Darrin Mish: Hi. Today we’re going to talk about the discharging of taxes in bankruptcy again. And that’s because my good friend, attorney Jonathan Ginsburg of Atlanta, Georgia, posted a comment on my blog for my June 12 blog post on the discharging of taxes in bankruptcy, and he made a couple of very interesting points. The first thing that he said that was liens can often survive a bankruptcy in a Chapter 7, and he also indicated that taxes can be discharged in a Chapter 13 as well. So I’m going to address both those points.
But before I do that, I want to direct you to Jonathan’s excellent website, at thebklawyer.com. It’s a really great blog. It has to do with filing of bankruptcies in general and filing of bankruptcies in Georgia in particular. So I want to encourage you to go check that out. That’s thebklawyer.com.
First of all, he said that liens can survive in a Chapter seven bankruptcy, and he is right. If you own real property, which is real estate, and a lien is filed while you own that real estate, then the lien attaches to the real estate. In a bankruptcy, if you have equity in that real estate, the lien is going to survive that bankruptcy most likely.
Interestingly, if you don’t have equity in that property at the time discharge of the bankruptcy, then we can often get the IRS to release that lien because post petition property is not supposed to be subject to lien; the liens are supposed to be discharged in that scenario.
Here is what that means. If you did not have equity at the time of the bankruptcy, then the IRS is not entitled to your after acquired equity. Hopefully that makes sense to y’all.
Number two, he also indicated that taxes can often be discharged in a Chapter 13, and that is also true. In a Chapter 13, the Bankruptcy Court uses the IRS’s financial standards to determine the debtor’s ability to pay.
You really don’t want to be there, because the IRS financial standards are really unreasonable, but in fact, taxes can be discharged in a Chapter 13. We’re finding that more and more tax bankruptcies can be filed and not subject to a Chapter 13, which is where you want to be.
If you are very interested in that, then give us a call at 888 438 6474, and maybe we can do a bankruptcy analysis on your case. Otherwise, take care, and bye for now.