New Bankruptcy Law - Tax Return Required
The new bankruptcy law
requires that you provide a copy of your most recent tax return before you can file your
bankruptcy application. If you haven't paid your taxes, you must pay the taxman and bring
your IRS fully current before you can proceed with your bankruptcy.
How will someone who is behind on their taxes come up with immediate cash? This is yet another hurdle law makers have erected to make bankruptcy more unavailable to those whose bills are in arrears.
Under Chapter 7 a single
year tax return will suffice but for those entering into financial slavery (excuse me),
Chapter 13, you'll need tax returns for the four previous years.
File Your Taxes Before Bankruptcy
In order to qualify for a chapter 7 bankruptcy the new bankruptcy law requires that you file your taxes. This may sound like a simple requirement but you'd be surprised how often it's overlooked.
The
bankruptcy court will need a copy of your return and creditors may also request a copy so
you'll need copies.
Document Other Income
You'll need to provide copies of your most recent pay stubs to document your income. Usually you'll need a full 60 days worth organized into a neat stack.
If
you have other sources of income you'll have to come up with some way of documenting the
source and amount of the income. Ask your lawyer if a signed letter from the source will
do or whatever other documentation the local court will accept.
Child Support Alimony and Bankruptcy
Under the new bankruptcy
law child support and alimony debts enjoy a much higher priority than before. The fear is
that in the past unscrupulous individuals used bankruptcy to escape paying child support
or alimony. The new law now attempts to slam that door shut. Under the new bankruptcy
law such abuse will become much more difficult. These expenses used to be placed at
priority level seven but now will appear at level one - right at the top of the list.
Anyone attempting to escape alimony or child support payments through bankruptcy will
be sadly disappointed.
New Bankruptcy Law and the Charitable Contributions Loophole
This new bankruptcy law
provides precious few loopholes but here is one potential loophole that just might be of use to
you, particularly if you can find a clever bankruptcy attorney. Under the new law up to
15% of your income can be given to a charity. If your income is too high to qualify for a
Chapter 7 bankruptcy, here is a way you might bring it down to below the threshold and get the
Chapter 7 debt
relief you desire. Once again - ask your attorney for guidance.
New Financial Management Training Requirement
Not only do you have to complete a credit counseling program during the six months before you file bankruptcy, but now under the new bankruptcy law you also have to complete a course in "financial management".
Since these silly courses are required by law, you can expect the fees you'll have to pay will be much more than for similar courses on other subjects. And you can be sure that since these courses are meant to punish, not inform - they will deliver little or no meaningful content.
