Last updated 2 months ago
Bankruptcy can be a viable legal solution for those with State and IRS income tax debts; however, discharging income tax debts in bankruptcy is a complex process. Income taxes that cannot be discharged under Chapter 7 may be eligible for repayment under Chapter 13 bankruptcy. If you have tax debt(s), it is essential that you contact an experienced bankruptcy lawyer who understands the bankruptcy code and can determine what course of action is best for you. Your attorney will look at:
Are the tax debts considered “priority” debts under 11 U.S.C. Section 507?
When an income tax debt has “priority” status, it will be non-dischargeable in Chapter 7 and must be paid in full through Chapter 13. If the return for the tax debt at issue was due within the three year period before your bankruptcy is filed, the tax debt for that year will be considered “priority” under 11 U.S.C. Sec. 507(a)(8)(A)(I). Also, if the return was subject to an IRS assessment within the 240 days prior to your bankruptcy filing, the debt will be considered “priority”. The assessment date can be hard to determine. Most clients receive notices from the IRS informing them that they have been assessed; however, it is suggested that you request a record of account from the IRS which will provide the best information on when assessment occurred.
When were the tax returns filed?
The next thing your attorney will want to know is whether you ever filed income tax returns for the tax debts at issue and when those returns were filed. If the returns were never filed or if they were filed within the two year period before your bankruptcy case is filed, the debts relating to those returns will be considered non-dischargeable under 11 U.S.C. Sec. 523(a)(1)(B) and will not get discharged in a Chapter 7 Bankruptcy. However, through Chapter 13 bankruptcy, you can propose a plan to pay those debts in full over a 3-5 year period. Again, a record of account obtained from the IRS will show the dates the returns were filed. Remember that tax returns filed on your behalf by the government may be insufficient to meet this requirement—it is best that you personally file the tax returns.
Fraudulent Return or Tax Evasion
If the tax debt relates to a return that was fraudulent or if the tax payer willfully attempted to evade the tax, the tax debt will also not be dischargeable under 11 USC Sec. 523(a)(1)(c). That is, the debt will not go away if you file Chapter 7 bankruptcy.
Other factors
The code is complicated when it comes to discharging taxes and careful planning is often required. For example, there are many tolling provisions that must be taken into consideration. The time you are in a prior bankruptcy will toll (delay the start of) the 3 year priority period referenced above. If you file a tax return extension, that will also delay the start of the 3 year waiting period. If you have a pending offer in compromise the start of the 240 day period gets delayed and an extra 30 days gets added.
Timing is critical when one is looking to take care of income tax debts through bankruptcy. For example, someone who filed 2004 tax returns 705 days ago may find they only need to wait a couple of weeks before they can file Chapter 7 and discharge the 2004 tax debt through bankruptcy. It is important that you obtain a record of account from the IRS and have it thoroughly reviewed by your attorney. Your attorney can then help you determine when you should file.
Are you considering declaring bankruptcy because of income tax debt? The laws regarding the discharge of bankruptcy debts are complicated and you should only consult with an attorney with experience. Andrew Sapinski has been helping Wisconsin residents handle their tax debts through bankruptcy for over 13 years. If you need an experienced bankruptcy lawyer who will personally handle every detail of your case and will always look out for your best interests, call Sapinski Law Office, S.C. of Milwaukee today at (877) 939-1739. To schedule a bankruptcy consultation in Appleton, call (920) 358-0333.
Disclaimer:
The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use and access to this website or any of the links contained within the site do not create an attorney-client relationship. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.
Last updated 2 months ago
In today’s economic climate, falling behind on your bills can have long-lasting effects on your life. If you are struggling to make ends meet, filing for bankruptcy may be a great way to discharge bad debt and secure a better financial future. This process can also help you avoid foreclosure and keep your home. Here is a list of links about important Federal and Wisconsin-specific bankruptcy and debt modifications laws:
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Filing for Chapter 7 bankruptcy can often discharge unsecured debt. Investopedia.com outlines the different types of unsecured loans that many people have.
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Chapter 128 is a Wisconsin-specific alternative to filing for bankruptcy; the State Bar of Wisconsin clarifies this unique option for residents struggling with debt.
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If you and your spouse earn less than $57,479 per year, you are likely eligible to file for Chapter 7 bankruptcy without having to go through the means test administered by the Department of Justice.
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Bloomberg News reports that healthcare costs throughout the country rose at a rate that was much higher than inflation during the last year.
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Do you want to learn how Chapter 7 bankruptcy is different from Chapter 13? HowStuffWorks.com explains the various types of debt discharges available to U.S. residents.
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To read the text of Chapter 128 of the Wisconsin Statutes, look no further than the state’s legislative documents website.
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The U.S. Courts provides lengthy explanations to frequently asked questions about the different types of individual and corporate bankruptcy.
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According to CNN Health, more than 60% of bankruptcies in the United States were caused in some part to high medical bills.
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In the case of Marie Brunner v. New York State Higher Education Services Corp., 831 F.2d 935 (2nd Cir. 1987), a the Second Circuit Court of Appeals outlined three factors to evaluate when deciding whether or not a debtor can discharge his or her student loans through bankruptcy.
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The Division for Public Education at the American Bar Association explains how the means test can prohibit households from filing for Chapter 7 bankruptcy.
If you are thinking about filing for bankruptcy in Wisconsin, consult the skilled legal team at Sapinski Law Office S.C. in Milwaukee by calling (877) 939-1739 today.
Disclaimer:
The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use and access to this website or any of the links contained within the site do not create an attorney-client relationship. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.
