Navigating the Intersection of Houses and Bankruptcy
Introduction: The relationship between houses and bankruptcy is a complex [...]
Navigating Bankruptcy and Your Vehicle: What You Need to Know
Financial difficulties can strike anyone, and when you find yourself [...]
Bankruptcy Myth
Common Myths and Misconceptions of Bankruptcy Bankruptcy is a complex [...]
Covid-19 and Bankruptcy
It goes without saying that these are unprecedented times. The world economy has been devastated as a result of the Covid-19 pandemic. Tens of millions of people in this country have lost their jobs.
Houses and Bankruptcy
I often file either chapter 7s or chapter 13s for individuals that own houses. Most of the time, the individual who files wants to keep their house. And most of the time it is easy for the debtor to keep their house in the bankruptcy. The key issue is the amount of equity in the house: the difference between what the current fair market value of the house minus the amount of money owed on the mortgage(s).
Chapter 7 versus Chapter 13 Bankruptcy
The two main bankruptcies for individuals are chapter 7 and chapter 13. In general, if an individual is looking to obtain a fresh start and obtain debt relief by filing a bankruptcy, chapter 7 is preferable to a chapter 13. The threshold matter for determining whether someone qualifies for a chapter 7 versus a chapter 13 is what kind of debt that the debtor has.
Does filing a bankruptcy make you a failure?
No!!! In the summer of 2009—after the economy collapsed due to the rampant fraud and corruption of Wall Street—General Motors filed a chapter 11 bankruptcy. Not only did this bankruptcy filing for GM help the owners of GM (the shareholders), it helped all the employees, and all of the companies that do business with GM, and everybody who has a retirement account that has GM stock.
Can the IRS take your vehicle for backed taxes?
First, it is important to understand the difference between a tax lien and a levy. An IRS or Oregon Department of Revenue (ODR) tax lien is a formal public notice—to anyone who knows where to look—that you owe taxes. A lien attaches to your property and affects your rights to the property. When a tax lien iNew Website Home page picture full resolution filed or recorded it can hurt your credit. A lien does NOT involve the direct taking of money or property from you. An IRS levy or ODR garnishment/seizure does involve their taking of your property—your real estate, personal property, or money owed to you. The most common ones by far are levies or garnishments on money owed to you by others—your paycheck being paid to you by your employer or money held in your bank or credit union accounts.
Chapter 13 Bankruptcy and Taxes with an Example
In some circumstances a chapter 13 bankruptcy is a better strategy for dealing with past due taxes. Indeed, as my last blog post explained, a Chapter 7 case can be a powerful tool in dealing with past due taxes. A chapter 7 stops, at least briefly, any pending IRS or Oregon Department of Revenue (ODR) paycheck or bank account garnishment, and most other collection actions. And, most importantly, a Chapter 7 case can either: 1) discharge (legally write off forever) certain, usually older, income tax debts; or 2) discharge enough of your non-tax debts so that—after your Chapter 7 case is completed— you can afford to enter into a reasonable monthly payment plan with the IRS and/or the ODR on the taxes that can’t be discharged; or 3) a combination of the above two—discharge some of your tax debt, along with some or all of your other debts, so that you can afford to enter into a monthly payment plan with the IRS and/or ODR on the taxes that can’t be discharged.
Chapter 7 Bankruptcy and Taxes With Examples
A Chapter 7 bankruptcy can be a very powerful strategy for dealing with past due income taxes. A Chapter 7 can stop a tax garnishment, discharge older tax debt, and allow you to pay off newer taxes. A Chapter 7 will stop the IRS, the Oregon Department of Revenue (ODR), and/or any other state or local tax entity from garnishing your bank accounts and paychecks. The filing will stop a threatened tax lien from being recorded against your home and will stop threatening letters and phone calls for at least 90 days after the filing, and, in some cases, forever.