special services
Ryan Law Firm, P.A. offers a variety of special services to help clients deal with specific financial issues. Some of these services, such as driver’s license restoration, foreclosure defense and workouts may seem unrelated to the bankruptcy process.
Other services, such as discharging tax obligations, seem to be contemporaneous with, and related to, the bankruptcy process. In this section, we provide some information on a few of the special services we provide. We welcome inquiries with regard to additional services not specifically dealt with in this section.
Discharging Tax:
In general, business withholding taxes (941 taxes) and personal income taxes (1040 taxes) are NOT discharged by a bankruptcy case filing. An individual’s liability for withholding taxes (941 taxes) is never dischargeable by a personal bankruptcy case filing. However, under certain very specific circumstances, some income taxes may be dischargeable
IF:
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The income taxes owed are for tax periods that are at least three (3) years prior to the date your bankruptcy case was filed. Your tax returns for these periods were timely filed or filed at least two (2) years prior to the bankruptcy petition date. The taxes were assessed at least 240 days prior to your bankruptcy petition date. There were no offers in compromise in effect that waived the statute of limitations or the time has passed on these extensions. There has been no intentional evasion of the assessment or payment of the taxes.
If you believe you may owe some tax liabilities that may be dischargeable, make sure to mention this to, and discuss this with, the attorney.
Forgiveness of debt - Tax Liabilities
There is a provision of the U.S. Tax Code which allows the Internal Revenue Service to assess "forgiveness of debt" tax liability against a party whose debt is forgiven.
This provision sneaks up on people in various ways. For example, if a person “short sells” a parcel of real property where the bank receives less than the total amount owed on the debt, the bank may issue a notice to the IRS, and the party “selling” the property can be assessed income tax liability on the portion of the “forgiven” debt. This can also occur in a foreclosure situation. For example, if you “short sell” a parcel of real property for $250,000 and the total debt owed was $300,000, then there could be $50,000 of “forgiveness of debt income.” If you are in a 30% income tax bracket, you could then owe the IRS approximately $15,000 in income taxes as a result of this transaction. This tax assessment may not be dischargeable in a subsequent bankruptcy case. However, if you timely file for bankruptcy protection before or immediately after the foreclosure sale or the scheduled short sale, the filing of the bankruptcy case prevents the assessment of these resulting income taxes.
If you think this situation could apply to you, make sure to mention this to, and discuss this with, the attorney.
Lien Stripping
Certain provisions of the Bankruptcy Code allow a debtor to bifurcate (separate) a claim into its secured and unsecured components. A claim is secured to the extent of the value of the collateral that secures the debt. If there is more owed on the debt, than there is value of the collateral, then the remaining debt is determined to be unsecured. For example, if you owe $12,000 on a car loan, but the vehicle is only worth $10,000, then the Court can separate the claim into a $10,000 secured debt - which you must pay in order to keep the car - and a $2,000 unsecured debt - which can be discharged. However, under recent amendments to the Bankruptcy Code, the Debtor can only “strip” a car lien, if the car was purchased at least 910 days (2 ½ years) prior to the bankruptcy petition date.
If you believe you are paying on secured debts that might be subject to a “lien strip”- i.e. the current value of the collateral is less than the amount of the debt owed, be sure to mention this to, and discuss this with, the attorney.
Stopping Foreclosures
The filing under any chapter of the Bankruptcy Code will stop a foreclosure case at any stage in the foreclosure procedure, up until the time the property is sold at a scheduled foreclosure sale. The filing of a bankruptcy creates an automatic stay or automatic freezing of all creditor action against the bankrupt Debtor or the Debtor’s property.
In a Chapter 13 bankruptcy, the Debtor may choose to keep the real estate under foreclosure, by proposing a plan to his secured creditors, under which he will be required to make the regular monthly mortgage payments and other required regular monthly payments related to the property, as well as paying a portion of the arrears on the property, over a period of time not to exceed five years.
In a Chapter 7 bankruptcy, the Debtor will normally give up or surrender the real estate under foreclosure, but will eliminate or discharge the balance owed on the mortgage. Alternatively, the Debtor may be able to keep various parcels or real estate depending on the values of the property, the amount of debt, and the ability to pay on a going forward basis. Some Debtors may try to sell their property under foreclosure by short sale, or for an amount less than what is owed on the mortgage, if the mortgage holder agrees to such sale. However, if the short sale takes place before a Debtor files bankruptcy, the Debtor may have adverse tax consequences.
Our office can advise you as to the best options for you in your particular circumstances.
Driver License Restoration
When a person is involved in an automobile accident and they do not have sufficient automobile insurance to cover the damages, it is common for the State of Florida to revoke a person’s driver license for financial irresponsibility. The lack of a driver license creates great difficulties for that individual in getting to work and conducting normal activities in their life. The filing of a bankruptcy case may allow a person to discharge money judgments resulting from the automobile accident and will allow the Debtor to obtain their driver’s license. However, the filing may not resolve issues and debts resulting from fines imposed due to moving violations, etc.
If you have been involved in an automobile accident that resulted in a monetary judgment against you, it will be necessary to provide the attorney with a copy of the police report from the accident, and all contact information for all drivers and insurance companies involved in the accident.
Creditor Representation
Creditors frequently do not collect all they are due when someone they know files for bankruptcy protection. Ryan Law Firm, P.A. represents all types of creditors in all types of bankruptcy cases and proceedings. The specifics of any creditor representation will be discussed in a free initial consultation.
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special services areas
bankruptcy will stop a foreclosure case at any stage in the procedure, (up until the time the property is sold at a scheduled foreclosure sale). Ask us how to stop a foreclosure action in its tracks!
creates great difficulties for an
individual in getting to work and
conducting normal activities in
their life. Ask us how to reinstate your driver's license.