This page addresses the most common questions about selecting the right attorney to help you address your tax problems and other financial concerns. Choosing the right solution is a big step that could affect your life for years to come.

If you’re worried about garnishments, foreclosures, lawsuits, repossessions, or other consequences of your debt, connect with an experienced bankruptcy lawyer at Sawin & Shea as soon as possible. You deserve a fresh start.

What’s the Difference Between a Tax Attorney and a Bankruptcy Attorney?

A tax attorney specializes in helping people understand income taxes and how the IRS works. They typically answer questions from a debtor about back taxes, filing annual tax returns, and tax penalties they may owe.

A bankruptcy attorney helps someone clarify and organize their finances while getting most types of debt discharged. They usually assist people with pursuing the common routes of Chapter 7 bankruptcy or Chapter 13 bankruptcy to address tax debt. They’ll help you resolve your back taxes as part of a broader bankruptcy plan for your finances.

If you simply need help preparing your taxes, or if you have basic questions about your income taxes or tax debt, a tax specialist is your best bet. However, contact a bankruptcy lawyer if you have a complicated financial picture that may require significant financial reorganization.

Bankruptcy attorneys address other important debt-related issues, like paying income tax debt, resolving credit card debt, and stopping creditor harassment. They help their clients ensure most old debts are discharged and start a new plan for financial stability, in addition to satisfying the IRS.

Choosing a Bankruptcy Lawyer vs. a Tax Lawyer

A tax lawyer can help with most basic tax-related tasks like:

• Getting your income taxes paid, including late payment penalties
• Identifying tax fraud
• Resolving most tax debts
• Making regular payments on income tax debt
• Answering many basic taxpayer inquiries

Bankruptcy lawyers address more than just clients’ tax relief and debt issues. Working with a bankruptcy lawyer is about taking a broader look at your entire financial picture beyond taxes to apply a bankruptcy filing wisely.

• Understanding the bankruptcy code and related law
• Selecting Chapter 7 bankruptcy or Chapter 13 bankruptcy
• Sorting through certain tax debts you may or may not owe to creditors
• Identifying priority debts vs. non-priority debts
• Making a plan to clear out credit cards, medical bills, and other debts owed, including interest
• Addressing tax debt issues related to property and belongings
• Evaluating recent tax debts vs. old tax debts
• Protecting a debtor’s assets while filing for bankruptcy
• Ensuring a bankruptcy petition is properly filed through the bankruptcy court

Does My Bankruptcy Lawyer Need a Tax Background?

New laws and trends impact how people manage their finances. A bankruptcy lawyer with a tax background helps you get the most out of your tax debt relief and ensures filing bankruptcy runs as smoothly as possible.

IRS Issues and Dischargeable Debt

Bankruptcy involves analyzing your tax debt and determining what may be dischargeable. This includes determining what you owe, when you filed relevant returns, the dates of your assessments, and what interest and penalties may apply. 

You’ll determine what’s dischargeable while keeping you in the good graces of the IRS. Your bankruptcy plan can be filed to pay back nondischargeable portions while still working to discharge as much tax debt as possible.

Handling Tax Debt and Refunds

Do you know how much of your tax refund you can keep when filing? Your lawyer should be able to give you a much clearer understanding of how your tax refund will be incorporated into the bankruptcy. Review your exemptions and withholding to see opportunities to keep the maximum within the law.

Protecting What You Own

Asset protection is always a concern when filing bankruptcy. If you have property, collections, investments, capital gains, or other valuable assets, ensure your attorney is fully qualified to address the range of your financial interests.

You may have questions about voluntarily or involuntarily surrendering real estate, for example. This can have a tax impact on your bankruptcy, so discuss your concerns with your lawyer.

Who Will Help Me Determine if My Debt is Dischargeable?

A bankruptcy attorney can help you determine if your tax debt is dischargeable. While a tax specialist is helpful in terms of helping you address specific concerns about your tax return, a bankruptcy attorney can move forward with bankruptcy and protect your assets while making a plan to hopefully discharge tax debt and other debts.

Factors in Determining Whether Debt is Dischargeable in Bankruptcy

How recent is the debt?

Did you already file a tax return related to this debt in the years prior to this one?

