Can a Bankruptcy Wipe Out Income Tax Debt?

People sometimes assume that a bankruptcy filing is a panacea that will wipe out all debts permanently, including tax debts. In fact, this is not the case. The details will depend upon the form of bankruptcy that is filed and the type of tax payment that is delinquent.

Chapter 7

A Chapter 7 bankruptcy can potentially result in a discharge of income tax debt if certain conditions are met. There are many rules, but the 3 primary rules are: 1) the tax year must be more than 3 years old at the time of the bankruptcy filing, 2) actual filing of the return has to have taken place in a timely manner, and the internal IRS or state assessment has to have been entered at least 240 days before the bankruptcy filing. If all of these conditions are met, the tax debts can usually be discharged.

Chapter 13

In a chapter 13 reorganization bankruptcy priority debts will be paid first. An income tax delinquency will be a priority debt, so your repayment plan can be structured to pay the taxes back over time and avoid any tax garnishments. The other benefit is that we can usually eliminate all future interest and penalties while paying the taxes back through a chapter 13.

Schedule a Case Evaluation

Our firm serves people in many different cities throughout the states of Oregon and Washington. If you are in Tri-Cities, Vancouver, Eugene, Salem, Portland, Bend, Medford or any other community in the Oregon our southern Washington, we are just a phone call away. We offer free, no obligation bankruptcy case evaluations, and you can set up an appointment right now if you give us a call at 1-800-682-9568.

Answers to Three FAQs about Bankruptcy in Oregon

We have been providing bankruptcy assistance in the state of Oregon for over 40 years, and we now have offices Portland, Eugene, Medford, Grants Pass, Coos Bay, Roseburg, Salem, Bend and a handful of additional cities. If you are considering the possibility of a bankruptcy filing in the state, you are going to have questions, and we can provide you with answers if you visit us in person. In the meantime, let’s look at the answers to three frequently asked questions about bankruptcy in Oregon so you can proceed with an underpinning of basic knowledge.

What are the different types of bankruptcy that are filed by individuals?

Chapter 7 and Chapter 13 are the forms of bankruptcy that are most commonly utilized. Chapter 11 is a type of bankruptcy that is used by businesses and a very limited percentage of individuals who have enormous levels of debt. Chapter 12 is a rarely used form of bankruptcy that is exclusively earmarked for family farmers and family fishermen.

How does a Chapter 7 differ from a Chapter 13 bankruptcy?

A Chapter 7 is a liquidation bankruptcy, so unsecured debts like medical bills and credit card balances are discharged. Plus, you can usually retain ownership of your car and your home if you are current on your payments. To be able to qualify for this type of bankruptcy, you have to be able to pass a means test. If your income is less than the median income in the state of your residence, you automatically qualify. It is possible to qualify even if your income does exceed the median if certain circumstances exist.

People who cannot qualify for Chapter 7 because they have too much income can file for a Chapter 13 reorganization. If you were to do this, you can keep all of your property, and your debt will be restructured. You will be required to use your disposable income to pay down the debt over a period of 3 to 5 years.

How long will a bankruptcy stay on my credit report?

It depends on the type of bankruptcy you file. Credit reporting agencies will erase a Chapter 13 bankruptcy after seven years. If you file for Chapter 7, the bankruptcy will remain on your credit report for 10 years.

Set Up a Free Bankruptcy Consultation

If you will like to take action after absorbing this basic information, we will be more than glad to assist you. We provide free initial case evaluations, so you can get to know us and learn more about the benefits of bankruptcy before you make any final decisions. To set the wheels in motion, send us a message through our contact page and we will get back in touch with you promptly.

Can My Car Get Repossessed During Chapter 7 Bankruptcy?

Catch-22 situations can present themselves when financial difficulties arise. One of them is the matter of transportation to and from work. Let’s say that you fall behind on your car payment because you are having monetary problems, and your vehicle is repossessed. Without a car, you may find it hard to get to work on time or complete a successful job search if you are unemployed. You lost the vehicle due to a lack of resources, but it will be even more difficult to satisfy your creditors without transportation. If you find yourself in this position, a Chapter 7 bankruptcy filing can provide a solution.

As soon as you file for Chapter 7 bankruptcy, you get an automatic stay. This means that your creditors cannot try to collect debts for a prescribed period of time while the bankruptcy process is underway, so your car can not be repossessed. However, the lender who holds the note on the vehicle can file a motion to get permission from the judge to repossess.

If you were behind on the payments when you filed the bankruptcy, you can potentially make arrangements with the lender to bring the payments current. After this is done, you will be able to retain possession of the car after the bankruptcy was finalized. Redeeming a vehicle is another interesting possibility. When you file a Chapter 7, you may be able to redeem the car by paying the lender the fair market value, even if it is far less than the amount that you owe on the car.

Chapter 7 Bankruptcy Can Free Up Resources

You may find it hard to pay your car payment because you have unmanageable credit card debts or medical bills. If you can get out from under these unsecured debts, you will have the money you need to make your car payments on time. If you were to file a Chapter 7 bankruptcy, the unsecured debt will be discharged. However, as long as you are current on your car payment, you will be allowed to keep the car (unless you had a great deal of equity in the vehicle).

