bankruptcy

[PDOTDOT]

What is the name of your state? Indiana.

We are not sure if we have enough debt to file bankruptcy. We have over
$20,000 owed in back taxes (income tax). Can we claim at bankruptcy? Also, because of our history of slow credit (nothing ever reposessed or previous bk, foreclosures, etc) our mortgate has gone from 8.8 percent to over 11%. That brings our mortgage payment to over $1600/month, which there is no way we can pay. We owe more on the house than what it is worth. What happens to the house? Help!!

 

[ALC]

What I have learned from reading these posts is that student loans and taxes are not discharagble in a bankruptcy. There are businesses that I have seen advertised on television that settle IRS debts. I own a small business and one of my clients I believe has a business that tries to help people with IRS debts. I could probably get you her phone number.

 

[spoiler]

you do not have to have a certain amount of debt to file for chapter 7, but you can't have more than $100 a month let over after living expenses post bankruptcy.
If you don't want to keep the house you can give it back. It will go into foreclosure and then it will be sold and you won't be held responsible for the rest of the balance.
You can also reafirm the house...but if you can't afford it you probably don't want to. In some states you are able to voluntarily make the house payment, until you either pay off the mortgage or it goes into foreclosure (but you have to be up to date on your payments and I am not sure if indiana has this option.)

Here is what I found while surfing the internet about taxes and bankruptcy on several pages.-this information could be out of date though...so talk to a few lawyers."Given the right combination of timing and facts, a chapter 7 case can provide for the complete discharge. Whether an individual's income tax obligations are eligible to be discharged either partially or entirely in a chapter 7 depends on five main criteria: (1) the income taxes must be personal income taxes, (2) the income taxes must relate to a tax year for which the tax return's original due date antedates the bankruptcy filing by at least three years, (3) the taxes must have been assessed at least 240 days prior to the bankruptcy filing, (4) the tax returns must have been filed by the taxpayer more than two years prior to the bankruptcy filing and (5) the tax returns must not have been fraudulent and the taxpayer must not have engaged in any willful tax evasion. "

 

[Ladynred]

In other words, if you filed those past tax returns when they were supposed to be filed and the tax debt is more than 3 years old, then the taxes may very well be dischargable. Consult with a lawyer.

If you cannot afford the house payments, then let it go. You say you have no equity, that you're upside down on the loan. You would be able to keep the house, but if you can't afford the payments, then you walk away from it, give it back. Its unlikely that the bank would renegotiate a lower payment in return for a reaffirmation. If you give up the house, the debt is discharged and you walk away from it with NO liability.