This article by noted bankruptcy attorney, Mitchell Sussman, answers these questions and more on the subject of what tax debts can be discharged by the filing of a chapter 7 bankruptcy. [...]
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As a result of perceived abuses in the bankruptcy system, Congress passed the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.” The principal provision of this Congressional enactment was the addition of a “means test” designed to prevent higher income earners from filing Chapter 7 bankruptcy. [...] As an experienced New Jersey bankruptcy attorney, I understand that financial problems can happen to good families who work hard, and am dedicated to helping people save their homes and get back on their feet by offering solutions, not just a “quick fix.” I also have many years of experience in reorganization and restructuring of businesses through the bankruptcy laws. [...] During the last decade, people took on more debt than ever before. For the first time, the average level of savings in a household reached a negative level, when measured as a portion of income. That means that on average, people spent more money than they made. Credit cards make this possible. They also make it easy to rack up debt problems if you aren’t disciplined. [...] I have been asked by hundreds of my clients to share a template letter as a debt validation letter sample. There is one problem with sharing a single template letter. That problem is that there is no one letter that will work in all situations. For the best results you must understand the principles that are brought together to create a good debt validation letter and use those to create your own. [...] With the world’s economic distress, more and more people are suffering from debts. Many are finding ways that can help them regain financial stability. Generally people suffer from financial stress because of excessive usage of credit cards. When you are locked in debt, sometimes it is impossible to regain your financial grip. Some people file for bankruptcy thinking that it will solve the problem, but actually it does the opposite. [...] When debts get out of hand and a person just can’t keep up, there are alternatives. Debt consolidation is one option that is available. This service is provided by credit counseling agencies. Using this method, an individual’s unsecured debts are consolidated into one monthly payment that is negotiated by the agency. The benefits of this include lower monthly payments and lower finance rates. Some late fees and penalties may also be cancelled. Bankruptcy is another option that is available. More information on that option is included below. [...] These days, credit counsellors and bankruptcy trustees are in high demand, as the tough economy and job market has meant that many individuals and families have found themselves tightening their belts as companies cut back their workforces and people lose their jobs. Families used to living off two incomes have had to adjust to their budget being scaled back considerably, and some have watched their life savings and their credit disappear. [...] One of the first questions, many homeowners who are contemplating filing bankruptcy ask is “Will I lose my home if I file for bankruptcy?” [...] These days, more and more households are incurring consumer debt due to overspending. Credit cards allow us to indulge in things we can’t afford, and as with all good things, indulging too much comes at a big cost. Buying things to satisfy your cravings without thinking about whether you can afford it or not is a dangerous habit. Without correction, your debt can become unmanageable, and your only relief may be bankruptcy, debt consolidation, or a consumer proposal with a bankruptcy trustee. [...] |
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