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Category Archives: Chapter 7 Bankruptcy

Bankruptcy and IRS Levies

When taxpayer cannot or will not pay their taxes, the IRS has two primary means of recourse: tax liens and tax levies. A lien is a type of legal claim to your property, which involves notice to creditors that you owe the IRS money and that its claims take priority. For example, if you have… Read More »

Tax Liabilities and Implications with Filing Bankruptcy

Filing bankruptcy often involves tax implications, but not in the ways you might think.  Filing bankruptcy itself is not a taxable event.  However, there could be tax implications if property is sold to pay creditors, or if debts are forgiven by creditors. Typically, when you owe someone $600 or more and they cancel or forgive… Read More »

Filing Bankruptcy After Divorce Is Final

One advantage of filing bankruptcy after the divorce is completed is a shorter divorce than a divorce that proceeds concurrent with bankruptcy. Shorter divorces are generally less expensive. Recent changes from the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) made it more difficult to discharge divorce-related debts in bankruptcy. You cannot discharge any divorce-related… Read More »

Filing Bankruptcy While a Divorce Is Ongoing

With a Chapter 7 bankruptcy, the process moves rather quickly and bankruptcy closes generally within three to six months of filing. However, when you are in the middle of a divorce and decide to file bankruptcy, the automatic stay puts a stop to divorce proceedings. The only legal actions not affected by an automatic stay… Read More »

How Does Bankruptcy Deal with a Deficiency Judgment?

Once a court grants a deficiency judgment to the creditor, the creditor may be able to take various actions to collect payment. The creditor can put a lien on your bank account or garnish your wages, depending on state laws. How long does the lender have to obtain a deficiency judgment? That depends on the… Read More »

What Happens to Cosigners When You File for Bankruptcy?

When your credit is not good enough to qualify for a loan, the lender may require a co-signer.  This practice is common with young people who have not established credit but want to buy a car or a home, and their parents help them out by co-signing. Unfortunately, you cannot usually foresee tough economic times,… Read More »

Actions that Can Result in Bankruptcy Dismissal

A bankruptcy dismissal is the court’s denial of a bankruptcy filing and the court throws out your case.  Once dismissed, depending on the reason for the dismissal, you might have to wait 180 days (six months) from the date of dismissal before you can file bankruptcy again.  Bankruptcy dismissal is something that anyone filing bankruptcy… Read More »

Does Filing Bankruptcy Relieve Any Tax Debt?

How filing bankruptcy affects tax debts varies greatly from case to case and depends on individual circumstances, the type of bankruptcy filed, and court decisions. However, in all bankruptcies, one factor never changes.  The only tax debt that bankruptcy may provide relief for is income tax debt. If the IRS has not filed a lien… Read More »

What Is the Bankruptcy Code?

The United States Constitution gives Congress the authority to create laws governing bankruptcy throughout all states in the United States.  In 1978, Congress passed the Bankruptcy Reform Act, which is contained in Title 11 of the United States Code and known today as the Bankruptcy Code. The Bankruptcy Code has undergone various amendments, with the… Read More »

How Does the State Where You Live Affect Asset Exemption in Bankruptcy?

When filing bankruptcy, debtors list exempt assets in their schedules and Statement of Financial Affairs.  Exempt assets are not subject to liquidation to pay unsecured creditors during a Chapter 7 bankruptcy.  However, which assets are exempt during bankruptcy largely depend on state law, because state property laws determine asset exemption―unless the debtor lives in a… Read More »