Effective January 22, 2011, New Yorkers filing for bankruptcy will have the added benefit of higher bankruptcy exemptions. The major change is thanks to Governor David Patterson, who signed the bill into law (his last while in office) just before Christmas last year.
Exemptions are the legislative tools that a debtor uses to protect their property when they file for bankruptcy. The purpose of exemptions is to assure that debtors are able to continue living a productive economic life. If a debtor loses all of their belongings when they file bankruptcy, they will have a more difficult time getting back on their feet. The more property that ...
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Eliminating Taxes: What Taxes are Dischargeable in Bankruptcy?
It is commonly misunderstood that bankruptcy cannot eliminate any tax liability. Although treatment of tax liability is one of the most complex aspects of consumer bankruptcy law, the Bankruptcy Code does offer many debtors substantial income tax relief. Whether or not your bankruptcy filing relieves your tax debt depends on several factors including the nature and the status of tax liability and the type of bankruptcy proceeding. Remember, only individuals can discharge certain tax debts, not businesses.
An individual can discharge debts for taxes in Chapter 7 bankruptcy only if all of the following conditions are true:
They are only ...
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Am I Required to Turn Over my Tax Refund in a Chapter 13 Bankruptcy Case?
This is a complicated question and the answer depends on your specific Chapter 13 Bankruptcy plan. In general, if your Chapter 13 plan provides for 100% payment to all creditors, you will be able to keep your tax refund. However, if the plan does not provide for 100% payment to all creditors, including general unsecured creditors (such as credit cards), then you must remit any tax refunds received during the life of your plan to the Chapter 13 trustee, in addition to your regular monthly plan payment to be included in the distribution to creditors. Here’s why:
When filing a Chapter 13 case, a debtor is agreeing to pay all projected ...
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