We have offices in numerous different cities in Oregon and Washington, including Eugene, Portland, Medford, and Salem. If you will like to discuss a potential Chapter 7 bankruptcy filing with one of our attorneys, we will be more than glad to assist you. You can set up a free consultation right now if you call us toll-free at 1-800-682-9568.

Bankruptcy Is Not a Badge of Dishonor

There are certain trigger words that can have negative connotations in some circles, and bankruptcy is one of them. As attorneys who help people who are struggling with debt in Portland, Vancouver and other cities in Washington and Oregon, we definitely understand this dynamic, but it is misguided. Bankruptcy is a legal tool. If you are experiencing financial difficulties for any reason, the law allows for corrective actions so that you can get back on track financially.

At the same time, a very significant percentage of people who file for bankruptcy handled their finances perfectly well until they were confronted with unexpected health care bills or other expenses. A study that was conducted in 2016 by T.H. Chan School of Public Health at Harvard along with National Public Radio and The Robert Wood Johnson Foundation shed some interesting light on the subject. Over a quarter of the respondents stated that health care expenses that accumulated over the preceding two years yielded very negative financial consequences. Four out of ten received collection calls from health care providers, and 23 percent of the poll participants were forced to take on credit card debt that will be hard to manage. Seven percent of these individuals had to file for bankruptcy.

Regardless of the underlying circumstances, bankruptcy can give you a fresh start, and you are not necessarily being unfair to your creditors if you take this route. With a Chapter 13 bankruptcy, you simply reorganize your debt and make payments that you can afford. The court requires you to utilize all of your disposable income after you pay for the basic necessities of life to pay down your debt. Creditors really can’t ask for anything more than that. A Chapter 7 bankruptcy does wipe away unmanageable debt, but you can’t qualify for this type of bankruptcy if your income will allow you to pay back your creditors.

We understand the fact that we discuss very delicate financial matters when we consult with our bankruptcy clients in Portland, Eugene, TriCities, Vancouver, and the other cities that we serve. This area of the law is our passion because we sincerely enjoy helping people. There is no need to feel any sense of uneasiness or trepidation. If you will like to obtain more information about bankruptcy before you proceed further, you can learn a lot if you read through our frequently asked questions. When you are ready to move forward, you can send us a message through our contact page to request a complementary, no obligation case evaluation.

Does Bankruptcy Discharge Alimony Responsibilities?

A bankruptcy filing can provide debt relief, but it is not a magic wand that makes every type of debt disappear forever. Certain types of debts are looked upon as priority debts that cannot be discharged via a bankruptcy filing. If you are required to pay your spouse alimony or child support, this would be a priority debt, and it could not be discharged. You would still be required to make your alimony payments. However, the bankruptcy filing could help if you are finding it difficult to keep your alimony obligation current.

To explain by way of example, let’s say that you are divorced, and you are required to make alimony payments. Over a period of time, you have accumulated a number of credit cards, and the payments are more and more difficult to make. You are also making payments on some large medical bills. These expenses eat up a large chunk of your disposable income, so it is hard for you to keep your other responsibilities current.

Under these circumstances, if your income is less than the median income in your state, you could choose to file for a Chapter 7 bankruptcy. We should point out the fact that it is possible to qualify even if your income is more than the median if you have very little disposable income left after you pay for the basic necessities of life. You get an automatic stay when you file for this type of bankruptcy, so most creditors have to suspend their collection efforts. However, this does not extend to alimony payments.

Your nonexempt property would be liquidated by the trustee to pay back unpaid debts under a Chapter 7, but most people who file have little to no property that is not exempt. Going back to our example, if you don’t have much property that can be liquidated, the credit card debt and medical expenses would be discharged permanently after the bankruptcy became final. Since you would not have to pay these debts anymore, it would be much easier to make your alimony payments on time.

Schedule a Free Consultation

If you reside in Tacoma, Vancouver, or tri-cities Washington, we have an office near you, and we also have locations throughout the state of Oregon. We offer free bankruptcy case evaluations, and we would be glad to gain an understanding of your situation and make the appropriate recommendations. To schedule an appointment, give us a call at 1-800-682-9568.

Small Business Bankruptcy FAQs

If you are involved in the operation of a small business and things are not going very well financially, you may have questions about the potential benefits of bankruptcy. We provide this type of assistance to people in Tacoma, Tri-Cities, and Vancouver, Washington. Our firm also has offices in many different locations throughout the state of Oregon, including Portland, Eugene, and Medford. We have successfully counseled countless small business people over the years, and we are often asked many of the same questions. In this blog post, we will take a look at a few of them so that you have a basic foundation of information to draw from going forward.

Am I personally responsible for debts that have been incurred by my business?

The answer to this question depends upon the business structure that you are utilizing. If you are the sole proprietor of your business, you would in fact be held personally liable for the business debts. The same thing is true if you are a general partner in a partnership. On the other hand, if your business is a limited liability company, a corporation, or a limited partnership, generally speaking, you would not be personally responsible.