When was your IRS tax return filed and assessed?

Has a lien been filed on your property?

Do you have other debt, loans, discharged debts, or other amounts owed?

What paperwork have you received from the IRS about this debt?

Are you selecting Chapter 7 bankruptcy or Chapter 13 bankruptcy?

Can a Bankruptcy Lawyer Help Me Resolve Tax Debt?

If you’re finding it challenging to pay back taxes to the IRS, a tax attorney can provide insight into what the IRS is demanding and how people typically address the situation. A bankruptcy attorney can help you use the bankruptcy process to try and get rid of tax debt.

More Tax Attorney vs. Bankruptcy Attorney Questions? Ask Sawin & Shea

If you still have questions about resolving your tax debts, please contact the experienced bankruptcy team at the law office of Sawin & Shea, LLC. We offer a fast path to financial freedom.

Start your free consultation today by calling 317-759-1483.

The post Tax Attorney vs Bankruptcy Attorney: What’s the Difference? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Below, we’ll explain what you need to know about your section 341 meeting and how to make sure you’re ready for it. With a bit of preparation, this is a simple part of the process that helps you move your bankruptcy along as quickly as possible.

The Basics of an Indiana 341 Bankruptcy Meeting

A 341 meeting is also known as a meeting of creditors or a bankruptcy hearing. It’s an opportunity for the official handling your case – an interim trustee in a Chapter 7 or a Chapter 13 Trustee – to meet you and ask questions about your background and financial status.

The hearing is reasonably informal. The Chapter 7 or Chapter 13 Trustee will ask you some questions. Your creditors may also attend, though they rarely do. The actual bankruptcy judge presiding over your case will not be present at this meeting, which helps preserve their neutrality in making a judgment about your case if there is cause for them to hear something out of the ordinary. Most Debtors in bankruptcy never have a hearing in front of the actual judge.

The meeting happens about 20 to 40 days after your initial bankruptcy filing. At this point in the bankruptcy process, the trustee in Chapter 7 cases is focusing on potential non-exempt assets that can be tapped to pay some of your debts. The Chapter 13 Trustee is looking at your situation to see if they think that your reorganization plan is going to do everything that the law requires. This means you may be expected to provide answers and/or documents to back up your statements.

The 341 meeting involves making sworn testimony, so you’ll be under oath. Answer the trustee’s questions honestly. However, the hearing is not a time to ramble on and talk about things not asked. Keep answers short and to the point. Listen to the guidance of your bankruptcy attorney and follow their instructions.

Questions to Answer at a 341 Meeting

Some of the questions the bankruptcy trustee asks might feel intrusive, but it’s just part of the process. It’s the trustee’s job to look out for fraud, undisclosed assets, undervalued assets, and other signs that someone might be manipulating the bankruptcy process.

During the meeting, maintain a pleasant attitude and stick with the facts. When the trustee asks a question, answer in a straightforward way based on your discussions with your bankruptcy attorney. Show the trustee that you’re an honest person acting in good faith and helping them get their job done.

Common questions bankruptcy trustees ask at 341 meetings include:

• Do you understand everything contained in your bankruptcy paperwork?
• Did you read and sign all of your bankruptcy documentation yourself?
• Are all possible creditors listed in your bankruptcy schedules?
• Have you ever filed for bankruptcy before?
• What is your monthly income?
• Do you pay child support?
• Are you current on paying your income taxes?
• Do you have a tax refund coming soon?
• Have you made any payments to any creditors within one year?
• Where do you reside?
• Have you lived at that residence for most of the last 180 days?
• Are you in the process of purchasing any real estate?
• What property do you own and how is it valued?
• Did you disclose all possible property?
• Are you part of a business partnership or corporation?
• Do you have homeowners’ insurance or car insurance?
• Does anyone owe you money?
• Are there any concerns, errors, or omissions you wish to bring to my attention?

Before you attend your 341 meeting, discuss the answers to the questions listed above with your bankruptcy attorney. If there’s anything you don’t understand, now’s your last chance to clear things up before the meeting takes place.

