Garnishment

[Lexy1969]

Im definitely not going to be able to file in time to stop a garnishment of wages but I have on question. Should I call the IRS to have them garnish before I have my debtors exam? Wouldnt this allow the IRS to get the garnishment position and I could be paying them off which Im going to have to do after BK?

Thank you all!

[WhatMoney]

Do you owe the IRS back taxes? I thought you said you were getting tax refunds for 2006 and 2007. Why would the IRS want to garnish your wages? What and why are you paying to the IRS after your bankruptcy?

[keepmine]

I doubt the IRS will move that fast.
One thing, you better close that bank account ASAP and get a paper check. They can seize 100% of what you have in the bank.

[Lexy1969]

I will receive refund for 2006 and 07 (small refund that IRS will take obviously). Owe for previous year. I have cancelled direct deposit and have no funds in the bank.

[WhatMoney]

So who has sued you, the IRS or a CA attorney working for the IRS, or another creditor?

If this judgement is from unpaid back taxes, then bankruptcy isn't going to discharge the back taxes. I guess you know that. (Only if your back taxes are at least five years old and you filed income tax returns for those years, could this be discharged under Chapter 7.)

If the judgement is from the IRS, then they are looking for all your assets, not just wage garnishment. So they may not be interested in cancelling your court ordered exam if you offer them wage garnishment alone. They may think you are trying to hide other assets by avoiding the asset exam under oath.

If this is some other creditor you are trying to avoid giving your asset information to, and the IRS hasn't sued you yet, then they would still have to sue you and win before they could get a wage garnishment. That could take months, and isn't going to protect you from the other creditor - who will still want to see all your assets and garnish what they can before your bankruptcy is filed.

[Lexy1969]

Thanks. No assets currently so Im not worried about that. I will just go to the hearing and hopefully I can get BK filed before they garnish my next check.

[lrprn]

(Only if your back taxes are at least five years old and you filed income tax returns for those years, could this be discharged under Chapter 7.)

Actually federal income taxes that are more than three years old and meet other certain strict criteria can be discharged in Ch 7.

From http://www.alperlaw.com/taxes_and_bankruptcy.html -

Income taxes that do not fail any of the below five tests may be wiped out in a Chapter 7 Bankruptcy.

"a. Taxes for which a tax return was due to be filed within three years (plus extensions) prior to the date of filing bankruptcy. For example, the tax return for 2003 income taxes was due to be filed on April 15, 2004 (plus any extensions), and therefore, these income taxes cannot be discharged by filing bankruptcy on or before April 15, 2007 (plus the time of extensions); OR

b. Taxes assessed by the IRS within 240 days before the filing of bankruptcy. Assessment date is the date that tax liability is entered on IRS records; OR

c. Taxes not yet assessed but still assessable; OR

d. Taxes for which a tax return was filed late and filed within two years prior to filing bankruptcy; OR

e. Taxes of a debtor who committed fraud related to a tax return or willfully attempted to evade or defeat taxes sought to be discharged.

[WhatMoney]

Thanks lrprn for the correction. My quote was directly from another law firm bankruptcy page site, dated early 2007, so someone was wrong or the laws have changed.

d. Taxes for which a tax return was filed late and filed within two years prior to filing bankruptcy

That may be another reason Lexy may not escape through a Ch.7.