompson, your <a rel="nofollow" href="http://arizonalegaladvocacy.com"> Chandler Bankruptcy Lawyer </a>
 Article Source: <a href='http://www.articleseen.com/Article_Bankruptcy-Can-taxes-be-eliminated-Do-I-have-to-be-broke-to-file-bankruptcy_38049.aspx'> http://www.articleseen.com/Article_Bankruptcy - Can taxes be eliminated, Do I have to be broke to file bankruptcy_38049.aspx</a>

Article Source : http://www.articleseen.com/Article_Bankruptcy - Can taxes be eliminated, Do I have to be broke to file bankruptcy_38049.aspx

Author Resource :
To get additional information on debt settlement and bankruptcy options please visit our web site. We would also like to offer you a free online debt evaluation. You can claim your free online debt evaluation at http://arizonalegaladvocacy.com.

Christy Thompson, your Chandler Bankruptcy Lawyer

Keywords : chandler bankruptcy lawyer, chandler bankruptcy attorney, mesa bankruptcy lawyer, mesa bankruptcy attorney, chandler bankrupt,

Category : Finance : Debt Consolidation

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