Tips for Attending Your 341 Meeting 

On the day of the meeting, dress professionally and not too casually, as if you’re attending a job interview. There are only a few things you’ll need to bring, but they’re essential to the meeting:

• Driver’s license or government-issued ID card
• Government issued social security card
• Any other documents requested

If the hearing is in person, arrive early to find parking so you’ll be on time for the meeting. Your creditors may or may not attend. If they’re present, the trustee might ask them questions and give them an opportunity to speak.

Stay positive and calm. Do not react negatively to any question a party to the hearing asks of you. You will have representation at the hearing that can handle improper questions. If you do not understand a question, say so and do not guess at an answer.

Have Questions About a 341 Meeting? We Can Help.

At Sawin & Shea, we have years of experience helping Hoosiers just like you change their lives through bankruptcy. Whether you have old bills that are still causing concern or new costs that you simply can’t handle, contact us as soon as possible.

We’ll help you address any concerns that arise during the bankruptcy process. Please reach out to the team at Sawin & Shea right away so you can feel fully prepared for your 341 meeting.

Sawin & Shea — Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is the first step in a fresh financial future. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of overwhelming debt and advise you on how to move forward after bankruptcy. We’re here for you during this life-changing process.

Please do not hesitate to call us today at (317) 759-1483 or send an email for a free consultation. We’re ready to help.

The post What Is a Section 341 Meeting and How Do I Prepare? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Filing your taxes after filing for bankruptcy is not as complicated as it may seem, and if you are still confused after doing some research, you can always reach out to a bankruptcy lawyer. Bankruptcy lawyers are important to work with when you file for bankruptcy, but they can be helpful and offer guidance even after you’ve filed.

If you have concerns about how your taxes should be handled after filing for bankruptcy, don’t hesitate to reach out to an attorney for help. While the internet offers a lot of helpful information on how to file your taxes after filing for bankruptcy, if you make any mistakes, it could negatively impact your tax return and your bankruptcy case. Your taxes will be handled differently depending on what type of bankruptcy you file, such as Chapter 7 or Chapter 13, and it can be easy to mix things up if you aren’t careful. When in doubt, always ask for help.

Tax Debt and Bankruptcy

If you have unpaid tax debt prior to filing for bankruptcy, you will likely receive several letters from the IRS, which can feel threatening. However, once you file, an automatic stay will go into effect, which will put a pause on IRS collection efforts. After you file, it is possible that your tax debt will get discharged, but it depends on your individual circumstances and which type of bankruptcy you file.

In a Chapter 7 bankruptcy case, for example, you can only get income tax debt discharged. Additionally, to qualify for a discharge, you must have filed your tax returns at least two years prior to filing, the income tax debt must be at least three years old, and the tax debt must have been assessed by the IRS 240 or more days before you file for bankruptcy. In addition, if you filed the return and an audit caused the assessment of the tax, the IRS may consider that tax debt not dischargeable. There are other factors that may lead to a tax debt no being discharged. Speak with your attorney to assess your particular situation.

What Happens to Tax Debt Accrued After You File for Bankruptcy?

If you have already filed for bankruptcy and then you accrue new tax debt, it can negatively impact your case. A provision of bankruptcy is that debtors may not acquire any new delinquent balances while under the court’s supervision. So if you acquire new tax debt that you cannot pay after filing for bankruptcy, it could result in your case getting dismissed. If you filed a Chapter 11 or Chapter 13, your case could be dismissed or converted to a Chapter 7.

What Happens to My Tax Refund

Another thing to take into consideration when filing your taxes while dealing with a bankruptcy is your tax refund. If you expect to get a sizeable tax refund, you may want to delay filing your bankruptcy. Your refund is money that is owed to you, but if you file for bankruptcy before you receive and reasonably spend your refund, you may have to turn it over to your trustee, who will then use it to pay something to your creditors. You should consult with an attorney before filing your taxes if you plan to file bankruptcy soon after.

How to File Taxes After Bankruptcy

Once you have filed your bankruptcy, you will want to make sure you file the right forms come tax season. Bankruptcy Code requires debtors to file an individual tax return; if they do not do this, or do not request an extension, their bankruptcy case could get dismissed or converted. In most cases, the procedure to file taxes after bankruptcy is the same as before filing.

