Many clients from Mesa, Gilbert and Queen Creek come to our Bankruptcy Attorney in Gilbert because things have not been going well financially. Between tax debts that they owe to the government and other financial obligations they have simply become overwhelmed and stressed. If this sounds familiar perhaps you’re in a similar situation. Furthermore, if you’re uncertain whether you can repay those debts and are considering all options then filing Chapter 7 Bankruptcy could help with tax obligations and other debt.
Chris Dutkiewicz has been practicing bankruptcy law for over 14 years right here in the East Valley. He is highly sought after for his expertise, knowledge and non-judgmental attitude. Chris has filed thousands of Chapter 7 bankruptcies and is one of the best Arizona bankruptcy attorneys. Get a FREE Consultation.
WHAT IS CHAPTER 7 BANKRUPTCY?
In a Chapter 7 bankruptcy, your assets that are considered to be non-exempt are sold and the proceeds are used to repay your outstanding debts. Non-exempt debts are those that don’t fall into one of the seven federally exempted categories (subject to dollar limitations). Married couples filing for bankruptcy can double any applicable amounts.
- Your home – Up to $23,675 can be kept in the equity of your home. If you have other property and do not use your entire exemption, up to $11,850 may be used for the additional property.
- Home equity – In some instances, your bankruptcy trustee may choose not to sell your home (such as in cases where you have less equity than the exemption amount). However, if you have defaulted on your mortgage payments, your lender may foreclose. If your equity exceeds the exemption amount, you will receive this amount with the remainder of your balance going to pay off debts.
- You may keep any motor vehicles with a value of up to $3,775.
- Your personal property such as appliances, books, and other belongings that you won can be retained as long as they don’t exceed a value of $600 per item, with a total allowed exemption for all property of $12,625.
- Retirement accounts: You may exempt the total of any amounts saved in 401(k) and 403(b) accounts and up to $1,283,025 included in Individual Retirement Accounts (IRAs).
- Jewelry up to $1,600 in total value.
- The entire value of any health aids that you require are federally exempt.
HOW DO I QUALIFY FOR CHAPTER 7?
In order to qualify for a Chapter 7 bankruptcy, you must meet certain qualifications include:
- Have income less than the state median amount (the means test) for the six months preceding the bankruptcy filing and have little or no disposable income. If your income exceeds the median amount for your state, you may qualify, however, additional financial tests will be required in order to determine eligibility.
- You must complete a pre-bankruptcy credit counseling course no later than six months from the date of filing a bankruptcy petition.
- If you have previously filed for Chapter 7 bankruptcy relief, you must wait eight years from the previous petition date in order to qualify to file a new bankruptcy request.
CAN TAX OBLIGATIONS BE DISCHARGED UNDER A CHAPTER 7 FILING?
Federal income tax obligations can be discharged during a bankruptcy, but a number of specific requirements must be met.
- The tax burden must have been incurred a minimum of 240 days prior to filing for bankruptcy.
- You filed a tax return which resulted in the tax obligation in question.
- The tax to be paid is at least 3 years old, meaning that the filing date for the tax return, must be at least 3 years before the date of the bankruptcy petition.
- You did not fraudulently file a tax return or attempt to evade taxes
- The taxes are income taxes. Other taxes are not eligible for elimination.
Filing for bankruptcy can be stressful for anyone. It’s important to understand which debts can be discharged when you are going through the process to help you increase your knowledge and reduce any unnecessary stress. Our bankruptcy attorney in Gilbert offers a free complimentary case consultation. Contact Chris Today!
DISCLAIMER: None of the content in this post shall be construed as legal advice to you, the reader, and no attorney/client relationship is formed by reading this post.