QUESTION
need bankruptcy due to bad health problems
Asked on May 04th, 2013 on Bankruptcy - Pennsylvania
More details to this question:
can't work,been sick for many years,did not want welfare or disability so i paid rent and credit card payments with yard sale and flea market money selling off all my belongings and inherited items.my credit was number one in my life.i live in poverty under$15,000 a year.paid rent and credit card payments and many times had no food and gas money.my health got worse. i'm close to 60.i need bankruptcy,a laywer told me the irs will want a 1\3 of all money made from me because i never filed income tax for years on those yard sale and flea market sales that went to my credit card payments and rent.that would be more than my credit card debt, i'm alone and do not know what to do.my savings is almost gone and i only own a 1994 junker for a car,i own nothing else....i am told i am eligable for bankruptcy but i'm terrified of the irs situation .....thank you
1 ANSWER
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When you are in a situation in which it is difficult or impossible to repay your debts, you have several options. One is to negotiate with your creditors. However, that is time consuming, uncertain and possibly pointless if you do not have the ability to pay them. The second option is to ignore the debt. The creditors will hassle you, possibly sue you and could seize your assets and bank accounts. The third option is bankruptcy.
There are two types of bankruptcies for consumers, Chapter 7 and 13. The former is generally for those who simply require the elimination of unsecured debt such as credit cards. The latter is generally for those who have fallen behind in secured debt such as a mortgage. Chapter 13 allows you to repay any arrears over five years.
In each case, the filing of the bankruptcy creates what is known as an automatic stay. That prevents any creditor from taking any action whatsoever. They cannot call you, write you or sue you. Ultimately, when you receive a discharge order, the automatic stay becomes permanent.
Bankruptcy has nothing to do with your taxes. Whether you file your returns or not is up to you. However, if you file close to filing a bankruptcy and owe taxes, bankruptcy won't eliminate those taxes. You coudl file your returns and wait a few years until the tax debt could be discharged.
Answered on May 09th, 2013 at 3:46 PM