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Internal Revenue Service Issues: Tax Levies vs. Tax Liens Part Two

August 29th, 2014 at 8:58 am

tax levyNeither a tax lien nor a tax levy from the Internal Revenue Service is a positive situation, and can certainly have dire consequences for you as a consumer and a taxpayer. A lien simply assigns the government’s right to your assets before any private creditor and is normally a result of unpaid income taxes and can be more than an inconvenience for anyone. In contrast, a levy is much more serious. Fortunately, there are remedies for both scenarios. A tax lien can result in high bills owed, a public filing of the tax lien, as well as attaching the label to every type of property you own.

Although selling the property can certainly help the situation in some cases, it is important to remember that all proceeds will go towards paying the lien, often leaving you in even more hardships. There are other ways to get rid of a tax lien, however, and use of a Texas attorney can make all the difference in how your case is resolved.

Consider the following options when a lien is placed on you by the Internal Revenue Service to help your case:

  • Paying off the overdue debt: Although most often easier said than done, should you have the means to do so, this is your best option. All tax liens will be removed within 30 days of the resolved debt, although this must be done in full;
  • Discharge of property: This option can make certain property that you owe exempt from the lien, and taking its equity out of the hands of the IRS and the federal government. While this will not always apply, it may help you save your residence or vehicle;
  • Withdrawal of the lien: While you are still liable to pay the full amount you owe the IRS, a withdrawal of the lien assures all other creditors that the government is not longer competing for your assets. Certain criteria must be met, such as ongoing compliance with payment plans and tax code.

A tax levy can be more complex, although there are ways to get this removed as well. The following is a short list of ways an experienced attorney can cause the least amount of hardship on you possible by getting a levy removed:

  • If you filed for bankruptcy before the levy notice was issued;
  • Proving the levy will cause undue economic hardship;
  • You did not have adequate opportunity to dispute the claim;
  • A desire to set up a payment plan of some sort;

These tax levies are no joking matter and can result in you losing your credit, property, as well as significant financial losses. A Texas bankruptcy lawyer with experience dealing with the IRS can not only help you protect your assets, but also your livelihood. Contact The Law Offices of Chance M. McGhee today for a free initial consultation regarding your economic hardships.

Debt Coping: What to Do When a Child Passes Away

March 31st, 2014 at 12:45 pm

student loan debt, San Antonio bankruptcy lawyer, San Antonio bankruptcy attorney, Texas lawyerGoing through the process of grieving a child is devastating for any parent. However it can be even more challenging to move on when private student loan debt follows that individual after the child has passed away.

While most federal student loan debt is wiped out when a person passes away, private lenders may try to go after family members. If you are trying to cope with this situation, you may have a way out: bankruptcy.

Just ask Francisco Reynoso of California. His son died in a car accident in 2008, but Reynoso was on the line for six figures of student loan debt for which he had cosigned. With an income of just $21,000 per year, Reynoso was trying to grieve the loss of his child while avoid collection calls and demands from private lenders.

Some of the debt had been transferred to private investors outside of the original lender, making it difficult to identify which company was connected with each debt. Reynoso wasn’t even sure whether it was possible to negotiate settlements because he did not know who had taken over the loans.

Ultimately, he felt backed into a corner, unable to meet the payment demands. He decided to go through bankruptcy so that he could finally wave goodbye to the loans and lenders and instead focus on grieving his son and healing.

Parents taking on co-signing responsibilities are likely not concerned about having to make these massive payments in the future because they expect the child to get a job after graduation, rather than expecting them to pass away.

A child who passes away may leave behind big private student loan debt that is impossible for parents to pay off. In these cases, bankruptcy can provide a way out and a fresh start. If you would like to know how the process can help you, contact a Texas bankruptcy attorney today.

What is a Chapter 20 Bankruptcy?

December 13th, 2013 at 3:24 pm

piggy bankA Chapter 7 bankruptcy is a common form of bankruptcy because it excuses the filer from all eligible debts.  It is commonly referred to as a liquidation bankruptcy because debts are eliminated by the sale of property and other assets. Creditors are repaid through the proceeds of those transactions.

A Chapter 13 is also called the wage-earner’s bankruptcy.  If someone is earning an income but cannot keep up with past due payments, then a Chapter 13 bankruptcy can give them time to pay those debts. There is a repayment plan that last from three to five years and is based on each person’s income.

Occasionally there are cases when nether Chapter of bankruptcy is appropriate. While a Chapter 20 bankruptcy is not a term found in the bankruptcy code, it is a common strategy to get a fresh start.  It is the process of filing two bankruptcies right after each other to resolve difficult financial situations.  The approach is filing for Chapter 7 protection and then for Chapter 13.

The Chapter 7 bankruptcy lets you eliminate dischargeable debts which does not include child support, taxes, or student loan debts.  If your debts are too high to qualify right away for a Chapter 13 bankruptcy, the Chapter 7 bankruptcy can eliminate enough to become eligible.  That can allow you to focus the majority of your income on debts that cannot be discharged.

The disadvantages of a Chapter 20 filing is you can’t receive a discharge during the Chapter 13 part of the process.  It is also possible that a bankruptcy trustee will object to your Chapter 20 bankruptcy.  They can claim that your Chapter 13 filing is in bad faith.  If that happens, you will be responsible for providing proof that it is necessary given your situation.

