Portland Bankruptcy Lawyer Blog

More and more these days in my bankruptcy practice I have clients coming to me as their lawyer and wanting to know what to do with not only their credit card debt but also their tax bills. I'll talk briefly today on what a Chapter 7 bankruptcy can do in terms of your Federal IRS tax debt.

The first question I must ask my bankruptcy clients is "did you file your taxes? And When?" These are probably the two most important questions when figuring out whether you can discharge your old IRS tax debt. The general rule of thumb is that you must have a tax debt that's at least 3 years old and that the obligation to pay that debt came about also 3 years back.

Continue reading "Chapter 7 Bankruptcy and Taxes: Does the IRS always get paid?" »

Its important this time a year to talk about filing your taxes and its possible effect on your bankruptcy. As a Chapter 7 bankruptcy lawyer I see my practice get busy around Feb and March every year and as part of that I also see more issues with clients tax refunds.

In many cases if a client files their bankruptcy petition before the refund has been issued then that refund in its entireity can become property of the bankruptcy estate. If you wait to file your return and haven't filed it before sending in your bankrutpcy petition the U.S. Trustee may hold the 341 hearing open until your tax refund has been filed and any refund amount determined. Either way you may loose that refund.

Its very important where you think you may be entitled to a refund to talk with your bankrutpcy lawyer before filing and inform them of what your tax status is. There may be legal ways to exempt some of those funds or protect them before filing so you and your family can make use of the money. As always talk to a lawyer first because the law varies in each State and the issues surrounding refunds are complex.

-Be Well