Income tax debts can be discharged as it is entitled under Chapter 7 and Chapter 13 of the Bankruptcy Code. In order to free yourself from the clutches of debt, you need to hire bankruptcy service in order to discharge your tax debts.

Under Chapter 7 a person can discharge his entire allowable debts. Under Chapter 13 bankruptcy a settlement plan is designed to make the repayment affordable for the pocket. And the remaining debts that could not be paid off are usually discharged under this bankruptcy code.

Tax debt is treated in the similar way like before, under the new bankruptcy law in both Chapter 7 and Chapter 13 petitions. But you need to be aware as all tax debts are not discharged under bankruptcy code. If the following five criteria are not qualified by the bankruptcy petitioner then his tax debts would not be discharged.

Five criteria to Discharge Tax Debts

If these five criteria are fulfilled then the tax debt is dischargeable under Chapter 7 and Chapter 13 bankruptcy petitions.

1. The due date for filing a tax return is at least three years ago.
2. The petitioner has filed a tax return at least two years ago.
3. The tax assessment is at least 240 days old.
4. No forgery while tax return.
5. The taxpayer is not accountable for tax evasion.

Return due at least three years ago

The tax debt must be related to a tax return that was pending for at least three years before the taxpayer files for bankruptcy.

Return filed at least two years ago

A tax return needs to be filed at least two years before the taxpayer files for bankruptcy. The time is measured from the date of tax return filing

Tax Assessment by IRS At least 240 days old

The tax needs to be assessed at least 240 days before the taxpayer files for bankruptcy. The basis of IRS assessment is from a self-reported balance due or an IRS final determination in an audit.

Tax Return was not fraudulent

Providing fraudulent documents in the process of filing a tax return is considered to be an offence.

Taxpayer should avoid the charge of Tax Evasion

If the taxpayer is found to be evading the tax laws then his debts would not be discharged under bankruptcy code.

By Keith Burgess

Are you finding it hard to meet all your financial obligations each month? Are you worried that you may nor be able to recover? Find out how you might be able to solve the problem quickly…

If you have high interest debts like payday loans, personal loans or credit card debt, then you could be paying more that you need in interest charges. Consider consolidating your debt to one low-interest loan. Depending on how much debt you have and the interest you pay, this could save you hundreds of dollars every month and make your life so much easier. Read on to see how you can make this happen.

Loan consolidation can be achieved in three main ways:

• Consolidate your debts to your home mortgage account. This is only applicable if you have a mortgage and have equity in your home (equity is the difference between what your home is worth and how much is owing. If your home is worth more than your debt, then the difference is called equity).
• Apply for a low interest loan and consolidate existing loans to this one account.
• Apply for a debt agreement.

Mortgage Consolidation

The interest charged against a mortgage on a home is one of the lowest around. That’s because the bank or lender has security. If you were to default on your loan payments, the lender could repossess the home and sell it to recover the debt. As there is less risk for the lender, so they are willing to lower the interest rate.

This is a great option if you have a mortgage and have equity in your home. If you do, then talk to your lender about extending your mortgage and use the difference to pay down your high interest loans.

There may be a cost to extend your mortgage, so please check the fees before you consider this option.

Low Interest Loans

If you don’t have a mortgage with equity, you can apply for a low interest low from your bank. This is effectively about applying for a new loan with a lower interest rate than your existing loans and then using this loan to pay down all the debt in your high interest accounts. The benefit is that you will have only one monthly payment to make, so it is easy, and the overall interest cost should be lower.

One note of caution. You are effectively taking out an additional loan, so can expect to pay loan establishment fees and potentially other costs. Please check the amount of these costs because they are often added to the loan amount and will drive up your monthly interest costs. What you want to avoid is having a new loan that costs more than your existing loans to pay off because these fees have been added.

