The filing and subsequent discharge of either a Chapter 7 or a Chapter 13 bankruptcy may eliminate some types of personal income tax liability. There are, however, certain rigid restrictions which must be met in order to completely eliminate personal income tax liability through bankruptcy.
Some personal income taxes may be eliminated through the filing and subsequent discharge of a Chapter 7 bankruptcy. The following requirements must be met for the personal income tax liability to be eliminated in a Chapter 7:
* The tax return must have been filed on time
* The filing should not be fraudulent
* The tax return must have been filed over three years ago as of the bankruptcy filing date (e.g. IRS debts for the last three years generally, would not be dischargeable)
* Alternatively, in some cases, if the tax return was filed late, was not fraudulent and was filed over two years ago as of the date of the bankruptcy filing, the tax debt may be deemed dischargeable. For example, if you filed your 1986 tax returns in 1990, and in 1994 filed a Chapter 7 Bankruptcy, this tax debt would be dischargeable as long as it was not related to a fraudulent filing and the tax debt was assessed by the IRS over 240 days before the bankruptcy filing.
Even if all of the above requirements are met, personal income taxes can still sometimes be non-dischargeable in a Chapter 7 bankruptcy. This occurs when the IRS has placed a tax lien on the debtor's property. In this case, the tax liability must be paid in full, but the IRS may be forced to accept a payment plan or substantially eliminate penalties through the filing of a Chapter 13 bankruptcy.
In a Chapter 13 bankruptcy, the debtor makes payments to a bankruptcy trustee and the bankruptcy trustee in turn distributes a percentage of the payment to the creditors. A Chapter 13 plan is filed with the court which determines the amount distributed to each creditor by the trustee. A bankruptcy judge can force the IRS to accept extended payments on personal income tax liability through a Chapter 13 plan. This type of bankruptcy works well when the IRS has a tax lien on personal property and the debtor has enough income to pay back the IRS over a three to five year period. Tax penalties may be discharged in a Chapter 13 bankruptcy because they are lumped in with all the other unsecured creditors of the debtor, such as credit cards. These are generally only paid back through the bankruptcy at 10% or ten cents on the dollar.
Filing either a Chapter 7 or a Chapter 13 bankruptcy may be a useful tool for debtors to eliminate tax liability.
http://www.legalhelpers.com/legal_helpers/brc_articles_taxes_bankruptcy.html
Friday, April 27, 2007
The Fair Debt Collections Practices Act
If you currently owe money to a creditor, you may be getting calls from third-party debt collection agencies. However, you may be unaware that there is a law that regulates how these collection agencies may operate. The Fair Debt Collections Practices Act, or FDCPA, sets up rules for everything from how often a collection agency may contact you to what the collection agency representative may say to you. If a collection agency violates these rules, you could sue them for these violations and be rewarded a cash settlement. Here is a brief list of FDCPA rules.
I. What is the Fair Debt Collections Practices Act (FDCPA)?
a. The FDCPA is the federal law that governs the way third party debt collectors operate.
b. The FDCPA only governs third party debt collectors. This means that only collection agencies and law firms that collect debt are governed by this law and NOT the original creditor such as Chase, MBNA, and Discover etc.
c. Many states have their own laws that are similar to the FDCPA.
II. What is considered a violation? (This is just a short list of the major violations and is not intended to be exhaustive)
a. Threat of a lawsuit when there is no actual intent to sue at the time the threat is made.
i. There is case law that states that if the balance is so low and a lawsuit is not feasible then you can assume there is no intent to sue. Generally, this occurs when the debt is less than $250.
ii. Also, if you are dealing with an out of state collection agency, generally you can assume that they do not have anyone licensed to practice law in your state. Therefore they can not legally file suit at the time the threat is made.
b. Threats to take an action that cannot legally be taken.
i. Example: Threats to garnish a debtor's wages when the debtor lives in a state that does not allow wage garnishment.
ii. Example: Threats to seize a house or car when the debtor lives in a homestead state.
iii. Example: Threats to have debtor arrested for the debt.
c. Third party disclosure.
i. The only people to whom a debt collector can disclose the fact that the debtor owes money is the debtor, their spouse or their attorney.
ii. It is also a violation to leave a message on a voicemail or answering machine disclosing the fact that a debt is owed.
d. False representation or implication of attorney involvement.
e. Communication with a debtor after the collection agency has reason to believe that the debtor is represented by an attorney.
f. Communication with a debtor at their place of employment after the collection agency has reason to believe that such calls are not permitted.
g. Communication with a debtor before 8am and/or after 9pm.
h. Abuse on the phone, calling the debtor names, calling the debtor a liar, calling multiple times in a day (5 or more without the debtors consent) or just being generally harassing.
III. What type of recovery can you expect?
a. A typical settlement is between $1000 and $5000 depending on the violation.
b. If the debtor has any actual damages then this will increase the settlement.
c. There is a 1 year statute of limitations on these types of cases. This means that if you have a claim against a collection agency, you must file your lawsuit within one year from the date the violation occurred.
more on Fair Debt Collection Practices Act...
Federal Trade Commission
Give us a call at 888.743.5787 or fill out our free legal evaluation form.
http://www.legalhelpers.com/legal_helpers/brc_articles_fair_debt_collection.html
I. What is the Fair Debt Collections Practices Act (FDCPA)?
a. The FDCPA is the federal law that governs the way third party debt collectors operate.
b. The FDCPA only governs third party debt collectors. This means that only collection agencies and law firms that collect debt are governed by this law and NOT the original creditor such as Chase, MBNA, and Discover etc.
c. Many states have their own laws that are similar to the FDCPA.
II. What is considered a violation? (This is just a short list of the major violations and is not intended to be exhaustive)
a. Threat of a lawsuit when there is no actual intent to sue at the time the threat is made.
i. There is case law that states that if the balance is so low and a lawsuit is not feasible then you can assume there is no intent to sue. Generally, this occurs when the debt is less than $250.
ii. Also, if you are dealing with an out of state collection agency, generally you can assume that they do not have anyone licensed to practice law in your state. Therefore they can not legally file suit at the time the threat is made.
b. Threats to take an action that cannot legally be taken.
i. Example: Threats to garnish a debtor's wages when the debtor lives in a state that does not allow wage garnishment.
ii. Example: Threats to seize a house or car when the debtor lives in a homestead state.
iii. Example: Threats to have debtor arrested for the debt.
c. Third party disclosure.
i. The only people to whom a debt collector can disclose the fact that the debtor owes money is the debtor, their spouse or their attorney.
ii. It is also a violation to leave a message on a voicemail or answering machine disclosing the fact that a debt is owed.
d. False representation or implication of attorney involvement.
e. Communication with a debtor after the collection agency has reason to believe that the debtor is represented by an attorney.
f. Communication with a debtor at their place of employment after the collection agency has reason to believe that such calls are not permitted.
g. Communication with a debtor before 8am and/or after 9pm.
h. Abuse on the phone, calling the debtor names, calling the debtor a liar, calling multiple times in a day (5 or more without the debtors consent) or just being generally harassing.
III. What type of recovery can you expect?
a. A typical settlement is between $1000 and $5000 depending on the violation.
b. If the debtor has any actual damages then this will increase the settlement.
c. There is a 1 year statute of limitations on these types of cases. This means that if you have a claim against a collection agency, you must file your lawsuit within one year from the date the violation occurred.
more on Fair Debt Collection Practices Act...
Federal Trade Commission
Give us a call at 888.743.5787 or fill out our free legal evaluation form.
http://www.legalhelpers.com/legal_helpers/brc_articles_fair_debt_collection.html
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