Photo by Joshua Sukoff on Unsplash. An income tax lien creates challenges, so try to file bankruptcy to prevent one. Otherwise, bankruptcy can often help deal with a tax lien. This blog post continues a series about the smart timing of your bankruptcy filing. (It was interrupted by two blog posts updating federal unemployment benefits.) The last one in this … Read More
If Chapter 7 doesn’t write off enough another debts so you can afford to pay the tax, Chapter 13 gives you much more time and protection from the tax lien. Last week we discussed how Chapter 7 handles a recorded tax lien on a tax that bankruptcy CAN’T discharge. The tax debt already can’t be discharged (legally written off in bankruptcy). … Read More
In spite of you filing bankruptcy, the taxing authorities can still take certain very specific actions as exceptions to the automatic stay.
You get immediate protection from creditor collections by filing a Chapter 7 case. Same with Chapter 13 except it protects you longer, if needed. The automatic stay is the very strong legal protection from your creditors you receive when you file a bankruptcy case. The automatic stay stops virtually all attempts by creditors to collect their debts against you, … Read More
If you are thinking about filing bankruptcy and have a tax refund coming, you can usually keep your refund if you get advice about doing so.
A tax lien may attach to assets worth more than the amount of the underlying tax. That could make either a small or a huge difference.
Bankruptcy gives you power over the IRS in getting rid of a tax lien. Chapter 13 in particular empowers you to value and pay off a lien.
With very few limited exceptions the IRS/state must stop all collection activity, from the beginning to the end of your bankruptcy case.
Can the IRS seize your car or truck in payment of a tax debt you owe? Yes, if it has substantial equity. Will it do so? Possibly.
You may not think of bankruptcy as a solution to your tax problems. But do look into it before the tax collector starts grabbing at you.
Bankruptcy can do so much more than write off old taxes and buy time to pay newer ones. So if you owe lots of taxes, it’s worth considering.
You are protected from the very powerful collection capabilities of the IRS during bankruptcy virtually as if it were just any other creditor.
Which is more powerful–tax collection or bankruptcy protection? Most of the time, bankruptcy is.
Chapter 7 can only help in certain tax debt situations. Chapter 13 “adjustment of debts” is both more powerful and more flexible.