Getting bad advice on IRS and BK?

[StylinGirl]

I am days away from filing a 7. I have 28k in IRS dbt (tax due 98,99,00. Liens on file- all returns filed timely)and 5k to state (GA 2002) Two attorneys have told me that this debt will NOT go away and I should file 13 to repay.

I think they're wrong- based on my understanding of the code- older than three years, etc. I no longer own ANY property (sold the house- they took 13k in proceeds off the sale in 2003) No car (a 15yr old Buick loaned to me by my father and am self-employed, and am under the 30k threshold. I hope to get a full-time job soon, but I think a 13 is much more risky as I could easily default due to unstable income! Plus where am I going to come up with the 900/mo to pay it?

No credit cards- a few medical bills and a repossed car that I have been paying off (upside down- of course!) for the past two years. (Missed a payment- the atty has now garnished my bank!) I have 30k in student loans which I will handle but I need some relief! If I truly cannot get a 7 I'm gonna stick my head in the oven and be done with it!

Bottom line- are these attys right? WHy would all that I read tell me I could dissolve the tax debt and they still say that Uncle Sam WILL ALWAYS get theirs! AND if they are wrong- whats the chance of finding one competent enough to pay to handle this? Can I file a 7 and have the court order a 13? I think I'm smart enough to go Pro Se, or am I just nuts? Help!

[FoolAndHisMoney]

Did the lawyers tell you why they aren't dischargeable? They should be if it's that old and you didn't commit any kind of tax fraud. Sadly the lawyers know better then most of us so hopefully someone in your situation will read this and have a better answer.

[StylinGirl]

No, they gave me no reason at all, and asked very little about the circumstances. They dismissed my desire to release this matter entirely, as if either they did not know the law, or they knew more than me and I was silly for asking. (BTW-no fraud involved)

[SinkingFast]

I may be wrong here, as I have not read about taxes due. Before this year we didn't owe,...........

Attnys here want to see our Income Taxes, W-2's, 1099's and other income statements from the last 4 years. That's '01, '02 '03, and '04. If we file Income Taxes before we file BK, then '01 would drop off, I think.

Part of the new law is that you have paid your taxes for the last 4 years prior to filing BK. Kind of like a right to passage??!! You can't file BK if you didn't pay sort of thing??!!

This is the only thing I found in a quick search:

(Sec. 314) Includes as nondischargeable chapter 13 debts those incurred: (1) to pay a tax to a non-Federal governmental unit; (2) for restitution or a criminal fine included in a sentence on the debtor's conviction of a crime; (3) for fraud or defalcation while acting in a fiduciary capacity; or (4) for restitution, or damages, awarded in a civil action against the debtor as a result of willful or malicious injury by the debtor that caused personal injury or death to an individual.

Maybe your Georgia taxes from 2002??

http://thomas.loc.gov/cgi-bin/bdquer...109query.html|

[StylinGirl]

I think we may be confusing "pay" with "file." If the taxes were "paid" there would BE no balance to include. I have filed my returns in a timely manner- THATs the issue that will land you in jail quick. Not being able to pay, however, will just take longer and more legal actions! ;)

[SinkingFast]

Guess I misunderstood. I got that you have filed. I thought you currently owe $5K to Georgia for 2002 taxes. That's why I cited the reference above from the New Law.

I thought maybe that's why the attnys are telling you that Ch 13 was the way to go.

[bkfiler]

sylingirl,

imo those attorneys, based on what facts you gave us, are idiots and ignorant to the actual law. problem is if two of them told you that then im wondering what info we aint getting here.

its common knowledge that taxes 'due' older then 3 years are dischargable unless fraud. they should know this. maybe its that they dont want to file against the government. makes then look bad. and if you think im kidding i aint. court is government, trustee is government, us trustee is government, etc.

you will have to file a motion to have those discharged i believe. and that will cost extra. i may be wrong about this however.

let us know. also, seek additional advice from 3 more attornyes imo.

can you give me the numbers to those attorneys and names in a pm. id like to call them and question them myself. i will act like its my taxes.

