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What happens in a Chapter 13 bankruptcy case when a creditor files a proof of claim involving a debt for which the statute of limitations to collect the debt has run? More specifically, does the filing of such a claim violate the Fair Debt Collection Practices Act (the “Act”)? That’s the issue considered by the U.S. Supreme Court in its recent decision in the case of Midland Funding, LLC v. Johnson. 1 Read More ›
Tags: Chapter 13, U.S. Supreme Court
What happens in a Chapter 13 bankruptcy case when a creditor files a proof of claim involving a debt for which the statute of limitations to collect the debt has run? More specifically, does the filing of such a claim violate the Fair Debt Collection Practices Act (the “Act”)? That’s the issue considered by the U.S. Supreme Court in its recent decision in the case of Midland Funding, LLC v. Johnson. 1 Read More ›
Tags: Chapter 13, U.S. Supreme Court
We usually think of credit cards and medical bills as the leading culprits behind consumer debt. However, many Californians struggle with an additional source of financial hardship: taxes owed to the IRS. While tax payments can seem overwhelming, the good news is that it may be possible to discharge (eliminate) certain tax debts by filing for Chapter 13 bankruptcy. However, in order to be dischargeable, tax-related debts need to meet specific requirements. Keep reading to hear these requirements explained by Roseville bankruptcy attorneys, and learn when you can discharge tax debt in Chapter 13 in California.
Can You File Bankruptcy on Back Taxes Owed to the IRS?
At The Bankruptcy Group, our Roseville Chapter 13 lawyers are often contacted by Californians wo have questions and concerns about tax-related debt. Some of the most common questions we receive from potential clients include, “Does bankruptcy clear IRS debt?” and, “Can back taxes be wiped out in bankruptcy?”
The answer is maybe, depending on the circumstances surrounding the debt. Factors like the type of tax that gave rise to the debt, the age of the debt, and when the tax was assessed all have an impact. If the tax debt meets certain criteria, which are explained in detail in the next section, it may be dischargeable not only in Chapter 13 (reorganization), but also in Chapter 7 (liquidation). Together, these are the two most common types of personal bankruptcy in California.
If a debt is dischargeable, it means the debtor will no longer liable for the debt once his or her case is discharged by the bankruptcy court. If a tax debt is discharged, the IRS cannot come after the filer to collect the debt, as bankruptcy court rulings supersede determinations made by tax authorities. (Note that for Californians in the Sacramento area, “bankruptcy court” generally refers to the Sacramento Division of the U.S. Bankruptcy Court for the Eastern District of California, which serves Sacramento and Placer Counties.)
Continue reading to find out when tax-related debts are dischargeable in Chapter 13 bankruptcy. Other examples of dischargeable debts in California bankruptcy cases generally include, but are not limited to, debts associated with:
- Business Loans
- Credit Card Bills
- Medical Bills
- Personal Loans
- Utility Bills
When is Tax Debt Dischargeable?
The only type of dischargeable tax debt is income tax debt. Generally speaking, debts arising from other tax obligations – for instance, payroll taxes – are considered to be non-dischargeable priority debts.
A priority debt is a debt that takes precedence in a bankruptcy case, even if it is not secured by collateral like a secured debt (such as a home mortgage). In Chapter 13, debtors are generally required to pay priority debts in full, in monthly installments, over the life of their three- to five-year reorganization plan.
However, there may be some cases where a Chapter 13 debtor can discharge federal income tax debt by filing for bankruptcy. In order for income tax debt to be dischargeable, the debt (and debtor) must meet certain requirements. These requirements are that:
- The taxpayer did not commit fraud, tax evasion, or other tax crimes. Fraudulent acts may result in dismissal of the bankruptcy case, and potentially, criminal prosecution.
- The debtor filed the relevant income tax return a minimum of two years before the bankruptcy filing date. Special rules apply for late returns, so a bankruptcy petitioner should consult with a Folsom Chapter 13 bankruptcy lawyer if he or she missed the tax filing deadline.
- The relevant tax return was due a minimum of three years before the bankruptcy filing date.
- One of the following statements must be true:
- The IRS tax assessed the tax a minimum of 240 days before the bankruptcy filing date.