Another thing to consider is that you could receive a 1099-C Cancelation of Debt from a creditor after receiving a discharge. Discharged or forgiven debt can be a taxable event. However, debts discharged in bankruptcy do not count toward income. It does, however, necessitate that you file an IRS form 982 with your taxes to alert the IRS to the discharge of the debt in bankruptcy. Please be sure to discuss the 1099s that you receive with your attorney and/or tax advisor.

Filing Taxes After Chapter 7

When you file Chapter 7 bankruptcy, you as the debtor are required to file a 1040 tax return per usual. Your trustee will then need to file a Form 1041 for the bankruptcy estate in some cases.

Filing Taxes After Chapter 11

If you filed a Chapter 11 bankruptcy, you will likely have been in control of your assets and thus acted as the trustee yourself. This means that you will be responsible for filing both Form 1040 and 1041 come tax season.

Filing Taxes After Chapter 13

Chapter 13 bankruptcies are a little different in that the debtor pays into a monthly plan for a period of time to pay back their creditors. However, you will still have been assigned a trustee, and as with a Chapter 7, your trustee will be responsible for filing Form 1041, while you will be responsible for Form 1040.

How Sawin & Shea, LLC Can Help

At Sawin & Shea, we provide compassionate and understanding representation to all our clients. Filing your taxes before or after filing for bankruptcy can be confusing, but it doesn’t have to be stressful. Our team can offer you guidance and support to ensure the best possible outcome for your tax situation and your bankruptcy case.

The post Filing Taxes After Filing for Bankruptcy appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Bankruptcy can often eliminate most of or make it easier to pay off your debt—it simply depends on the type of debt you have and the type of bankruptcy you file. Debts are handled differently in Chapter 7 versus Chapter 13.

If you are interested in filing for bankruptcy, it’s best to consult with a bankruptcy attorney first. They can offer you guidance and recommend the best option based on the types of debt you have. They can help you throughout the entire process and even after the bankruptcy has ended when you are trying to get back on your feet.

How Debt Discharge Works

The type of bankruptcy you file will determine how your debts are handled.

In Chapter 7 Bankruptcy:

While not guaranteed, most debts are often discharged when you file a Chapter 7 bankruptcy. However, you may have to give up some of your property in return. There are exemptions depending on the property and how essential it is, but anything considered nonexempt will likely be sold to help pay off your creditors.

In Chapter 13 Bankruptcy:

Chapter 13 bankruptcies work a little differently. Instead of discharging most of your debt and using your personal property to pay off creditors, a reorganization plan is filed to dela with the debt. You will then be required to pay a monthly amount over the course of three to five years. That money will go to your Chapter 13 trustee, who will then distribute it amongst your creditors. A Chapter 13 Plan can help get you back on track with secured debts that you are behind on, like house or car payments. It can also force unsecured creditors to take what the bankrutpcy law says you can afford to pay, many times cents on the dollar. After the repayment period, any remaining debt will likely get discharged.

Debts That Are Not Discharged in Bankruptcy

There are various types of debt that cannot be eliminated no matter which type of bankruptcy you file. A total of 19 categories are listed by the U.S. Bankruptcy Code for debts that are not eligible for discharge. The more common types of debts that many debtors hold that cannot be eliminated include:

Child Support and Alimony

If you have a legal obligation to pay alimony or child support to an ex, this debt cannot be eliminated through bankruptcy. If you are behind on child support or alimony payments, you will still be required to pay what is owed after your bankruptcy case has ended.

Certain Tax Debts

Taxes that you owe to the federal or state government are sometimes dischargeable, and sometimes not. Discuss your tax debt with a bankruptcy attorney to make sure you get the most out of your discharge.

Student Loans

Most student loans are not discharged without filing a separate lawsuit in the bankruptcy asking for a court order declaring them discharged. The courts will only discharge student loans if certain requirements are met and there is no likelihood that you could repay any of the loans in a structured, income-based repayment plan now or in the foreseeable future.

Divorce Legal Fees and Debts

In divorce cases, there are often other things that are agreed upon outside of child support. For example, one partner will often agree to pay the legal fees or other debts as a stipulation of the divorce. If you are unable to pay these fees and debts, they may not be included in the bankruptcy, and you will have to find another way to pay them.