[AAAArt]

I can speak with some experience to your question...at least under the old law.
True...Federal income taxes older that 3 years are dismissed through Bk.
Problem...Liens are not dismissed/hat means that you have to negotiate with the IRS over the liens and taxes. The lien protects them agaaiinst Bk.
So the lawyers weren't idiots, except that they didn't explain it fully.
It is kind of a catch-22. The taxes are dismissable normally, but not when there are liens on them.
Hope this helps. Art

[StylinGirl]

Thanks for the insight. I do wonder what purpose the lien serves when there are no assets however. Does that mean that post-BK they can still garnish whenever they want? I mean I have NO assets for them to lien against!

[AMISLANDER]

I Went Thru This!!!!

I am days away from filing a 7. I have 28k in IRS dbt (tax due 98,99,00. Liens on file- all returns filed timely)and 5k to state (GA 2002) Two attorneys have told me that this debt will NOT go away and I should file 13 to repay.

I think they're wrong- based on my understanding of the code- older than three years, etc. I no longer own ANY property (sold the house- they took 13k in proceeds off the sale in 2003) No car (a 15yr old Buick loaned to me by my father and am self-employed, and am under the 30k threshold. I hope to get a full-time job soon, but I think a 13 is much more risky as I could easily default due to unstable income! Plus where am I going to come up with the 900/mo to pay it?

No credit cards- a few medical bills and a repossed car that I have been paying off (upside down- of course!) for the past two years. (Missed a payment- the atty has now garnished my bank!) I have 30k in student loans which I will handle but I need some relief! If I truly cannot get a 7 I'm gonna stick my head in the oven and be done with it!

Bottom line- are these attys right? WHy would all that I read tell me I could dissolve the tax debt and they still say that Uncle Sam WILL ALWAYS get theirs! AND if they are wrong- whats the chance of finding one competent enough to pay to handle this? Can I file a 7 and have the court order a 13? I think I'm smart enough to go Pro Se, or am I just nuts? Help!

...but I owed for 2001, 2002, 2003 & 2004...all the lawyers I saw said to take care of my IRS situation prior to filing bankruptcy.....I took care of my IRS debts (somewhere in the 18K range...and did not want to be in the IRS payment plan system so I just withdrew from SEP and paid out).

You need to see a few more attorneys, as your debt is older...I had NOT FILED or PAID, but they did take the penalty for 2001 completely off as my prior 15 years of IRS returns had all been paid on time.

IRS can always garnish your wages or your bank account when they feel like it...one of my friends didn't even get a letter...they just went for his paycheck.

It depends on your income vs. the means test thing...someone else who's better versed in this may be able to help you with that one...

[StaciMM]

I don't know all of the details for when taxes CAN be discharged-but if all the returns were filed on time, I'd think the older ones should be eligible. I wonder if its the lien issue-and perhaps the attorneys you have met with like the 'simple' BK cases.

Try to find others to interview-and when you call to set an appointment, try to find out about the attorney's experience in dealing with taxes and bankruptcy.

[AAAArt]

Thanks for the insight. I do wonder what purpose the lien serves when there are no assets however. Does that mean that post-BK they can still garnish whenever they want? I mean I have NO assets for them to lien against!

That is exactly what it means. They can still garnish your paychecks, seize your bank accounts and seize and sell anything that you own, such as your household furnishings.
They don't like to do this and would much rather have you on a payment plan or making an Offer in Compromise (OIC).
Check out both of these options.
Liens stay on for 10 years which is normally the statute of limitations for the debt collection, however, the IRS normally automatically renews liens and these are murder on your credit scores. Art

[bkfiler]

I can speak with some experience to your question...at least under the old law.
True...Federal income taxes older that 3 years are dismissed through Bk.
Problem...Liens are not dismissed/hat means that you have to negotiate with the IRS over the liens and taxes. The lien protects them agaaiinst Bk.
So the lawyers weren't idiots, except that they didn't explain it fully.
It is kind of a catch-22. The taxes are dismissable normally, but not when there are liens on them.
Hope this helps. Art

art, whoo!!! stop the buggy and put down that beer. i need more information!

if a tax debt is discharged in bk then the lien against it can be avoided via a motion and the lean is then unenforcable.

what part am i missing here?


-----
staci, its 3 years from the date its due. if you dont file a return then its not due yet. if you got an extention then it was dur on the date your filed it. thats the basic and simple rules. of course you can file a motion just as you can with a student loan, etc. but good luck on that one lol. aslo, if the taxes owed are due to fraud then you do not have a time frame. and the time gets extended while you are in a bk as well beuase they can not collect. so if you filed a chapter 7 before and then a 13 latter they get to add the chapt 7 stay time as well.