- The IRS did not assess the tax.
CA Bankruptcy Attorneys Serving Roseville and Sacramento
It is very difficult for taxpayers to successfully navigate the highly technical regulations governing bankruptcy and taxes. It is not in your best interests to file bankruptcy without assistance from a bankruptcy lawyer, especially if you are concerned about IRS liabilities. Without the benefit of a Chapter 13 attorney’s extensive experience applying bankruptcy law in California, you are likely to miss key details that could make an enormous financial difference. In the worst-case scenario, you could even make errors that lead to the dismissal of your case, leaving you few remedies to eliminate or mitigate your tax liabilities and other debts.
If you are worried about paying back taxes and income tax-related debt, you are urged to speak with a Folsom bankruptcy attorney concerning your legal options. For a free and confidential consultation, contact The Bankruptcy Group at (800) 920-5351 today.
The post Can You Put Back Taxes in a Chapter 13 Bankruptcy in California? appeared first on The Bankruptcy Group, P.C..
(305) 891-4055 - Free Initial Consultation - Office: North Miami - Kendall - Bankruptcy Attorney Jordan E. Bublick - 25 Years Experience - www.bublicklaw.com
Chapter 13 and chapter 7 bankruptcy each provides for different requirements and relief. In general chapter 13 provides for an opportunity to reorganize your debt and chapter 7 provides for an opportunity to just discharge your debt.
Chapter 13 Chapter 13 bankruptcy is often used by people with higher incomes and substantial non-exempt property to formulate a chapter 13 plan to reorganize their debt while under the protection of the bankruptcy court. Under a chapter 13 plan, you are able to reorganize your secured debt (such as mortgages and car loans) as wells as unsecured debt (credit cards and personal loans). Often you are only required to back only 10% to 20% of you unsecured debt and discharge the rest. A typical chapter 13 plan is over a period of 3 to 5 years.
Chapter 7
Chapter 7 bankruptcy is usually used by people with lower income and little non-exempt property. Under chapter 7 unsecured debt, such as credit cards and loans, is discharged, unless it falls within the categories of non-dischargeable debts, such as student loans and some types of taxes.
Mortgage Modification
Chapter 13 bankruptcy is also used by people who are behind with their mortgages and to save their homes from foreclosure. Under a chapter 13 plan, you are able to take various approaches. You may reinstate your mortgage by catching up-to-date your past due payments over a period of up to 5 years.
Totally underwater second mortgages on residential property may be wholly avoided. Maintenance association liens may be avoided to the extent they are not secured by equity in the real estate.
Mortgage Modification Mediation
You may use the bankruptcy court's new mortgage modification mediation program ("MMM") [previously called the loss mitigation mediation ("LMM") program] to negotiate with your mortgage company to achieve a modification of your mortgage.
Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
(305) 891-4055 - Free Initial Consultation - Office: North Miami - Kendall - Bankruptcy Attorney Jordan E. Bublick - 25 Years Experience - www.bublicklaw.com
Chapter 13 and chapter 7 bankruptcy each provides for different requirements and relief. In general chapter 13 provides for an opportunity to reorganize your debt and chapter 7 provides for an opportunity to just discharge your debt.
Chapter 13 Chapter 13 bankruptcy is often used by people with higher incomes and substantial non-exempt property to formulate a chapter 13 plan to reorganize their debt while under the protection of the bankruptcy court. Under a chapter 13 plan, you are able to reorganize your secured debt (such as mortgages and car loans) as wells as unsecured debt (credit cards and personal loans). Often you are only required to back only 10% to 20% of you unsecured debt and discharge the rest. A typical chapter 13 plan is over a period of 3 to 5 years.
Chapter 7
Chapter 7 bankruptcy is usually used by people with lower income and little non-exempt property. Under chapter 7 unsecured debt, such as credit cards and loans, is discharged, unless it falls within the categories of non-dischargeable debts, such as student loans and some types of taxes.
Mortgage Modification
Chapter 13 bankruptcy is also used by people who are behind with their mortgages and to save their homes from foreclosure. Under a chapter 13 plan, you are able to take various approaches. You may reinstate your mortgage by catching up-to-date your past due payments over a period of up to 5 years.