Debts That Can Be Eliminated

When you file for bankruptcy, most unsecured debts will be eligible for discharge. Some unsecured debts may still be a challenge to get eliminated, but there is no hard rule that says they are not eligible like the debts listed above. Some common types of unsecured debts that get discharged include:

• Credit card debt
• Medical bills
• Personal loans
• Utility bills
• Business debts
• Tax penalties
• Auto accident claims
• Past due rent
• Attorney fees
• Student loans

*Student loans can be particularly challenging. There are many cases where these types of debts do not get eliminated. To eliminate debt from private or federal student loans, you must be able to prove undue hardship.

How Sawin & Shea, LLC Can Help

At Sawin & Shea, we believe in providing compassionate and understanding representation to those struggling with debt. We understand how stressful and even confusing filing for bankruptcy can be. Our attorneys can help walk you through the process every step of the way. We can even offer guidance after your bankruptcy case has ended.

Contact us at 317-759-1483 or send us an email for a free consultation today!

The post Will Bankruptcy Erase ALL of My Debt? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

In this blog, you’ll learn about some of the factors you should take into consideration before filing for bankruptcy. If you’re considering filing for bankruptcy, we encourage you to contact experienced bankruptcy lawyers today.

Should I File for Bankruptcy?

When considering bankruptcy, you need to evaluate factors relating to your debt and your retirement. If you suffer from overwhelming debt that’s negatively impacting your life, bankruptcy maybe your best option.

Seniors who file for bankruptcy are often able to discharge certain debts like medical bills and credit cards, both of which are incredibly common debts for senior citizens. Debts associated with the medical industry and credit card companies can be bought by aggressive debt collectors, which can affect your overall quality of life. Certain debts can be discharged entirely when filing Chapter 7 bankruptcy, but not everyone is eligible for Chapter 7 bankruptcy. Some people have too high of an income or have assets that require making monthly payments through filing Chapter 13 bankruptcy. 

Filing for bankruptcy is a viable option when your debts affect your social security. For example, unpaid federal student debts can garnish your social security by 15%. Additional debts that can affect your social security include federal taxes, child support, alimony, victim restitution, and other federal debts.

When Should I for Bankruptcy?

Although bankruptcy is the best option for some when it comes to overcoming debt, it’s certainly not the best option for everyone. Many senior citizens fall under the category of “judgment proof,” meaning they don’t have enough assets that creditors can seize. Social Security benefits are protected from bankruptcy and creditors, so even if an elderly individual is in debt, they may not be at risk of losing much money or assets to creditors. Other assets that are protected when declaring bankruptcy include 401(k)s, 403(b)s, IRAs, and Roth IRAs.

Although Social Security is protected from creditors, there are certain factors you need to take into consideration when it comes to your debts. Your Social Security needs to be in a separate account. If it’s mixed in with your other funds, the money can be impacted by your declaration of bankruptcy. Additionally, retirement withdrawals are considered income, so your creditors can go after that money.

A reason that someone on social security may need to consider bankruptcy is to protect certain assets. If a creditor sues a person on social security that also owns real estate, those judgements will likely become judicial liens attached to their real estate. It is possible for a creditor to foreclose on that judicial lien and force a sale of the property to satisfy the debt. A Chapter 13 can protect the equity in a house. It is important to file a case prior to the creditor obtaining the judgement to avoid the judicial lien issue.

And finally, people with social security income may wish to file a bankruptcy to stop the onslaught of calls and letters that debt brings. Over the years we have helped many seniors who simply wanted the harassment to stop.

Call Indiana Bankruptcy Lawyers

Bankruptcy is an incredibly complex area of the law, especially when you’re eligible for retirement. Filing Chapter 7 or Chapter 13 may be the best option for some seniors while negatively impacting others. For bankruptcy guidance you can trust, contact Sawin & Shea, LLC. With over 45 years of combined bankruptcy service experience, our experienced legal team has helped numerous individuals become debt-free. To learn your best financial option going forward, call Sawin & Shea, LLC at 317-759-1483 or schedule a free consultation by clicking here.

The post Am I Too Old to File for Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

How Can I Wipe Out My Tax Debt?

