There are a number of debts that cannot be discharged when you file for bankruptcy. These debts need to be discussed with an Iowa bankruptcy lawyer.

While filing bankruptcy under Chapter 7 will give you a fresh start on your financial life, there are some debts that you cannot discharge. Some of those non-dischargeable debts include, but may not be limited to:

• Alimony
• Taxes owed the IRS
• Liens
• Student loans
• Back child support
• Car loans (unless you surrender the car to the creditor)
• Mortgages (unless you surrender the home to the creditor)
• Fines/penalties owing to government agencies
• Debts incurred as a result of larceny or embezzlement
• Debts not reported in the bankruptcy filing
• Recent purchases of non-essential items
• Debts owed for luxury goods/services charged within 90 days of seeking bankruptcy protection

If you have chosen to file a Chapter 7 bankruptcy, you may not be allowed to keep all your assets. However, most of the exemptions allowed under federal and state law happen to be large enough to cover most of your standard items of personal property. If the value of an item of personal property in question, such as a car, is higher than the allowed state exemption, then you (the debtor) may need to sell it or “buy it back from the bankruptcy estate/trustee” in order to pay down your debt. These are things that need to be discussed with an Iowa bankruptcy lawyer.

Property taxes may not be discharged by bankruptcy. However, there are some federal taxes that may be, provided they meet certain specific conditions. For example: federal income tax may be discharged provided that the return was due to be filed more than three (3) years prior to your bankruptcy, and provided that you filed the return more than two (2) years prior to the bankruptcy, and provided that the tax was assessed at least 240 days prior to the bankruptcy, and provided that you did not avoid paying your taxes or file a fraudulent return. This is a complex area, and to completely understand it, it is best to consult with an Iowa bankruptcy lawyer.

It should also be noted that if you have any debts or fines owing that accrued because of illegal behavior, you will still be responsible for them when you declare bankruptcy. For example, if you were charged with driving under the influence, if you have a collection of traffic tickets or have court ordered restitution to pay etc.

Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact him, visit https://www.iowachapter7.com or call 1.877.888.1766.

The Internal Revenue Service (IRS) may seize a tax refund at any time. Sometimes this is done in error.

Filing bankruptcy does not stop the IRS from collecting tax refunds before the process is started. What many people do not realize is that if the bankruptcy trustee is the one behind the seizure of a tax refund, the refund will not be forthcoming. It will be used to pay creditors. On the other hand, if the bankruptcy trustee did not seize the tax refund, the seizure can be corrected.

When it comes to bankruptcy, the courts view the IRS as a creditor, just like any other bank, credit institution, or company that is owed money. If the IRS moves to seize someone’s tax refund, they must advise the individual of their actions, and include the reason for doing so. For example, if the reason is to pay back taxes written off in bankruptcy, contact your lawyer, the bankruptcy trustee and the IRS promptly. You will need to provide proof your bankruptcy has been discharged to correct this error and get your tax refund back.

Why call the trustee? They have a great deal of latitude to file motions to seize funds and redirect the money to pay creditors. Letting the trustee know the IRS seized a tax refund may trigger the legal process to have that money returned. Provided the trustee is able to demonstrate the IRS acted illegally to seize the refund in the first place, the motion should result in the money being returned.

There are instances in which you may owe more in taxes than you expected. If you file bankruptcy, the IRS might audit your previous tax returns, to see if you made any extra cash. They could then seize the refund to pay for the extra owing they found in your records. This extra money is usually not written off in bankruptcy, as you did not know the debt existed. Despite the fact this kind of gold mining in a debtor’s past tax records is unsettling and seems underhanded, it is legal.

In both Chapter 7 and Chapter 13 bankruptcy proceedings, bankruptcy trustees may file motions to seize tax refunds to pay creditors and back taxes owed the IRS. In a Chapter 7 filing, the liquidation of assets takes the tax refund and uses it to pay off the maximum amount of the debt. The rest is written off. In a Chapter 13 filing, the taxes are seized to roll them into an individual’s court-approved payment plan.
Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact him, visit https://www.iowachapter7.com or call 1.877.888.1766.

There are some circumstances in which federal taxes may be discharged in a bankruptcy proceeding.
While it is possible to include taxes owed the IRS when you file for bankruptcy protection, there are very strict conditions that need to be met. If you are considering doing this, you must seek the experienced legal counsel of an Iowa bankruptcy lawyer.

If you are filing a Chapter 7 bankruptcy, which is by far the most common bankruptcy declared in the U.S., federal income taxes may be discharged only if the taxes in question were due to be filed more than three (3) years ago, and were actually filed more than two (2) years ago, and were assessed on previous returns at least 240 days prior to seeking bankruptcy protection, and you did not file a fraudulent tax return or try to avoid paying taxes. The issue is that if you are seen to have made an effort to pay the taxes, but just did not have enough funds at your disposal, you may be able to discharge your federal taxes.

The courts may consider discharging a tax debt if the IRS has not already filed a tax lien on your assets. If they have, the lien will then carry over through the bankruptcy, meaning the IRS may still seize your property to collect on your debt. By and large, debtors may find this process more beneficial for them, instead of agreeing to what the IRS refers to as an “offer in compromise.” That would, if the debtor accepts it, mean they must make payments for a long time to come.

Federal tax liens are a tricky area, and you really need to understand how this process may work, by consulting with an Iowa bankruptcy lawyer. For instance, any federal lien filed against property prior to a bankruptcy, should only attach to the equity you have at the time the bankruptcy petition is filed.

Make certain before you file for bankruptcy protection that you are up-to-date on all of your tax returns and amendments before going to the 341 meeting. The fact is there are a large number of bankruptcy trustees who refuse to have a 341 hearing if you are missing tax returns for the last four years. If information is missing, the trustee will not know if you have non-dischargeable tax liability, which makes a difference in how your case is handled. In other words, be prepared before filing Chapter 7, and do it in partnership with an experienced Iowa bankruptcy lawyer.

Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact him, visit https://www.iowachapter7.com or call 1.877.888.1766.