How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask cfortunato Your Own Question
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
Type Your Bankruptcy Law Question Here...
cfortunato is online now
A new question is answered every 9 seconds

I am considering filing chapter 7 since I am in the mortgage

This answer was rated:

I am considering filing chapter 7 since I am in the mortgage business and have had 2 very poor years. ytd 2010 is just 16k. I do not understand the rules related to the means test but understand that the last 6 months of that look back period is very important.

Also, I have some tax debts which I was told (85k in IRS) would be dischargable.. in Feb 2010. I had filed the returns late and had to wait 2 years until the time period had elapsed. There are also some old state taxes due from 1999-2001 that also should be able to be discharged.

In state of md - ch 7, are all of these debts dischargable including the IRS and state tax issues?

Thank you
1) What happened in Feb. 2010?
2) What tax years are these taxes for?
3) When did you file the tax returns for these taxes?
4) Have there been any assessments for these taxes? If so, when were the assessments?
Customer: replied 7 years ago.
Hello Christina,

Thank you for responding.

To your questions -

1) My Mistake Feb 2011..not 2010. I had to wait 2 years from time of filing any past returns so that they would be able to be discharged. I was told there would be a 2 year time period.

--- i would just file now had it not been for this matter.
--- I will be discharging about 110k in personal debt and 85k in
IRS debt.

2. Tax years 1999-2000 then 2002-2003- and 2006-2008 I believe is correct. The year 2004 earnings were 119, 2005 291k, 2006 244k, 2007 35k, 2008 - 23k, 2009 - 89k and 2010 will be aprox 50k at this rate.

3. The taxes were filed by a CPA who went through all 10 years of returns and re-filed or corrected, or filed in place of the return the IRS filed and this was done Feb of 2009.

4. When you say assessments what does that mean? I have liens now on my credit as I tried at the start of the year to get a IRS pmt plan set up. This did not work out as they agreed to 1440 per month and I am not making that much some months right now. So they made me noncollectable status until further notice. BUT they filed the liens.

I have no assets other than a old Cadillac - no 401k no retirement, no stocks, no bank account with any money - just 1k in the bank. No assets on paper (or otherwise) - no ownership of home.. Nada. Basically broke.

Hope that helps.

Thanks again!

Basically you can have state and federal income taxes discharged in any state, including Maryland. The rule is the taxes have to be from years where the tax return was due to be filed (including one 6-month extension, if applicable) more than 3 years before the filing.
2006 and 2007 are okay to be filed after April 15, 2011, but taxes for the 2008 return cannot be filed until after April 15, 2012.
Means test does look at income for the 6 months before filing.
An assessment is when the I.R.S. redoes your taxes because they found errors.
Customer: replied 7 years ago.
Hello Christina -

Is there any chance the IRS could find a way to legally not have the taxes discharged. They filed some of the years for me, and we re-filed over them again and then the IRS came back and did not agree with some advertising deductions I had for some substantial advertising on the radio, this then caused a revision to come out. Maybe that would be the assessment as you stated?... But, all of those years we are talking about which is the majority of the money owed 85k with pen and int is from 1999 - 2006.

If I start making a great deal of money, I will go the other route, and just settle with everyone and hire a company to help make an offer in compromise to the IRS. If I can solve the problem in a year that is the best route, if the problem solving will take more than 1 year i am going to file the BK - 7.

I am worried though in the back of my mind that there will be some reason that I will not be able to discharge the IRS debts and then they will be vengeful and create issues.?

Is that something that I should worry about or is that over-thinking. I am sure people do this sort of thing every day, but I am not so sure they do it with 85k of taxes?.

Thanks again -

I recently had a client who was trying to have about $150K discharged, so 85K is not unusual.
The only problem I envision is that if the I.R.S. debt is more than $100K, you have to have a special hearing (called an Adversary Proceeding) where you have to prove that you did not intend to not pay I.R.S. (Not being able to pay is not the same as intentionally not paying, which can only happen if you are able to pay, but do not.) If the taxes owed are less than $100K, there is no requirement to prove that there was no intention to not pay.

Edited by Christina Fortunato, Esq. on 6/6/2010 at 3:55 AM EST
cfortunato and other Bankruptcy Law Specialists are ready to help you
Customer: replied 7 years ago.
If I change jobs in July will that cause a problem for the Bk. Also, if the Bk were filed quickly IE August with the new job can they say I voluntarily left one job then did not have any income IE self impoverishment? I will make more money at the new company - commission levels are higher.

Thank you for accepting my answer!
You are absolutely allowed to change jobs. Even if you did change jobs to purposely make less, so you could file, there is nothing the bankruptcy court could do about it.