Hi, I'd like to assist you with your bankruptcy questions this afternoon.
Hi, can you provide rough estimates of the types and amounts of debts you owe that you can no longer afford?
And again very roughly, what is the total value of your assets (i.e. everything you own that could be sold, including your mineral rights)?
Also, do you think your mineral rights are worth enough that you could sell them, pay off your debts, and have some money left over?
If you both signed for the joint credit card, each of you would be potentially be liable for the entire amount. Even if you were to have all of these debts discharged in bankruptcy, your partner would still owe them.
How much of that gets paid to you each month?
Is it possible to work out a payment plan with the IRS?
It sounds like you may have too much income (compared to the amount of your debts) to file bankruptcy.
I don't know the entire situation, but my gut instinct is that you are not a good candidate for bankruptcy.
You cannot discharge the student loan in bankruptcy, so you're left with the credit card debt of around 40k, 11k in property taxes, and 120k (?) owed to the IRS, is that about right?
You have a fairly substantial income stream from these mineral rights, so I think you would be able to work out payment plans with your creditors.
If you filed for Chapter 13 bankruptcy, which you might be eligible for, you would have to pay all of your disposable income into a Chapter 13 Plan for 5 years. I suspect that this would pay off close to 100% of your debts, so you're probably better off not filing.
Which years are these taxes from?
These tax debts are too recent to be discharged in bankruptcy, so the best you could do in a Chapter 13 is essentially force the IRS to accept a 5-year repayment plan.
Have you applied for an Installment Agreement Request from the IRS?
You CAN always refinance and pull cash out of your home; however, 90% of financial advisors would tell you not to do this.
If your financial struggles continue for the next few years, you might be a candidate for Chapter 13. However, I don't see much advantage to filing bankruptcy at this point in time.
Back taxes owed to the IRS can be discharged in bankruptcy if the tax return was due at least 3 years ago, you filed the return at least 2 years ago, and the taxes were assessed at least 240 days ago.
So in the worst-case scenario, if this becomes a spiral of tax debt, you'd still be better off waiting a few years so you could discharge at least some of this debt in a bankruptcy.
I would think you could refinance because you have a steady stream of income. However, the IRS penalties and interest may actually be lower than the interest rate on a home equity loan if your credit isn't very good.
Here are the two IRS forms you would fill out to request an Installment Agreement:
I know your accountant most likely already filled this out, but if you look at the form, it gives you up to 72 months to pay the debt.
So you can probably fill out a new form and put in lower monthly payments. Your accountant was probably putting higher than minimum payments so you'd pay off this debt more quickly, which would be the prudent thing to do, but it sounds like you can no longer afford whatever this payment was.
You could probably pay as little as $1,500-$1,600 per month.
The tax lien issue is a concern, that's why you want to be on some type of payment plan rather than just defaulting on your payments.
Once the IRS has a lien on your property, the LIEN cannot be discharged in bankruptcy (you wouldn't be personally liable, but there would be a huge tax lien on your home that you really wouldn't be able to get rid of).
The IRS won't often levy your property, although they could if you defaulted on your payments.
We usually levy only after these three requirements are met:
<------ From the IRS Website
It's more cost-effective for the IRS to simply put a lien on everything you own and collect if/when you ever sell anything of value. Obviously, you don't really want this to happen either.
Do you have any more questions for me this afternoon?
http://www.irs.gov/pub/irs-pdf/f9465fs.pdf On Line 9 of this form, it says it will divide the amount you owe by 72 months if you leave the line blank.
So I assumed $110,000 / 72, which = $1527.28 per month
The real amount would probably be a bit higher due to penalties and interest, but that's a good ballpark figure.
And then you don't have to worry about tax liens and the like
Please remember to rate my answer so I can receive credit for assisting you this afternoon, and good luck!
You too! Have a happy holiday season.
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