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LawTalk
LawTalk, Attorney
Category: Bankruptcy Law
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My husband and I are in debt probably $40,000 plus another

Customer Question

Hello my husband and I are in debt probably $40,000 plus another $190,000 in IRS debt from 2011 -2014. We have approx $150,000 in equity on our home that we cant access because our credit is poor, due to my business failure and I was primary income.Can we file bankrupsy on any of the IRS debt? The majority is 2011 and 2012. We dont have the income to realistically pay a payment plan for that high of a figure. If we cant file bankrupsy but instead sold our house and used the proceeds to pay the IRS could we immediately file bankrupsy for the rest of our debt? Would bankrupsy court care that we just sold our house?One more big question. We are behind in our daily bills - utilities, mortgage ect and my husbands car just stopped. He really needs a car to go to work. If he accesses his 401k for lets say $35,000 how does that affect our ability to settle with the IRS or file bankrupsy in the next 6 months.
Submitted: 4 months ago.
Category: Bankruptcy Law
Customer: replied 4 months ago.
Also if he buys a car if he pays cash will the IRS or bankrupsy court take it? Should he instead put 1/2 down like $8000 for a $16,000 car.
Expert:  LawTalk replied 4 months ago.

Good morning Rhonda,

I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today.

It is possible to discharge old taxes under certain situations. if the majority of your taxes are from 2011 and 2012, you can likely discharge those. The following are requirements to be able to discharge taxes in bankruptcy:

  1. The due date for filing a tax return for which you owe taxes was at least three years ago.
  2. Your tax return was in fact filed at least two years ago.
  3. The tax assessment (the time when the IRS sent you notice of the taxes you owed) was at least 240 days ago.
  4. Your tax return was not fraudulent in nay respect.
  5. You are not/have not been found criminally guilty of ax evasion.

You asked: We are behind in our daily bills - utilities, mortgage ect and my husbands car just stopped. He really needs a car to go to work. If he accesses his 401k for lets say $35,000 how does that affect our ability to settle with the IRS or file bankrupsy in the next 6 months.

You could be charged with preferential payments to creditors and that will severely complicate your bankruptcy. See this link: http://www.alllaw.com/articles/nolo/bankruptcy/preferential-debt-payments.html#

Also if he buys a car if he pays cash will the IRS or bankrupsy court take it? Should he instead put 1/2 down like $8000 for a $16,000 car. Paying cash for a new car will almost certainly result in it being taken by the trustee. Lease a new car and put down a sizable down payment. Leased vehicles have no equity and won't be effected by your bankruptcy.

You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.

I hope that I have been able to fully answer your question. As I am not an employee of JustAnswer, please be so kind as to rate my service to you. That is the only way I am compensated for assisting you. Thank you in advance.

I wish you and yours the best in 2016,

Doug

Customer: replied 4 months ago.
Aren't we more likely to loose the house in bankrupsy with having so much equity and owing the IRS so much? If we file chaper 7 we loose the house correct because of the equity and how much we owe IRS? If we do chapter 13 which means if we keep the house we will have a huge payment to cover all our debt with IRS bundled in?
Expert:  LawTalk replied 4 months ago.

Hi,

Yes, if you go chapter 7 you'll lose the house because you can only protect $30,000 in home equity in bankruptcy.

You can still do chapter 13 and keep the house but you would have to pay at least $120,000 in taxes during the 5 year repayment period. So yes, you'll probably lose the house.

As you may not be aware, the Rules of JustAnswer specify that each customer ask one question in each question thread. These are new questions that you are asking. For new questions, the customer is asked to open a new question thread. I do sincerely ***** ***** any inconvenience this might cause you. You are a subscription member and it costs you nothing to open a new question.

You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.

Please remember to rate my service to you so that I can be compensated for helping you. Thank you in advance.

I wish you and yours the best in 2016,

Doug

Expert:  LawTalk replied 4 months ago.

It is possible that your questions and issues might be better served by an in-depth conversation with me. If you are interested, for a very nominal charge I can offer you a private phone conference.

Please know that I answered your question in good faith, providing you with the information that you asked for, and I did that with the expectation that you would act likewise and rate my service to you. If I have already provided you with the information you asked for and you have no additional questions, would you please now rate my service to you so I can be compensated for assisting you?

Thanks in advance,

Doug

Expert:  LawTalk replied 4 months ago.

Hi,

Is there anything else I can assist you with today?

Doug