[StylinGirl]

BK Filer is right...

I spoke with a tax atty friend (a former IRS agent) and he agreed. If the tax is DISMISSED, the lien is "hollow" and can be discharged. Too bad it will not work with the state of GA- they wanna play hard ball.

I spoke to one yesterday that said the taxes will not go away and that with my little amount of other debt, I should just try to pay off. THEN the notice came from my bank about the garnishment from my Ford Motor repo. The bank wants $75. The state charged $130 to process- I think I'm gonna BK just to get these ^&(* off my back. (It REALLY burns me because I got TOTALLY SCREWED in the initial contract! BIGGEST LESSON OF ALL- when your credit sucks you are more willing to take a bad deal, and EVERYONE is standing there waiting to hand it to you) Kids- PLEASE don't end up in my shoes!

I wish my case was easier. Its not exactly "cut & rry", but I am meeting with atty #4 (or 5?) this morning and hope to learn more soon.

[Gastylin]

My happy ending (with a few small steps to follow)

I am days away from filing a 7. I have 29k in IRS dbt (tax due 98,99,00. Liens on file- all returns filed timely)and 5k to state (GA 2002) Two attorneys have told me that this debt will NOT go away and I should file 13 to repay.

I think they're wrong- based on my understanding of the code- older than three years, etc. I no longer own ANY property (sold the house- they took 13k in proceeds off the sale in 2003) No car (a 17yr old Buick loaned to me by my father and am self-employed, and am under the 30k threshold. I hope to get a full-time job soon, but I think a 13 is much more risky as I could easily default due to unstable income! Plus where am I going to come up with the 900/mo to pay it?

No credit cards- a few medical bills and a repossed car that I have been paying off (upside down- of course!) for the past two years. (Missed a payment- the atty has now garnished my bank!) I have 30k in student loans which I will handle but I need some relief! If I truly cannot get a 7 I'm gonna stick my head in the oven and be done with it!

Bottom line- are these attys right? WHy would all that I read tell me I could dissolve the tax debt and they still say that Uncle Sam WILL ALWAYS get theirs! AND if they are wrong- whats the chance of finding one competent enough to pay to handle this? Can I file a 7 and have the court order a 13? I think I'm smart enough to go Pro Se, or am I just nuts? Help!

It's me- StylinGirl. Flash forward 6 months.

Filed after my last post- found a lawyer I trusted. A tip: You DO NOT want a flashy lawyer or a big firm. They were more concerned about their business than mine. I found a VERY understated lawyer online. I Googled the tax discharge question and he stated on his website that it was doable, so we emailed a few times and I hired him. (Half the cost of the lowest of the others- if you are in DeKalb Co. GA PM me and I'll give you his name-small office- works Saturdays! What a wonderful man!))

He was true to his word. I got my Chapter 7 (discharged May 21, 2006)!!! even after 4 others said I HAD to go 13 (they were just chicken!) He said the next step was that he would contact the IRS and ask that they drop the liens. I called him, no response, but I guess he was getting it done, because today I got THREE letters from the IRS- usually NOT a good thing, so I was hesitant to open- but there it was in print. My liens have been satisfied and released. $30k. AMEN.

Life is SO much better. I did take the job. Honestly, it NEVER came up so I never went there.

Next step is to negotiate with the State of GA- much less $$ but I hear they are handled by hardass collectors. Again, the lawyer said if the IRS rolls, the state USUALLY follows suit, so...we'll see. That just leaves $36k is defaulted student loans -in collections- but by law they HAVE to work with me to rehabilitate and in 6 mos I'll be in good standing and elligible for a refi there.

I'm still driving a 17 year old car (knock wood!!)- the air is gone (try THAT is a hot GA summer!) and the drivers window won't roll down (even hotter!) but its paid for (thank you Daddy!) and gets me to work every day. OH how I wish I had a stylish new car instaed of my hoopty, but only when I can get a good rate with some $$ down so I will never be upside down again!

PLEASE PLEASE PLEASE kids- NEVER take on a car loan that you could even possibly turn upside-down on. Its financial quicksand and you will lose every time. Also- stick with your gut. Don't be afraid to go after what you want. This board has helped me sleep at night and I never could have done it with out you all, so bless you and thank you!- and may you all know the peace of mind in living debt free- I hope to soon.