Totally underwater second mortgages on residential property may be wholly avoided. Maintenance association liens may be avoided to the extent they are not secured by equity in the real estate.
Mortgage Modification Mediation
You may use the bankruptcy court's new mortgage modification mediation program ("MMM") [previously called the loss mitigation mediation ("LMM") program] to negotiate with your mortgage company to achieve a modification of your mortgage.
Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
Bankruptcy Attorney Jordan E. Bublick is a Miami, Florida has over 25 years of experience in filing Chapter 13 bankruptcy (reorganization of mortgages and other debt) and Chapter 7 Bankruptcy cases (discharge of debt). He has filed over 8,000 bankruptcy cases. Jordan E. Bublick has been a member of the Florida Bar since 1983 and is a graduate of the Ohio State University College of Law (JD) and the New York University School of Law (LL.M.).
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is generally used by people who desire to discharge unsecured debt and who have little non-exempt property.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is used to reorganize mortgages and other secured debt as well as to discharge unsecured debt.
Chapter 13 bankruptcy is often used to stop a foreclosure action and proposed a plan of reorganization. Due to the decreased real estate values in South Florida, often a junior mortgage lien may be avoidable as an "unsecured debt."
Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
Bankruptcy Attorney Jordan E. Bublick is a Miami, Florida has over 25 years of experience in filing Chapter 13 bankruptcy (reorganization of mortgages and other debt) and Chapter 7 Bankruptcy cases (discharge of debt). He has filed over 8,000 bankruptcy cases. Jordan E. Bublick has been a member of the Florida Bar since 1983 and is a graduate of the Ohio State University College of Law (JD) and the New York University School of Law (LL.M.).
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is generally used by people who desire to discharge unsecured debt and who have little non-exempt property.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is used to reorganize mortgages and other secured debt as well as to discharge unsecured debt.
Chapter 13 bankruptcy is often used to stop a foreclosure action and proposed a plan of reorganization. Due to the decreased real estate values in South Florida, often a junior mortgage lien may be avoidable as an "unsecured debt."
Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
In chapter 13 bankruptcy, only the chapter 13 debtor is allowed to file a chapter 13 plan. That is, creditors are not allowed to propose a plan as they are in chapter 11.
Chapter 13 plans generally are designed to adjust payment of debts under a flexible repayment plan. Usually these payments are made from future wages or income. There are some mandatory provisions for a chapter 13 plan, but most are permissive.
A chapter 13 plan is usually three to five years in length. Not all secured creditors - such as an up-to-date car loan - are required to be paid as part of the chapter 13 plan. Priority claims, such as child support and alimony arrearages, may be paid through the plan. Defaults in mortgage payments may be cured in a chapter 13 plan.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
In chapter 13 bankruptcy, only the chapter 13 debtor is allowed to file a chapter 13 plan. That is, creditors are not allowed to propose a plan as they are in chapter 11.
Chapter 13 plans generally are designed to adjust payment of debts under a flexible repayment plan. Usually these payments are made from future wages or income. There are some mandatory provisions for a chapter 13 plan, but most are permissive.
A chapter 13 plan is usually three to five years in length. Not all secured creditors - such as an up-to-date car loan - are required to be paid as part of the chapter 13 plan. Priority claims, such as child support and alimony arrearages, may be paid through the plan. Defaults in mortgage payments may be cured in a chapter 13 plan.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
Chapter 11 bankruptcy is occasionally used by individuals, but is more commonly utilized by businesses. Though arguably the most complicated form of bankruptcy Chapter 11 has the power to save a failing business from complete financial collapse when used strategically. Chapter 11 also has an added benefit for business owners: unlike other forms of business bankruptcy, such a Chapter 7, it allows the company to continue operating while the case is pending. In this article, our Roseville bankruptcy attorneys will provide a basic overview of how Chapter 11 works for businesses in California.
What Does Chapter 11 Mean for a Business?
Under the right circumstances, Chapter 11 may mean the difference between a business permanently closing its doors, and reemerging from debt financially revitalized. By timing your filing strategically, and making sure you are in compliance with bankruptcy regulations, our Chapter 11 bankruptcy attorneys may be able to help stop your company from going out of business.