Whether or not you can wipe out or put off tax debt collection will depend on which bankruptcy plan you choose, what type of tax you owe, how old your tax debt is and whether you filed a tax return timely. In bankruptcy you can discharge federal income taxes only if:

• You filed tax returns for at least two years before filing for bankruptcy and they were timely.
• The tax was not assessed due to audit.
• The tax debt is at least three years old.
• You meet the 240-day rule, which means the IRS assessed the debt at least 240 days before you filed for bankruptcy.
• You did not commit a crime like tax evasion, fraud, or identity deception.
• The debt is for income taxes only. Other types of taxes don’t necessarily qualify for discharge.

Can I Eliminate Payroll Taxes or Tax Penalties?

Unlike federal income taxes, payroll taxes cannot be wiped out in Chapter 7 bankruptcy. Tax penalties are eligible to be discharged when the taxes that they are based upon are dischargeable. In certain other circumstances, penalties associated with non-dischargeable taxes may also be discharged. You may be able to eliminate tax penalties on previously unpaid income tax but not payroll tax. Tax penalties for fraud are never eligible for discharge by bankruptcy because they involve a crime.

What If I Have a Tax Lien?

If the IRS has already placed a tax lien on your property prior to the point of filing for bankruptcy, then the situation gets more complicated. A bankruptcy can discharge personal liability on a debt, but the tax lien will remain attached to anything you own, and you will still owe taxes related to it, even after your case is discharged. This is a good reason to act urgently and contact a bankruptcy attorney before things go too far.

If I Need to Wipe Out Tax Debt, What Should I Do Next?

Eliminating tax debt is possible but it is one of the most difficult things you can attempt in bankruptcy. It is a tricky process to navigate alone because you will need to deal with the United States Internal Revenue Service, provide many types of proof and documentation and avoid making critical errors that could put your bankruptcy discharge in jeopardy. You will need the advice and guidance of a bankruptcy attorney who can help you pursue eliminating the tax debt you owe. Contact an experienced bankruptcy attorney and ask them about using Chapter 7 bankruptcy to discharge your tax debt.

Sawin & Shea – Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy.  We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.

The post How Can I Eliminate Tax Debts In Bankruptcy? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

If you’re thinking of filing for bankruptcy and you live in Indiana, you may be wondering whether it could eliminate your tax debt. Hoosiers can sometimes get their tax debt discharged during an Indiana bankruptcy. However, you may have received conflicting advice about whether or not it’s possible to make this happen. So let’s settle it once and for all. Here are the answers you need about discharging tax debt.

When Can Tax Debt Be Discharged by Bankruptcy in Indiana?

Indiana debtors may have their tax debt discharged under certain circumstances. If the tax debt is at least three years old, it may qualify for a discharge. This includes both back taxes owed to the Internal Revenue Service (IRS) and to the Indiana Department of Revenue. But the debts must be at least three years old at the point you file for bankruptcy.

Are There Any Exceptions?

There are some exceptions that could prevent your tax debt from being discharged during either a Chapter 7 or Chapter 13 bankruptcy. The relevant tax returns must have been filed two years before your bankruptcy. In fact, recent court rulings have indicated that filing returns late leads to the debt not being dischargeable in bankruptcy. Also, you must have filed the tax returns yourself, without the IRS filing them on your behalf. Finally, tax debt assessed within 240 days before you file your bankruptcy case is not discharged.

What If My Debt is Too Recent?

If your debt is too new and hasn’t yet reached the three-year point, you have two main options. First, you could wait until the debt hits the three-year mark, being sure to file your tax returns timely. However, in the meantime, your financial situation could get worse. Another option is to file for bankruptcy, anyway, knowing your back taxes probably won’t be discharged but many other debts will be. This creates financial breathing room to pay off your tax debt. Also, a Chapter 13 bankruptcy can create a plan under the court’s protection that can pay recent, or priority, tax as part of the debt reorganization plan.

If I Have Overwhelming Tax Debt, What Should I Do Next?

When tax debts are contributing to an overwhelming financial burden, consult a bankruptcy attorney as soon as possible. They will look at the details of your circumstances and determine key factors, like how recent the debt is, when your tax returns were filed, whether any filing/payment issues are reported and any other factors involved.

