W. Chris McGough,
Attorney at Law
50 N. Florida Street
Mobile, Alabama 36607
Phone: (251) 478-1187
Toll Free: 1-877-478-1115
Fax: (000) 000-0000
If you or a family member is suffering from serious debt problems, please contact
[Your Firm Name Here], Bankruptcy Attorneys At Law for an initial consultation and review of
We Provide Affordable Bankruptcy Representation
W. Chris McGough of Greene & Phillips, Attorneys At Law,
represents clients in bankruptcy and debtor-creditor matters.
If you need to be out of debt, then call now.
We can make bill collectors leave you alone!
A Few Facts About Bankruptcy......
Bankruptcy WORKS for most people. But there's a catch... ...the legal system is
a complex maze of laws, rules, and regulations. The creditors have aggressive legal
counsel to fight you. That's why you need to know the facts before its too late.
The filing of a bankruptcy action is an important legal right.
The Constitution of the United States, Article I, Section 8, Clause
4, provides Congress with the power to establish uniform laws on
the subject of Bankruptcies throughout the United States. That
provision was included by our Founding Fathers in reaction to the
"debtor’s prisons" of colonial times, in which individuals could be
imprisoned for their debts. Since the year 1800 this country has
had formal bankruptcy laws for the benefit of U.S. residents. Our
current bankruptcy code was adopted in 1978, providing a major
overhaul of the bankruptcy system.
++++++Add 2005 Law Data Here!!!
The Bankruptcy Code provides for five separate types of bankruptcy
proceedings. Since Chapters 9 and 12 are available only to municipalities
or family farmers, respectively, they will not be addressed in detail.
A Chapter 7 liquidation proceeding is available to individuals, partnerships,
and corporations. The debtor is allowed to keep exempt assets.
Call us for more details about exempt assets.
For individuals filing Chapter 7, most debts, including some tax obligations,
are discharged (see discussion below). Some debts, including recent tax
obligations, trust fund obligations, child support and alimony generally cannot
be discharged. Other debts may not be discharged if the creditor can prove
improper conduct on the part of the debtor.
A Chapter 13 bankruptcy, or "wage-earner reorganization" is available only to
individuals with regular income. It requires that the debtor file a plan providing
for payment to creditors over a period of up to five years. The benefits of a
Chapter 13 include the ability to reinstate a home mortgage that is in default,
stop IRS collection efforts while payments are made, the ability to retain
non-exempt real estate and personal assets, and a broader form of discharge.
A Chapter 11 reorganization is available to individuals and businesses. Due to
the higher court fees, reporting requirements and legal fees involved in a
Chapter 11, it is seldom used by individuals. However, it may provide individuals
and businesses with an opportunity to reorganize their debts and make
arrangements to pay all or a portion of the debts, or sell the business, while
obtaining protection from creditors. A Chapter 11 generally provides more
flexibility than a Chapter 13 reorganization for individuals.
Discharging Taxes in Bankruptcy
Most individuals are unaware that they may be able to discharge some or all
of their older income tax obligations in bankruptcy. Dischargeability of these
taxes depends on whether or not they are "priority" claims. Tax
obligations which are non-priority are dischargeable.
The Bankruptcy Code provides that taxes assessed by a governmental agency
which are based on income (income taxes) lose their priority status when:
Certain penalties and interest may also be dischargeable. Penalties designed to
compensate the agency for actual loss are non-dischargeable while those which
are punitive in nature may lose priority and become dischargeable. Employment
taxes are not dischargeable regardless of the age of the tax claims. This is true
whether the obligation arose because the debtor was the employer or a responsible officer.
the tax return, with all extensions, was due more than three years prior to filing for bankruptcy protection;
a return was filed at least two years prior to the filing for bankruptcy relief;
the tax obligation was assessed at least 240 days prior to filing; and
the tax payer is not guilty of fraudulent conduct or tax evasion and has not signed an offer in compromise or other settlement agreement.
Bankruptcy protection also provides a means to stop IRS collection procedures
for a period of time while payments are made. Bankruptcy Code § 362, which
grants debtors automatic relief from collection activity, applies to the IRS in
the same manner as other creditors. The period of relief depends on many
factors, including whether the tax payer files for relief under Chapter 7, 11 or
13. Priority and non-priority taxes can be treated in a Chapter 11 or Chapter
13 plan and paid out over time. The bankruptcy stay remains in effect until
the Plan is completed or the case dismissed. This may allow a business which
has been seized by the IRS to re-open and operate under a Chapter 11 Plan
without interference from the IRS or other creditors. The filing of a Chapter 7
stays all collection proceedings until the entry of a discharge or dismissal of the case.
This description is not intended as a substitute for competent legal
representation, but merely as a guide to help you decide whether you need
the services of a qualified attorney.