If you are concerned about making your monthly credit card payments or losing your family home, then bankruptcy might be an option for you.  Talking to a legal professional can show the benefits of each Chapter based on your situation.  Contact an experienced bankruptcy attorney in San Antonio today.

Bankruptcy Terminology: What is Reaffirmation?

November 29th, 2013 at 11:57 am

texas-reaffirmation-bankruptcyFiling for bankruptcy is a difficult decision. However, bankruptcy is an important tool that gives people a second chance despite the curve balls that life may throw. Indeed, the reason behind the United States Bankruptcy Code is an acknowledgment of the reality that life sometimes just happens.

It is unfortunate that bankruptcy has such a negative stigma. Bankruptcy is an invaluable tool, and if used properly, it allows persons to shed off undesired liabilities while retaining useful assets; just ask Donald Trump.

With proper planning, bankruptcy can even allow a person to continue inhabiting the same home or drive the same car while getting rid of undesired debt. This is all thanks to the concept of reaffirmation. Reaffirmation allows bankruptcy filers to choose to remain liable for the debt that encumbers certain assets, thus keeping those assets.

For example, assume that a person who decides to file for bankruptcy wants to keep a car that they have financed; this may be the vehicle used to make a living or to drive children to school. Under bankruptcy rules, if a person does not reaffirm the debt associated with the car, the bank that financed the purchase would repossess the vehicle and dispose of it as they see fit.

However, a person may reaffirm the debt through a reaffirmation agreement, which allows the debtor to keep the property by continuing to remain liable for the debt despite the bankruptcy. In other words, the bankruptcy filer is promising to continue making the payments on the loan as though the bankruptcy did not happen.

Reaffirmation is a serious matter, however, and people must make certain it is the right thing to do. For example, if the car is worth substantially less than what one owes to the bank, it would make little sense to reaffirm the debt.

While it is true that bankruptcy is a difficult decision, an experienced Texas bankruptcy attorney can ensure that one leverages it to get a fresh start.

What Does an IRS Tax Levy Mean in Texas?

October 30th, 2013 at 10:19 am

san-antonio-irs-tax-levySince the economy has taken a turn for the worse, the IRS has be relatively aggressive in coming after income tax debt. If you are being contacted by the IRS about existing tax debt and you are feeling overwhelmed with your finances, you need the advice of a San Antonio bankruptcy attorney.

The IRS can use levies to pay your taxes if you do not make payments or arrangements for payments to cover a tax debt. The IRS can take and sell any type of personal property that you own or have interest in. This includes the cash loan value of your life insurance policy, commissions, your wages, bank accounts, licenses, rental income, dividends, and retirement accounts. The IRS may also seize and sell property such as houses, boats or cars.

The tax levy can be completed after the IRS assessed the tax and provided you with a Notice and Demand for Payment, you refused to pay the tax or ignored the notice, and you received a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing.” Generally, you will receive this last piece of information about 30 days before the levy. Taxes are extremely complicated and contacting the IRS may not clear up your questions. This is a sign to reach out to a bankruptcy lawyer.

If you are being contacted by the IRS about an impending levy, now is the time to act. The automatic stay provision of bankruptcy will stall all attempts by creditors to collect on a debt. Filing for bankruptcy is one way to stop the attempt to levy you as a result of an outstanding tax debt.

You should only work with a professional who understands the challenges of an IRS tax levy. If you’re ready to talk about bankruptcy and your opportunity to get a fresh start in life, contact an experienced Texas bankruptcy attorney today.

Small Business Bankruptcy Threatens San Antonio’s Future

September 5th, 2013 at 1:10 pm

With the economy firmly in recovery, it may seem for residents of San Antonio that it’s all clear ahead. Indeed, CNN Money Magazine lists San Antonio as one of the top ten booming cities in the country. According to CNN, “those who move here from other parts of the country often find their income stretches much further in San Antonio… it’s 57 percent less expensive to live there than in Manhattan, 29 percent less than in Los Angeles, and 18 percent cheaper than in Chicago.” This translates to some big savings—especially when it comes to housing. Now that the Great Recession has done its worst to the housing market, houses in San Antonio are some of the cheapest in the nation. According to CNN, the median price for a single-family home in San Antonio was $167,000 in 2013, “well below the $184,000 national median.” This means that the city is prime stomping grounds for new entrepreneurs and start-ups. Even CNN reports “San Antonio is a blue collar town that is attracting a lot of cutting edge companies.”

And yet scarily enough, it’s exactly those cutting edge companies and their oftentimes young, otherwise uninitiated employees that need to be on edge about bankruptcy. According to Dallas News, bankruptcies, both corporate and personal, are way down in Texas. Much of this is due to “low interest rates and a stingy market credit,” reports Dallas News. And yet there’s a fear that “hundreds of Texas business would have benefited from Chapter 11 protections from reorganization and restructuring, but Federal Reserve policy has significantly impeded those avenues.”

This is what makes the situation something about which to be aware. With an influx of new entrepreneurs calling San Antonio home, the bottom has the potential to drop out if fears speculated upon in the Dallas News come true.  “At some point,” one lawyer told Dallas News, “there will be enough distressed debt that this ‘extend and pretend’ philosophy will no longer work.”

If your small business seems headed down this road, it’s important to seek the counsel of a qualified bankruptcy attorney sooner rather than later. Contact an experienced San Antonio bankruptcy lawyer today.

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