No matter which route you take to resolve your tax debt, your bankruptcy attorney will be by your side to provide valuable wisdom and counsel. With their help, you can finally shed overwhelming debt and take a positive step forward.

Sawin & Shea – Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy.  We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.

The post Can Bankruptcy Help Me With My Tax Debt? appeared first on Indianapolis Bankruptcy Attorneys of Sawin & Shea.

Around tax time, bankruptcy attorneys often receive questions about tax refunds and filing for bankruptcy. You may be wondering whether it’s a good idea to wait for a refund to arrive before you file, or whether it’s better to do it as soon as possible. You probably also have questions about whether you’ll be able to keep the money from a refund you receive, especially if you’re facing wage garnishment, repossession, foreclosure or a lawsuit. Don’t worry. These are common concerns. We’re here to help you understand your options in this situation.

How Could My Tax Refund Benefit a Bankruptcy Filing?

Because a tax refund can be an asset used in a bankruptcy proceeding to pay your creditors back something,  in general, it’s preferable to wait on filing for bankruptcy until you receive your tax refund. With your refund safely in hand, you can move forward with your next financial decision. In fact, you can use your tax refund to pay your bankruptcy attorney’s fees. However, waiting for your refund isn’t always the best course of action. Sometimes it can put something valuable at risk, like your tax refund itself, your paycheck, your car or even your home. Contact a bankruptcy attorney to be sure.

What if I’m Worried About a Garnishment, Repossession, Foreclosure or Lawsuit?

These are serious and time-sensitive matters. A wage garnishment can instantly reduce the size of your paycheck. A repossession or foreclosure can take away your car or home. And a lawsuit should never be delayed or ignored. If you have concerns like these, you might not want to delay filing for bankruptcy by waiting for your tax refund. Discuss your options with a bankruptcy attorney. Bankruptcy creates an automatic stay, or hold, on most garnishments, repossessions, foreclosures and other attempts to seize your assets.

If I File Before Receiving and Spending My Refund, Will the Bankruptcy Court Take it Away?

This is an understandable concern: Can the bankruptcy court take a tax refund? The answer is yes, it potentially can, but a bankruptcy attorney can help you prevent this. By filing for Chapter 7 or Chapter 13 bankruptcy, you hold off most seizures and create a new financial plan to resolve your debts. This may allow you to keep your refund, or at least apply it toward your bankruptcy plan, rather than having it seized as part of the bankruptcy estate.

What About My Earned Income Tax Credit?

The only part of a tax refund that can be deemed fully exempt is an Earned Income Tax Credit (EITC). The EITC is a benefit for working people with low to moderate incomes. Because the EITC is considered a welfare benefit, it is an exempt asset that is not subject to seizure by the court on behalf of your creditors. If you have more questions about the EITC, your tax refund and filing for bankruptcy, seek the advice of a bankruptcy attorney as soon as possible.

Sawin & Shea – Indianapolis Bankruptcy Attorneys

Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy.  We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.

Video Transcript

Hello, this is Richard Shea with Sawin & Shea. We received an email question today regarding “should I file my bankruptcy now, or should I wait for my tax refund?” That primarily is a fun little question we receive this time of year.

If at all possible, if it’s something you wish to wait and file your tax return first, so we can advise you on how to spend it, and then file your bankruptcy. Now usually speaking that’s if you have the luxury to wait – if you don’t have a pending garnishment or a lawsuit or repossession or foreclosure pending.

Waiting on a tax refund, for that to arrive, not only can you use it to pay your attorney fees to file a bankruptcy, but also you can use that money so that it is not seized by the bankruptcy estate in either a chapter 7 – where the trustee would actually take those funds – or in a chapter 13 where you may end up having to repay more of your debts to keep that tax refund.

As far as tax refunds go, the only portion of a refund that can be deemed exempt or protected is that attributable to earned income tax credit. Now earned income tax credit is different from child tax credit. Earned income tax credit is what you would call a welfare benefit, so therefore that is an exempt asset.

But, the short and sweet and simple of it is, if you can wait to receive your refund, by all means do so. If you cannot, well there’s ways to plan around it and make sure you get the maximum benefit. Make sure you call a bankruptcy attorney like ourselves that can walk you through that process.

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