Chapter 11 bankruptcy is sometimes called “reorganization bankruptcy,” as is Chapter 13. Though Chapter 13 is only available for individuals (including sole proprietors), both types of bankruptcy require the debtor to create a reorganization plan, which is where the term “reorganization bankruptcy” comes from.
The reorganization plan allows the filer to restructure debts without having to surrender property to a bankruptcy trustee, which is a major advantage over filing for Chapter 7. If a business files Chapter 7 bankruptcy in California, its property and assets will be sold by a court-appointed trustee, and the business will be forced to close. If a business owner wishes to file bankruptcy and continue daily operations, he or she must file Chapter 11. If you are a small business owner in California, and don’t know whether you should file Chapter 7 or Chapter 11, our bankruptcy Chapter 7 attorneys can help you figure out which option would be more practical.
In most Chapter 11 cases, the bankruptcy court will allow the business to continue running as a “debtor in possession” (DIP) without assigning a trustee to the case. However, the court may decide it is necessary to assign a trustee if there are unusual circumstances, such as fraud or egregious mismanagement of the company’s finances. Further, even if no trustee is assigned to the case, the DIP must still obtain court approval to make major decisions about business operations, such as opening additional locations or signing a new contract with a vendor.
Filing for Bankruptcy Chapter 11 in California
Like any bankruptcy case, a Chapter 11 case typically begins when the debtor files a voluntary petition for bankruptcy. There are also situations in which creditors can force a business into filing bankruptcy, but only if certain financial requirements under 11 U.S. Code § 303 are met. For the purposes of this article, our Sacramento business bankruptcy attorneys will focus on voluntary Chapter 11 petitions.
Depending on the situation, the company may file for bankruptcy in its principal place of business (wherever operations are primarily centered), or in its state of incorporation (the state where the business filed articles of incorporation), which is also referred to as the place where the business is “domiciled.” Our Folsom bankruptcy lawyers for small businesses can help you make the right decision about where you should file Chapter 11.
Filing for Chapter 11 requires a substantial amount of paperwork and documentation. In addition to filing your voluntary bankruptcy petition, you will also be required to submit a disclosure statement (Form B 25B), an attachment to the voluntary petition describing debts and assets (Form Form B 201A), and – most significantly – the plan of reorganization (Form B 25A) around which Chapter 11 cases revolve. You and your Roseville small business bankruptcy lawyer must propose a reorganization plan, sign it, and submit it to the bankruptcy court for approval.
In order to be confirmed by the bankruptcy court, your plan must meet certain criteria. For example, the plan must meet the best interests of your creditors, which means that under the proposed plan, your creditors would receive, at minimum, the same amount they would have received if you had filed for Chapter 7. (On a related note, keep in mind that you may be forced to convert your Chapter 11 into a Chapter 7 if you prove unable to meet the terms established by your reorganization plan.)
At first, you will be the only party who has the right to propose a reorganization plan. However, once four months have passed, this exclusivity period will come to an end, and your creditors will gain the right to submit plans of their own, unless you are able to obtain an extension of the exclusivity period.
The duration of Chapter 11 proceedings can vary widely from case to case. Depending on the circumstances, a Chapter 11 may take anywhere from several months to several years to complete successfully. The ultimate goal or purpose of Chapter 11 for a business is to manage debt and continue operations, instead of being forced to sell or shut down.
Roseville Business Bankruptcy Attorneys for Corporations and LLCs
The Bankruptcy Group assists all types of business entities with Chapter 11, Chapter 7, and Chapter 13, including S corporations, C corporations, limited liability companies, partnerships, and sole proprietorships. Whether you run a local, family-owned business with your spouse and children, or a large company with thousands of employees and shareholders, we can help you get business debt under control.
If you own a business in the Roseville, Sacramento, or Folsom area, and you’re worried about financial problems that seem to be growing out of control, we encourage you to contact The Bankruptcy Group to talk about your options in a free and confidential legal consultation. To discuss how a California business bankruptcy could help your company avoid insolvency, contact our law offices at (800) 920-5351 today.
The post What Does it Mean When a Business Files for Chapter 11 in California? appeared first on The Bankruptcy Group, P.C..
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