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Federal Tax Liability and Chapter 7

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  • justbroke
    replied
    Hopefully your attorney has a plan and that you at least get the general bankruptcy discharge.

    Leave a comment:


  • shellys
    replied
    Thank you for redacting!

    I have very little understanding about what is happening- just know that pretty much anything that could go wrong has gone wrong. We've been working on Chapter 13 filing since the first of the year. Chapter 7 feels like a whole new and scary ballgame.

    There seems to be little info available online for asset cases, especially when it's for a married person filing individually. If the Ch 13 Trustee is this rabid, I cannot imagine with the Ch 7 Trustee will be like. The stress is definitely shortening my lifespan!

    Leave a comment:


  • justbroke
    replied
    You had me at Rule 2004 exam. It's just not that often you see a forced liquidation unless something was amiss. I hope that you are okay with the liquidation, but do you know if they'll deny your discharge... or is this just because you would have what is called a back-door Chapter 7? (Where you are not paying anything to the unsecured creditors.)

    I removed [most] some of your story because it was a little too details. Again, you had me at 2004 Exam.

    Leave a comment:


  • shellys
    replied
    He is definitely below $2.2M limit but we did some really stupid things because we did not anticipate having to file.

    Here's the sob story from start to finish...
    ================================================== ==================================================
    [moderator removed for anonymity reasons]
    ================================================== ==================================================

    Meeting of creditors: Our attorney did zero prep with hubby beforehand because he said it wouldn't be a big deal, that creditors typically don't even dial in. We assigned garage sale values to everything, including the cars and that did not fly with the trustee. Our attorney accidentally omitted the sale of the vacation rental house on our schedules (even though we gave him all the sale docs)- that looked TERRIBLE. The meeting lasted 4.5 hours.


    Rule 2004 meeting- We produced all kinds of documents. We aren’t hiding anything but the Trustee hates us. From her perspective we are trying to defraud the system I'm sure.

    Does that help? :-)

    Last edited by justbroke; 06-14-2023, 12:05 PM. Reason: [moderator removed for anonymity reasons]

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  • justbroke
    replied
    Why are you being forced into a Chapter 7? Something else is going on here. Are you over the $2.2M limit under 11 USC 109(e)? People aren't usually forced from a Chapter 13 to a Chapter 7.

    Leave a comment:


  • shellys
    started a topic Question Federal Tax Liability and Chapter 7

    Federal Tax Liability and Chapter 7

    My husband is in the middle of a very messy BK filing. He is filing individually. He is on the hook for $1.3M due to a failed business (long twisted story). This includes $210,000 to the IRS for 2021 income taxes. We had NO idea they would be that high.

    He originally filed for Chapter 13 because he has many assets including several automobiles registered in his name (even though they were really "ours" & the kids). We are both on the mortgage and have at least $500K equity in our home.

    We just found out that the Chapter 13 Trustee has filed a motion to convert to Chapter 7. Basically our payments will only cover the tax debt and the other creditors won't get much of anything.

    My question is surrounding the federal taxes. I am reading that these taxes would not be "wiped out" during Chapter 7. What does that mean in an "asset case"? Does that mean that all funds recovered in the estate would be paid to creditors OTHER THAN the IRS? So he could lose everything and still be left with this crazy tax bill? Could we lose our house?! Freaking out a little.

    Thanks so much for any insight.

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