Debt Agreements

A debt agreement is often used as a last resort to avoid declaring bankruptcy. This is a formal arrangement between you and your creditors whereby you agree to pay an agreed amount monthly to service your debts. Often you will be able to negotiate an agreement where you will not have to pay all the money back. This is because creditors will be aware that you are experiencing difficulty paying your debts and would rather get part of the money back than risk getting nothing (e.g. if you were to declare bankruptcy).

There are many reputable debt companies that will help you negotiate a debt agreement with your creditors. Many will also take over all communication with creditors so that you only have to pay them and they handle the distribution of funds to creditors. This can be a good option if you are feeling stressed and need a break from the pressure. In some countries this process is overseen by Government agencies and is underpinned by law. Check out the options available to you.

Final Note of Caution

Once you have a solution that works for you, consider changing the spending behavior that got you into trouble in the first place. If you do not then you might well find yourself in the same situation in a few months. Consider learning about how to create and manage to a budget. There are plenty of good resources online to help you learn about budgeting.

Summary

If you find yourself in financial difficulty, you might find one of t5he above debt consolidation solutions will work for you. If you have a mortgage and have equity in your home it should be relatively easy. If you are in real difficulty and simply can’t make your payments, you might have fewer choices and could consider a debt agreement.

The main reason for filing bankruptcy is unable to repay the creditor and declare your self that won

In Chicago the court accepts filing for Chapter 7 and Chapter 13 bankruptcy cases for people who are unable to pay their debt. The judge must be convinced that the person who is filing for bankruptcy must qualify the criteria of bankruptcy before filing it otherwise he won’t approve it.

Warning regarding filing for bankruptcy:

Filing for bankruptcy can spoil your credit record as it stays on the report for 10 years. The person can not acquire credit to buy new home or indulge into any luxurious products as he has filed for bankruptcy. Student’s loan and back taxes are two debts which are not excused even after filing for bankruptcy.

A declaration has to be made in the news paper as well as in the court paper stating that you are a “bankrupt”. The judge would demand an explanation for the cause of filing bankruptcy and he can also question you regarding the cause of your financial crisis.

Filing bankruptcy would ruin you name and it would be hard for you to fetch a job in the market.It is advisable to avoid filing bankruptcy.

• Time period: It stays on your credit report:

Bankruptcy would be on the credit record permanently according to Chapter 7 bankruptcy. The fact that you filed a bankruptcy would be quite visible on the credit report. If you have filed for Chapter 7 the information would be there on your credit reports for 10 years from the date you have filed. While a Chapter 13 would be on your credit report for 7years from the date of filing.

• Payment plan- Fee and installment charges:

A Chapter 7 bankruptcy case cost $299 to file and filing fees for a Chapter 13 case would cost $274. If a filer can prove that he is financially weak to pay the full fee of the bankruptcy procedure then the court may accept installment. With in 30 days of filing bankruptcy the installment should be made and the remaining amount should be paid within 60 days from the initiation of a bankruptcy case. Within 120 days of filing bankruptcy the total amount must be paid.

• Debts that are not excused:

Some debts are excused even if you file for bankruptcy which might include such as court fines, child support, alimony, federal student loans, and back taxes. Most tax debt cannot be included unless Unless a tax debt is three years old it can not be included till then.

• Credit Counseling session:

Filing for bankruptcy won’t be accepted unless a filer goes for a credit counseling session. Before you file for bankruptcy a certified credit counseling session’s evidence has to be provided by the filer.

• Required Financial Documents

You have to provide with a number of financial documents as these are required before you pursue a case. You must submit the following documents:

1. bank statements
2. past three tax returns
3. current pay stubs
4. list of your assets and debts.

You bankruptcy case would be denied if you fail to produce the said documents and lying about your assets constitutes It would be considered a federal crime if you lie about your assets.

The New Bankruptcy Laws which came into effect from 17th October, 2005, have indeed opened up new possibilities for the debt settlement industry. On one hand, higher cost and more rigid nature of the new laws have put a check on extensive bankruptcy filings. On the other, it has led to a growing interest in debt settlement.

