For those facing financial challenges and seeking a fresh start, bankruptcy options exist to help eliminate most, if not all, of the debt.
The founder of THR & Associates was in bankruptcy court recently in Illinois to discuss his back tax debt. Seeking debt relief, both the company and the founder filed for bankruptcy towards the end of this past year. The company conducted a road show selling collectible and other items prior to filing for bankruptcy. The bankruptcy trustee based in Illinois has come to the conclusion that the founder’s remaining personal assets will likely be used to pay the $3.4 million owed to the IRS in back taxes and penalties for unpaid personal income tax. The state revenue department in Illinois has filed a claim for $1.3 million for unpaid individual, sales and employee withholding taxes. The founder is also in the middle of a hotly contested divorce in which his wife claims ownership of much of the assets. The judge in the case acknowledged that it has been difficult to determine which assets belong to the company and which belong to the founder.
Individuals seeking debt relief have a couple of consumer bankruptcy options available to them. Consumers facing financial challenges can file for a Chapter 13 “reorganization” bankruptcy or a Chapter 7 “liquidation” bankruptcy. Likewise, businesses seeking debt relief have the same options through a Chapter 11 business “reorganization” bankruptcy or a Chapter 7 bankruptcy. Either type of bankruptcy, reorganization or liquidation, can help eliminate debt and provide a fresh start to consumers or businesses seeking financial stability.
Some debt, however, cannot be discharged in bankruptcy and that generally includes tax debts. In some cases, however, the debtor can meet certain criteria for discharge of federal tax debt. Other types of debt that cannot be discharged in bankruptcy include child support and student loans unless the party filing for bankruptcy can show an undue hardship.
For anyone facing overwhelming debt, seeking to eliminate debt can be a stressful process. Several options, however, exist to help create a fresh start and a qualified bankruptcy attorney can help counsel consumers on the best available options.
Source: SJ-R.com, “IRS slated to collect most from THR founder’s bankruptcy,” Tim Landis, Jan. 16, 2013.