Filing bankruptcy and taxes?
I am getting ready to go see a lawyer about filing for bankruptcy we went into a settlement company and it's not working anymroe the creditors are threatening to sue me and freeze my bank accounts and if that happens then i'm screwed casue i cannot pay for my car or feed my kids. I'm stressed to the max and this the last thing i want but i have no choice i'm young enough to recover form it i think. So if i file will they take my tax returns until i have it paid off or not i was just curious if they did i don't think they can since i don't owe any back taxes or any government agencies mostly credit cards. Any help would be appreciated Thanks
I will add we have no house or land and we are a family of 5 on one income. All we have is a car still being paid on.
May 31st, 2009 at 11:48 pm
Look, don't feel bad. Go see a lawyer and get the creditors off your back. Generally you can keep your home and two cars but since you have only a car there shouldn't be any problems. As for the credit card companies freezing your assets the only entities allowed to do that are the IRS, student loans and some state taxes.
File a chapter 7 so that you won't have to make any payments. Your debts will be cleared. This will stay on your credit report 10 years and you can declare bankruptcy only once every 6 years so stay away from credit cards.
Get a lawyer right away and direct any creditors to them. They may not contact you anymore once you advise them of your filing for bankruptcy. Good Luck!
May 31st, 2009 at 11:48 pm
With the 2005 change in bankruptcy laws, it depends.
Mainly it depends on two things: your salary and your assets.
Each state has a different level of income that determines whether or not you are put on a payback schedule (risk to your income tax return) or on a complete dissolution.
Go and see a qualified bankruptcy attorney for a consultation, they are the only ones that can help you now.
May 31st, 2009 at 11:48 pm
it's a best possible way
May 31st, 2009 at 11:48 pm
Have you ever heard of Dave Ramsey? If not, you need to check him out. He's a faith-based financial guru that preaches that we shold live our lives debt free. His ministry changed my life!
My husband and I were over $63,000 in debt. We got focused, made a budget and paid off the debt in less than 2 years. You are not bankrupt. You can get out of this mess you created. You just have to be willing to sacrifice and work toward correcting your behavior.
Creditors will say ANYTHING to make you scared. They are mean, vicious DOGS that break federal law every day by threatening people. Yes, they can sue you; will they, no, probably not. Millions of people are in credit card debt and there's no way they could go around suing every person that's behind. They CANNOT freeze your bank account. They can threaten to all day long, but they CANNOT do it.
Here's your plan:
1. Get on a written budget. Sit down and write out your income and bills on paper. Spend every $$ so you know where it goes.
2. All extra $$ every month goes into a savings account until you have $1,000 saved up.
3. Once you get your $1,000 baby emergency fund, you will start attacking the debt smallest to largest. One at a time. Don't stress about them calling you. If they get bilergent, and they will, hang up on them. Don't take the abuse. They want you to get upset and angry and send them your grocery $$. Don't let them get to you!!!
May 31st, 2009 at 11:48 pm
If you file bankruptcy, they will not take your tax return. Those are completely separate issues….HOWEVER, some states make you declare a percentage of your bankruptcy as an asset and you might have to pay taxes on those. For some reason, the IRS sometimes looks upon forgiven debt as "income" and then they make you pay taxes on that.
It's not everywhere, so just make sure you ask at the consultation with your lawyer.
May 31st, 2009 at 11:48 pm
I recently completed a ch. 7. When I went to court they asked me if I got a tax refund. I said yes, they said how much was it for, I told them the dollar amount, they said when did you receive this check, I told them February. After this conversation on the tax subject they didn't bring it up again. They didn't tell me I'd have to use any of these funds to repay my creditors (all credit cards.) I think they didn't touch this money because I got this refund 3 months prior to court and since I didn't have much income and needed this money to help me survive. I didn't own a house, I had a 12 year old car that they didn't touch. You can keep your car if you sign a paper with your lawyer stating to reaffirm the loan. (promise to keep paying this bill). Doing a ch. 7 bk was the best thing I could have done. I can sleep at night, but more importantly I can feed my kids. If you have any questions or need advice you can email me at hansjill228@optonline.net. I usually go on the computer once a day. Good luck.