If you file for bankruptcy under Chapter7 of the New Bankruptcy Laws, most of your debts are likely to get redeemed, followed by the liquidation of your assets. While this chapter makes room for complete debt cancellation, Chapter 13 of the new laws gives the debtor a certain time limit within which he/she is supposed to pay off the due. The time span in the latter case may extend up to 5 years.

If your income exceeds the median of the State you belong to, you are considered ineligible for bankruptcy filing under Chapter 7. Instead you are to file it under Chapter 13. This clause makes way for debt repayment plans, of which debt settlement is an efficient mode of repayment. Thus, in a way, bankruptcy is leading to debt settlement!

Even the IRS interference in the debtor

If you have filed bankruptcy or are considering doing so, you may be concerned with the possible effects. Renting an apartment after bankruptcy is possible; you just need to be prepared.

Whether you’re just considering bankruptcy or have just been through one, you are likely to ask yourself this question. The good news is yes, there are plenty of places willing to give you a second chance. But as you may have discovered, many others won’t even consider renting to you. So how do you find those that are willing to work with you? You can start with our listing service which includes only properties where the owners and managers will consider renting to those with bankruptcy and or bad credit. You can also use your local listing service and call the numbers on the ads to ask if they would consider renting to you. Either way, you’ll need to be prepared to convince them that renting to you is a good business move for them.

• Documentation: When you go to rent an apartment or home after filing bankruptcy, it is imperative that you bring documentation to prove your income and ability to pay rent. Showing bank statements, pay stubs and any other forms of income besides your credit report will help to solidify a home. Some companies can be hired to help you with your apartment search after bankruptcy, but be aware of their fees and restrictions.
• Appearance: Creating a good impression is the first step in securing an apartment. People make evaluations based on appearance as well as the vibe they get from you. If they feel you are a good person and are respectful, they will be more likely to rent to you. Carry yourself well and come prepared to meet a landlord. Provide all necessary documentation even if you aren’t asked; show that you are dedicated and willing to do what is necessary.
• Be honest: it is important to be honest with your would-be landlord. If you have an impeccable renting history but had to file bankruptcy because you became ill then be upfront with your landlord. Your potential landlord will most likely do a credit check as well as check your previous rental history, so there’s no sense in hiding anything.

By approaching private landlords or small management companies, you are increasing your chances of obtaining a place to live. Bring references from past landlords, your employer and anyone you can think of that will help you seal the deal.

• Renting an Apartment after Bankruptcy: Be Employed: If you have filed for bankruptcy in the recent past and have no job with which to assure your ability to pay the rent, you aren’t going to be approved. Ideally, you should be gainfully employed for at least six months before attempting to rent an apartment, and you should be able to provide the landlord with your employer’s contact information as a reference. Further, bring with you at least two pay stubs to confirm your income. Make sure it is at least three times the amount of the rent.

If you have filed bankruptcy but can prove that you have a steady income, there is no reason for a private landlord to not rent to you. Renting from a well established and large rental company can be difficult because they typically have guidelines for credit that must be held consistent. Bankruptcy is not the end of the world. There is life after bankruptcy; you just have to be positive.

You may like to visit:

whocanisue.com

During the initial consultation your specific situation will be reviewed and discussed, the process of bankruptcy will be explained, options available in Bankruptcy will be analyzed by our experienced attorneys, fees and costs will be discussed and questions will be answered.

Prior to filing bankruptcy: A debtor is required to take a credit counseling class by an approved credit counseling provider. Certificate of credit counseling Bankruptcy Court requires that all bankruptcy filers obtain a credit counseling certificate. Names and contact information of credit counseling providers are available on our site and will be provided to you during your initial consultation. This class does not require your personal attendance

BAPCPA, or the Bankruptcy Abuse Prevention and Consumer Protection Act, was passed by the US federal government in 2005. The purpose of this act was to reduce the number of Chapter 7 bankruptcy filings and increase the number of Chapter 13 filings. The reason creditors prefer Chapter 13 over Chapter 7 is that debtors have to partially repay their debts before they are discharged; whereas, with Chapter 7, all debts are discharged.