What types of bankruptcies are available to small business people?

There are three types of bankruptcies that are often used: Chapter 7, Chapter 13, and Chapter 11. Chapter 12 bankruptcy is also a possibility, but it is only available to family fishing businesses and family farmers.

What kind of bankruptcy should I file if I want to shut down my small business?

In many cases, a Chapter 7 will be the most efficient and effective choice under these circumstances. This is a liquidation bankruptcy that is available to limited liability companies, corporations, and partnerships. If your business qualifies and you file for a Chapter 7 bankruptcy, the bankruptcy trustee would liquidate the business property to pay back as much as possible, and the business would not be responsible for any debt that may remain.

You can also use a Chapter 7 bankruptcy if you are a sole proprietor, but it would be personal bankruptcy that encompasses your business debts.

Schedule a Small Business Bankruptcy Consultation

Now that you understand a few of the basics, you may be ready to take the next step. If you would like to schedule a free case evaluation, give us a call at 1-800-682-9568.

How Long Does Delinquent Debt Stay on My Credit Report?

If you are unable to keep up with your debt payments, the delinquencies will be on your credit report, but they do not stay there forever. The credit reporting agencies stop including most types of delinquent debt after seven years. This can sound like a very long period of time, and it is significant, but you may still be able to obtain credit even if there are collection accounts on your credit report. Plus, according to the credit reporting agency Experian, if you were to pay off accounts that are in collections, in many cases they would have less of a negative impact. In fact, under currently utilized methods, collections that have been paid may not have any negative effect on your credit score at all.

As bankruptcy attorneys, we assist clients who are struggling with overwhelming debt. There two different types of bankruptcies that are most frequently used by individuals: Chapter 7, and Chapter 13. A Chapter 7 is a liquidation bankruptcy. If you have any nonexempt property, it would be liquidated by the trustee, and the proceeds would be used to pay your debts. However, in most of these cases, there is no property to sell, so there are no losses. The unpaid debts would be discharged, and the creditors would be unable to seek payment going forward. This type of bankruptcy remains on your credit report for 10 years.

A Chapter 13 is a reorganization bankruptcy. You would be required to file a Chapter 13 rather than a Chapter 7 if you have enough disposable income to make payments on all or some of your outstanding debt. You make payments for 3 to 5 years when you opt for a Chapter 13 reorganization. The debts will be discharged if you keep your payments current throughout the duration of the term. A Chapter 13 bankruptcy stays on your credit report for seven years.

When it becomes apparent that you are not going to be able to keep up with your debt payments, you have decisions to make. The optimal course of action will depend upon several different factors. Since there are multiple ways to proceed, it is wise to discuss your options with a licensed bankruptcy attorney. A bankruptcy is often going to be the right choice, but there are other possibilities.

Our firm serves clients in many different cities in the state of Oregon, including Medford, Eugene, Portland, Grants Pass, and Salem. We also have offices in Tacoma, Vancouver, and Tri-cities in Washington. The attorneys at OlsenDanes are always standing by to assist if you would like to come in for a case evaluation, and these initial consultations are offered free of charge. If you are ready to make the connection, call us right now at 1-800-682-9568.

How Can I Stop Collector Harassment?

If you are the victim of collection agency harassment, you do not have to sit idly by accepting whatever they dish out. You have certain rights, and you should certainly exercise them if you are being encroached upon in an overly aggressive manner. The Fair Debt Collection Practices Act went into effect in 1977, and it spells out very specific guidelines that debt collectors are legally compelled to abide by. You should certainly understand all the provisions so that you can assert your rights if they are being violated.

FDCPA Guidelines

The collectors are not allowed to call you whenever they feel like doing so. Generally speaking, they cannot legally contact you before eight a.m. or after nine p.m., but there can be other provisions. For example, if you work the graveyard shift, they may be out of compliance if they contact you during the daytime. They also must refrain from repetitive calls that are nothing than intentional acts of harassment.

Creditors are not allowed to call you at your place of employment if they have been made aware of the fact that you are not permitted to receive calls while you are on the clock. They are also prohibited from contacting you directly if you have obtained legal counsel, and this is one of the many benefits that you would gain if you were to retain a bankruptcy attorney to help you manage your debt. The collectors are not allowed to threaten you in any way, and they are violating the law if they utilize profane language during their interactions with you.

Plus, we should point out the fact that you can make a creditor stop calling if you send them a cease-and-desist letter. If they continue to try to communicate with you after you have sent this notice, they are violating the FDCPA. We represent clients who have been victims of collector harassment, and you can recoup damages and receive as much as $1000 in statutory damages if you file a lawsuit. The guilty party would be required to pay your legal expenses as well.

You should certainly sit down and have a meaningful conversation with a licensed bankruptcy attorney if you are experiencing financial difficulties. We have assisted thousands of families over the last few decades, and we would be more than glad to add you to the list. Our firm has offices in virtually every metropolitan area in the state of Oregon, and we also have locations in Vancouver, Tri-Cities, and Tacoma, Washington. If you would like to schedule a free case evaluation, fill out the contact form on this website and we will get back in touch with you to arrange the consultation.