Bankruptcy

There are individuals out there that think they can get rid of their debts by filing bankruptcy. FYI: Bankruptcy just delays the inevitable. It can either discharge or reorganize debts. When dealing with the IRS, if one files bankruptcy, it just puts a hold on collections and extends the statute through the time of bankruptcy plus six months.

There are three "chapters" that cover the issue of bankruptcy...
~Chapter 7: Liquidation
-This chapter is basically "a fresh start" for the client and taxes can possibly be discharged. It can dissolve non-exempt assets and pay off all creditors to the greatest extent possible. You can lose almost everything because you are liquidizing your assets, or quickly turning your assets into cash to cover your liability. For example, your primary residence can't exceed $15,000 in value, or your vehicle can't exceed $2,400 in value; each state can have different rules.
~Chapter 11: Reorganization
-This chapter is a plan of reorganizing your assets to pay your debts. This plan of reorganization needs to be approved by all creditors, BUT, if in court, the plan can be forced upon the creditors.
~Chapter 13: Regular Income Earner-Reorganization
-Here, a trustee comes up with a streamline payment (liability is less than $25k) to all creditors. Also, there is a mandatory 180 days of credit counseling if this chapter is chosen.

With regards to tax liens, if the IRS files a lien prior to bankruptcy, the lien services through bankruptcy and attaches to the client's property. If there's no equity in a client's assets, the IRS usually removes the lien after discharge. In addition, during bankruptcy, the IRS is voided from filing liens.

FYI on Effectur

I am currently in my second week of working for Effectur, Inc. Before working here, I did not know a whole lot about taxes, but just in a week, I have retained so much knowledge from many of the experienced tax experts here. Whether it be dealing with tax organizers, 433's, calling Practioner Priority Services, or even understanding W-2's. I'll be going into greater detail for some of these topics in future posts.

For many of you who are not familiar with Effectur, this business strives "to provide a peace of mind and a fresh start" to businesses and individuals who are seeking tax relief from the IRS. If you don't know already, when dealing with the IRS, they are NOT pushovers. They want their money and they want it ASAP. Some examples of ways that the IRS can retrieve their money is through bank or wage levies. Bank levies are a one time deal, but will typically drain everything that is in your account. Wage levies take out a certain percent out of each paycheck and can be ongoing until the IRS retrieves the full balance owed.

For more information on Effectur, you can visit: http://bwatts8k.blogspot.com/