Supposed Abuse

BAPCPA was created in order to reduce the possibility of bankruptcy abuse. Prior to BAPCPA, anyone could file for Chapter 7 bankruptcy and have their debts discharged. Only an officially appointed trustee could determine “abuse,” which, if discovered, would bar a bankruptcy candidate. Because officials feared that too many people were abusing the system and eradicate debts that could have been taken care of, all candidates with primarily consumer debts are subjected to a “mean’s test” to determine their eligibility.

BAPCPA corrections

The BAPCPA amends many parts of the US bankruptcy code. The most considerable changes follow:

• A “means test” is now used to help determine whether or not a bankruptcy candidate is eligible to file for Chapter 7.
• Chapter 7 filers are now subjected to random and scheduled audits to ensure that their financial documents are legitimate.
• All bankruptcy candidates are required to attend credit counseling prior to filing.
• All filers are required to attend financial education programs before their debts are discharged.
• Filers are now subject to new fees, including: filing fees, attorney liability, increase debt repayment, and increased compliance requirement costs.
• Exemption rules and requirements are more strict.

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) made sweeping changes to American bankruptcy laws, affecting both consumer and business bankruptcies. Many of the bill’s provisions were explicitly designed by the bill’s Congressional sponsors to make it “more difficult for people to file for bankruptcy”. Although the BAPCPA was intended to make it more difficult for debtors to file a Chapter 7 Bankruptcy

Bankruptcy goes thorough a regular set of bankruptcy motions, based on the decisions made by the judge or the trustee. Motions in some cases are so smooth that the case is completed without any disagreement. However, the course may get very difficult for the debtor if someone files a complaint against him/her under federal fraud laws or files a motion to dismiss the bankruptcy filing itself.

• Motion#1: must be consumer-initiated regardless of the fact whether the debtor is availing the services of a lawyer or not. This is the first of all the bankruptcy motions. As per this motion, the petition is filed – either by the debtor themselves or by the lawyer representing them. This way, the first motion is to place a request to the federal government to either reorganize or eliminate the debts that the debtor in question owes to different creditors.
• Motion#2: The second motion includes the arrangement of a meeting of creditors or a 341 meeting after the petition is received. The meeting provides the creditors an opportunity to have their say. They have the right to object to the bankruptcy request. However, if the petition has been filed under chapter 7, creditors seldom appear in such meetings. The only situation when they may come up with an objection when they have some solid proof of bankruptcy frauds with them. In that case, they will ask the trustee to make bankruptcy motions to dismiss the petition on the basis of the possible frauds.
• Motion#3: In the final motion, the debtor and the trustee are supposed to complete all necessary paperwork. Once the trustee is satisfied that all formalities have been completed thoroughly, a final motion is made by them to the judge to either reorganize the repayment plan or accept the bankruptcy. In a normal state of affair, the motion is accepted and the judge issues the discharge papers for bankruptcy to the debtor.
• Motion to Dismiss Bankruptcy: Bankruptcy motions sometimes may also include a possible bankruptcy dismissal motion. Creditors file such motion when they suspect a fraud. Here, it is important for you to keep in mind that even if the case is dismissed because of any reason, it will still reflect on your credit report that you filed for bankruptcy. So, your credit will still be hurt badly. But if you are found guilty of fraud, you may also be persecuted for the same.

The best way to avoid dismissal bankruptcy motions is to practice truthfulness with Bankruptcy Specialist. File your petition only if it is a genuine case.

US Auto Bailout – Pros and Cons – Addressing Bankruptcy in 2009

As Congress comes closer to finalizing a bailout for the American auto industry, one can