Last updated 2 months ago
While America boasts one of the best healthcare systems in the world, the price of this care is often steep. If you are terminated from your position at work or otherwise lose your health insurance, you may face exorbitantly high hospital and doctor bills. If your insurance policy provides poor coverage, and you realize an accident or chronic condition, you may also find yourself with an insurmountable debt load. Here is a look at how and why medical expenses have become the leading cause of consumer bankruptcy in the United States:
Spiraling Medical Costs
The costs associated with routine medical procedures and tests have outpaced inflation throughout much of the country. Due to the advent of new procedures, tests, and insurance models, doctors and hospitals have increased costs at a rate higher than the rate by which most salaries have grown. Similarly, national spending on medical care has doubled in the last decade. All of this has led to higher bills for more people. With the devastating effects of the recession, medical emergencies may saddle families who lack insurance or have poor coverage with hundreds of thousands of dollars in debt.
Relief Through Bankruptcy
Medical debt is typically unsecured debt, which means it is not backed by any collateral. After you receive care, the medical provider obviously cannot take away the care that was previously rendered. As a result, medical bills are almost always easy to eliminate (discharge) through bankruptcy. A recent study noted that medical expenses played a role in 62% of bankruptcies throughout the country. If you are struggling to make ends meet and are falling behind on medical bill payments, filing for bankruptcy under Chapter 7 can help you discharge these debts and start over.
Households struggling with medical debt can often benefit from consulting a bankruptcy attorney. You may be surprised what this option can do for you and your family. Milwaukee residents in need of competent bankruptcy advice should call (877) 939-1739 to reach Sapinski Law Office S.C. We have decades of experience helping Milwaukee and Fox Cities families discharge their debt, so contact us today. To reach our Appleton location, please call (920) 358-0333.
Disclaimer:
The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use and access to this website or any of the links contained within the site do not create an attorney-client relationship. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.
Last updated 2 months ago
Depending on your unique mix of debts and assets, you may be able to consolidate your loans instead of filing for bankruptcy. This video explains the advantages and disadvantages of debt consolidation.
The first benefit of consolidating debts is that it can greatly simplify your life. Many individuals find when they have only one payment to worry about, they keep better track of their finances. Another benefit is that when you consolidate your other bills, you may be able to negotiate a lower interest rate and stretch out the time in which the debts must be paid. The end result of the lower rate and longer repayment term is a lower monthly payment for you.
However, a consolidation loan may not be the best solution for you and your family. Extending the repayment term may lower your monthly payment; however, if you extend the repayment term long enough, you may end-up paying more over the long-term through consolidation. Also, when you consolidate you may put your assets at risk if you are forced to pledge them as collateral.
If you are thinking about consolidation and need debt management advice, first speak with a local attorney about your options. If you live in the Milwaukee or Fox Cities area, call (877) 939-1739 to reach Sapinski Law Office S.C. We have over 13 years of Wisconsin bankruptcy law experience, so contact us today for a free, no-obligation case evaluation.
Disclaimer:
The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use and access to this website or any of the links contained within the site do not create an attorney-client relationship. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.
Last updated 2 months ago
Individuals have two options when it comes to declaring bankruptcy in the United States: Chapter 7 and Chapter 13. The former is a great option for those carrying large burdens of credit card debt and medical bills, while the latter is often a good choice for those who want to avoid a home foreclosure, protect a car from repossession or consolidate and pay debts that may not be dischargeable in bankruptcy. For those with high incomes or those who may stand to lose non-exempt assets in Chapter 7 bankruptcy, Chapter 13 may be their only option. Only an experienced bankruptcy attorney can help you decide which option is best for you. Here is a look at some of the critical differences between filing under Chapter 7 and Chapter 13:
Chapter 7: Debt Discharge
Often called the “straight bankruptcy”, this is the most common form of bankruptcy and is designed for debtors who have insurmountable unsecured debts. Chapter 7 allows consumers to discharge debts they no longer wish to pay and start their financial lives anew. The Court issues a discharge order at the end of your bankruptcy to all your creditors, informing them that you are no longer obligated to pay debts eligible for discharge. Often, Chapter 7 is not an option for those who earn more than their state’s median income. In Wisconsin, the median income for a household of two is $57,479. For an individual it is 42,776. If your income is above the median, you may still be eligible to file Chapter 7; however, unlike those who are below the median, you have to complete a complicated form called the means test to determine if you qualify. This form is complicated and it is strongly recommended that you hire an attorney who specializes in bankruptcy if your income is above the national median.
Chapter 13: Debt Consolidation
If you earn more than the average income, and you don’t pass the means test, you may still be able to file bankruptcy under Chapter 13. This type of filing allows you to consolidate your debt and alter the terms of many of your loans, including most secured loans. The goal of Chapter 13 is to help you keep your property and lower the amount you must pay your creditors each month. You are allowed three to five years to complete your monthly debt repayment plan. If you are behind on your mortgage, you can use Chapter 13 to stop foreclosure and give you time to cure your default. If you are behind on a car loan, Chapter 13 can stop any pending repossession and can lower the amount you must pay the lienholder by lowering the interest rate and/or allowing you to pay back only what the collateral is worth as opposed to what you owe.
Each household’s varying assets and debts make every situation different—consulting a bankruptcy lawyer is an important first step if you are considering filing for bankruptcy or seeking other debt-relief options. If you live in the Milwaukee, Appleton or Waukesha areas and are seeking actionable advice, look no further than Sapinski Law Office S.C. We have years of experience helping Wisconsin residents with both Chapter 7 and Chapter 13 bankruptcies, so call (877) 939-1739 today to schedule a consultation. For appointments in the Appleton area, call (920) 358-0333.
Disclaimer:
The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use and access to this website or any of the links contained within the site do not create an attorney-client relationship. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.
