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19

Jul 2020

IRS Means Never Having to Say….

Posted by / in After Bankruptcy, Blog, Chapter 7, Chapter 7 Bankruptcy / No comments yet

IRS Means Never Having to Say….Anything

The IRS is not like most creditors. (Your probably knew that.)  The IRS in bankruptcy is not like most creditors in bankruptcy, either.

Knowing what debts have been cleared (discharged) by your bankruptcy is easy for most debts. For credit cards, loans (including payday loans, who want you to think they are somebody special), car loans, medicals. When those debts are properly listed (scheduled) in the bankruptcy, they are automatically discharged, unless they object.

So, for example, Capital One. Was your Capital One card listed on the schedule of debts? (Schedule F.) Yes. Did they object? No. Then they are discharged.

That’s NOT the rule for the IRS in bankruptcy.

IRS and Bankruptcy: Not Like Other Debts

IRS logo illustrating the IRS in bankruptcy

IRS in bankruptcy is not like other creditors.

First of all, not all income tax debts can be discharged. (Some people assume none can be, but you know better than that.) The main rule is you can discharge taxes that were due more than three years ago, and were properly filed. See 11 USC § 523(a)(1).

More than Three Years—Look at the Calendar

The due date for taxes is usually April 15, unless there was a holiday, or you asked for an extension, or because of some natural disaster (Covid-19 in 2020) there was an automatic extension.  523(a)(1).

That you can figure out for yourself, usually. (There are other rules on timing that do apply. This is NOT a complete analysis.)

Properly Filed—Lots of Gray Area

I say “properly filed” but that’s not the wording in the law. It’s my shorthand.

Your taxes do have to be filed, by you. (When people are chronically late, the IRS will often look at the W-2’s, estimate a tax and send you a bill. That does NOT count as filing a return for bankruptcy purposes).

You can’t file a fraudulent return. And you can’t willfully attempt[ed] in any manner to evade or defeat such tax.

That gray area is enough to give anyone who owes taxes some worry about what the IRS will do. You might feel certain you don’t pay because you were broke, but worry the IRS says you were evading.

I Got My Discharge. Am I OK?

The IRS does NOT have to say. The IRS does NOT have to tell the bankruptcy court, or you, if they say you filed a fraudulent return or willfully attempted to evade. They can decide whenever they want that they think you’re an evader.  You find out when you get collection notices again.

Is There Anything I Should Do?

Actually there is. You should get your account transcript and look at the IRS notes. You can see if they have your debt coded as discharged in bankruptcy. Or are they showing something else.  You can get your transcripts here.

Get your tax account transcript.  The IRS has several different transcripts, For what we are talking about, the tax account transcript is the one you want.

What If There’s an IRS and Bankruptcy Problem?

If there’s a problem, you need to talk to a lawyer who knows more than I know about about tax law and the IRS and bankruptcy.  That’s not me.  I’ve told you all I know, here.

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25

Jun 2020

After bankruptcy….the car still has to pay!

Posted by / in After Bankruptcy, Blog, Chapter 7 Bankruptcy, Weekly Posts / No comments yet

…But the Car Still Has to Pay.

When you file Chapter 7 bankruptcy, that means you don’t have to make the car payments.

But that does not mean you get a free car. You don’t have to make the car payments, but the car still has to pay.

That’s because the car finance company is attached to the car title. Lawyers call that a lien.  If the debt that’s attached to the car isn’t paid, the lien holder will repossess the car.

Don’t Forget to Make the Car Payment

It’s easy after bankruptcy to forget to make the car payment.  If it slips your mind, the car finance company won’t send you a reminder. Why? Because you don’t have to pay. They also won’t send the car a reminder letter. They know the car doesn’t open its mail.

And if you get a week behind, they won’t call and demand payment. Because you don’t have to pay. And they won’t call the car, because the car doesn’t have a phone. Only one thing happens if you forget to pay. You wake up in the morning and the car is gone.

Don't forget to make the car payment. The car still has to pay.

If you forget to make your after bankruptcy car payment, you won’t see the car. the car still has to pay.

Does Paying the Car Help Your Credit Score?

Suppose you forget to pay and the car gets repossessed. The repossession won’t show up on your credit report.  That’s because the bankruptcy discharges the debt from you. But that also means your car payments won’t show up on your credit report if you do pay. You don’t have to pay.

Only one thing happens if you pay. You keep the car.

Only one things happens if you don’t pay. When you wake up in the morning, the car is gone.

You need to make the car payments if you want to keep the car. 

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24

Sep 2016

Bankruptcy: Best Plan or Best Guess?

Posted by / in Chapter 7 Bankruptcy /

Chapter 7 Bankruptcy: Best Plan or Best Guess?

Donnell’s Chapter 7 bankruptcy got discharged this month. We have about 30 to 40 bankruptcies discharged—that means approved and done—every month. But Donnell’s was special. He explained why, when he wrote me one of our best reviews ever. You can read it here.

 

Best plan for filing Chapter 7 bankruptcy

    Eight lawyers told Donnell he could not get approved for Chapter 7 bankruptcy. I told him he could; and he did.

Donnell says he went to eight bankruptcy lawyers who told him he could not get approved for a Chapter 7 bankruptcy. I told him he could; and he did.

Every bankruptcy case is different.

Your case will be different from any of the 14,000 cases I’ve handled before. I want to handle it the best way possible, for you.

That’s why I insist on having complete information about your situation when we sit down and talk. Every week people say to my staff, “why do I have to fill out your 37 page form—and bring you all this other information—when I don’t even know if you can help me.” Exactly.

Until you fill in my 37 page form—and bring all the other info I need—I don’t know if I can help you. I can guess, but I don’t know. Eight lawyers guessed that Donnell could not get Chapter 7 bankruptcy approved. I knew that he could.  When you make an appointment to talk to a lawyer, do you want the easiest answer? Do you want the obvious answer? Or do you want the best answer?

If you really have a simple question you can email me.

People tell me, I only have a simple question. If you only have a simple question, you can email me. For example: Will Chapter 7 bankruptcy discharge my DC parking tickets. Answer: No.

But most people have a serious question: What’s the best way for me to fix my financial problems. Answer: We need to talk. I need complete information on your financial picture to answer that question.

Chapter 7 bankruptcy is serious

jpg_doctor-with-clipboard

Would you want a doctor who scheduled you for surgery based on a 15 minute phone call? Why would you want a lawyer to schedule you for bankruptcy with less than complete information?

It’s not really as serious as some surgery can be, but it’s serious. Would you trust a doctor who talked to you for 15 minutes on the phone and then scheduled an operation? Most doctors want a complete examination.  If not, you want to talk to a bankruptcy lawyer who will only schedule you for a bankruptcy based on your complete financial picture.

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NORTHERN VIRGINIA BANKRUPTCY LAW OFFICES