Tuesday, November 10, 2015

Bankruptcy Relief from IRS and Georgia Tax Debts

Most people are unaware that bankruptcy can be a useful tool in resolving tax debts.   Generally speaking,  if a Georgia or IRS debt for income taxes is over three years old you can obtain a discharge in Chapter 7.   If it is less than three (3) years old, you can consider filing a Chapter 13 bankruptcy or a Chapter 11 bankruptcy and pay this debt over time.

The benefit to this is that interest and penalties stop while you are making payments via a plan, which makes this a better deal than simply working out a payment plan with the IRS or Georgia.    I run into people who have been making payments for years under a payment plan, but the penalties and interest exceed what they are paying.  In other words,  the debtor will owe this money forever.

What if you have failed to file over years because you're afraid of the IRS and Georgia?  I recommend that you go ahead and file your taxes.   When the tax authorities contact you, work out the lowest possible payment plan.   I don't care if it doesn't even cover the interest and penalties.   So long as you are paying, the government is happy.  Make it a priority to pay your current taxes.   After three years of paying on the old taxes, then file your Chapter 7.

Another issue is what if I have failed to pay payroll taxes or sales taxes on my business?  Although the business owes the taxes, the IRS and Georgia will go after the person responsible for these payments.  In one case, a poor lady was hired by some shady businesses to organize and pay their payroll taxes.  The shady businesses failed to give her enough money, and the IRS went after her personally because she wrote the checks!!!  The best advice for this is to shut down the business, and wait for the authorities to chase you.  Typically the IRS and Georgia will accept the basic amount owed without penalties and interest from an individual   Please call if you have any questions.

Please visit my website at tomtierneylaw.com

Please call if you need legal representation to Thomas F. Tierney at (770) 631-1100 or e-mail at tierneylawyer@yahoo.com   Thomas F. Tierney is an attorney who represents clients in south metro Atlanta, including Fayette County, Coweta County, Peachtree City, Tyrone, Fayetteville, and Newnan Georgia.




Monday, November 2, 2015

Do I have to file bankruptcy? What are the alternatives?


There are basically two (2) reasons to file for Chapter 7 Bankruptcy.  The first is to repair your credit.  I know, this seems contradictory.  But if you ever have looked at your credit report you will understand.  Every month there is a list of your debts, showing whether good payments have been made.  If you are simply letting the bad debt sit there, every month your credit is getting worse.

Do not be fooled by a debt being marked "Charged off".  Often this just means that the debt was sold at a discount to some other creditor.   You can still be sued for a "charged off" debt.  The worst is when you have old debt and are waiting for it to fall off your credit.  After years you might still be sued for the debt.   Here is an article about a woman who won a judgment against Midland Funding when Midland failed to show up for Court.   This shows how all this works.  Charged off lawsuit

So the first advantage to filing bankruptcy is that all of  your debt will show "discharged", so you will no longer owe the money.  Imagine if you are a bank and two people request a loan with similar credit history.  One shows debts "charged off" and the other shows discharged in Chapter 7.  Who would you give a loan to?  As the person who filed bankruptcy no longer owes the debts and as this person cannot file another bankruptcy for 8 years, you would more likely provide credit to the bankrupt person.

Bankruptcy provides a fresh start to your credit, and if used correctly can greatly improve your credit.

The other good reason to file bankruptcy is to protect your income and assets.   Once a creditor obtains a judgment against you the creditor can garnish your wages and your bank account.  A bankruptcy will stop the creditor from such actions.

An alternative to bankruptcy can be a simple as saving money to make an offer to the creditor.  If you were to save $500.00 per month in a year you would have $6,000.00 saved.  You may be able to offer a settlement to your creditors, especially on old "charged off debts".  For example, a collection agency may take 50 cents on the dollar, but only on "cash" offers.  So if you have saved $6,000.00 you may be able to settle a $12,000.00 debt.   At that point your credit would reflect paid in settlement, which is better than leaving the debt or filing bankruptcy.


Please visit my website at tomtierneylaw.com

Please call if you need legal representation to Thomas F. Tierney at (770) 631-1100 or e-mail at tierneylawyer@yahoo.com   Thomas F. Tierney is an attorney who represents clients in south metro Atlanta, including Fayette County, Coweta County, Peachtree City, Tyrone, Fayetteville, and Newnan Georgia.