Woman burdened with tax debt

Can You File Bankruptcy for Taxes in Wisconsin?

Bankruptcy protection is a handy answer to many people’s money woes, but the law has its limits. If you’ve got tax debts that you’d like to resolve by filing for bankruptcy, you need to understand the essentials.

Bankruptcy Basics

Bankruptcy protects consumers by helping them resolve their debts and stopping harassment by collectors. It can also give debtors welcome breathing room before they attempt to make a rebound.

Tax Debt and the Automatic Stay

The automatic stay is a freebie of sorts — It provides temporary relief even if the court denies you bankruptcy protection. What’s more, it goes into effect the instant you file.

While active, the automatic stay bars creditors, such as the IRS, from trying to collect your debt balance. Creditors can ask the court to lift the stay so that they can keep coming after you. Although judges won’t remove your temporary protection without a good reason, you may be less likely to receive a stay after filing multiple times.

The End Goal

Automatic stays only last during your bankruptcy case. The real objective of filing is to convince the court that you’re worthy of more permanent protection.

Bankruptcy involves the legal discharge, or cancellation, of outstanding debts that you lack the means to pay. Different types of filings, such as the overwhelmingly common Chapters 7 and 13, have distinct rules for the kinds of debt they’re allowed to discharge.

What makes taxes bankruptcy eligible?

To be discharged, your tax debts must have already been three years old when you filed and pertain to business or compensation-related income. You also need to have filed an on-time tax return no less than two years before seeking bankruptcy.

By law, the IRS is required to assess, or record, all overdue tax liabilities. Your IRS assessment must have occurred at least 240 days before you seek bankruptcy.

Bear in mind that you’ll need to be on your best behavior during the case. For instance, skipping a return or missing your current-year tax deadline might result in your bankruptcy petition’s dismissal.

Using Bankruptcy for Taxes

Bankruptcy is an ideal fresh start for many Wisconsin taxpayers. Considering that American consumers struggle beneath about $4 trillion in debt, it’s not unreasonable to assume that someone with tax liabilities might also need relief elsewhere. Filing for Chapter 13 or Chapter 7 bankruptcy could be a viable answer.

Not every debt qualifies for bankruptcy. Depending on your tax circumstances, you might only receive partial relief. Considering a bankruptcy filing is still worth it, however, because it might be the one thing that turns your situation around. Learn whether it’s the right move for you by contacting the Burr Law Office team. Call 262-827-0375 for a FREE tax debt relief consultation today.

Filing for Bankruptcy? Here’s What to Know About Your Tax Debt

Filing for bankruptcy won’t magically solve all of your money problems. What it can do, however, is reduce some of your hardships. When it comes to your overdue tax burdens, you may get some relief. Does bankruptcy clear tax debt? Here’s what to know about the complex rules and why you might need legal help.

Understanding Bankruptcy

Being bankrupt doesn’t just mean that you can’t pay your debts. It’s a specific type of legal status with roots in constitutional law, and you have to petition a court to leverage the benefits. As you might expect, this process includes a variety of rules.

A Good Example: Chapter 7

Imagine that you file for Chapter 7 bankruptcy in Wisconsin. This widely used form of protection lets you transfer your assets, or properties, over to a third party. The third party, or trustee, then sells them and uses the money to pay your creditors.

Chapter 7 and Taxes

Does bankruptcy clear tax debt? It all depends on your situation and ability to build a strong, evidence-backed case.

Chapter 7 only lets you eliminate tax debt under specific circumstances. For instance, you’ll still need to file your taxes during your bankruptcy case, and you need to have filed a previous return at least two years before seeking protection. You also can’t have previously taken unlawful actions, such as lying on a return or trying to hide non-exempt assets, to evade taxes or mislead the court.

The specifics of the tax debts that you want to discharge also matter. Chapter 7 only excuses income tax debt that’s at least three years old at the time of your filing. In addition, the IRS needs to have assessed the liability at least 240 days before your bankruptcy petition becomes formal.

If you owe money in penalties from missing a payment or took on more tax debt recently, then these liabilities won’t be excused. It’s also important to understand the case-by-case limitations of the rules: As various cases in the Eastern District of Wisconsin Bankruptcy Court have shown, things like tax refunds may not be protected from claims.

The Value of Filing for Bankruptcy

Why file for protection if you have to jump through so many hoops? When you work with a reputable attorney like Burr Law Office, there are many potential advantages.

Chapter 7 has the benefit of immediately stopping your collectors from pursuing repayment. This temporary relief, also known as an automatic stay, only lasts while your case is going through court, but it can be a huge perk if you’re struggling financially. What’s more, the stay goes into effect the instant you file even if you don’t eventually receive approval.

Chapter 7 filings can also be quick compared to alternatives, such as Chapter 11 and Chapter 13 bankruptcy. Although these options have their benefits, they require you to come up with a repayment plan, which can take time.

Filing for bankruptcy has the potential to relieve you from overbearing debt. Even if it doesn’t clear all of your tax debt, the mere act of giving you breathing room may make it easier to adapt and pay what you owe.

Want to learn more about the ins and outs of seeking bankruptcy protection in Milwaukee or Waukesha? Talk to a legal tax debt adviser at the Burr Law Office. Call (262) 827-0375 today.

The Truth About Bankruptcy

I’m sure there aren’t too many people in the Milwaukee area who would be surprised to hear that the vast majority of people in southeastern Wisconsin, and America in general, have faced financial hardship at one point or another throughout their lives. There are a whole host of reasons people face these hardships, and there is a huge variance in how long these hardships last. For some people, their hardships may only be temporary and for a very specific and limited cause, and it’s very easy for them to see “the light at the end of the tunnel.” For others, it may seem the financial hard times will never end…and they just can’t imagine getting to a better place in terms of their finances.

It’s also true that sometimes it’s a matter of perspective. I think we have all heard of an actor or athlete who made millions of dollars and ended up broke only a few years later. They may consider “financial hardship” as being no longer able to afford any sports car they desire. Conversely, someone used to living on a much smaller salary may only consider themselves to be facing “financial crisis” when they no longer have the bare minimum to pay their bills and feed their family. Needless to say “financial hardship” can sometimes be just as much a matter of external situations, perspective, and duration as it is about simple dollars-and-cents math.

Today’s post is titled “The Truth About Bankruptcy” for good reason. We want to take a look at some of the nuances of bankruptcy as well as some of the positives and negatives of using bankruptcy law to address a financial hardship. At Burr Law Office LLC, we’re committed to, first and foremost, doing what is in your best interest. While bankruptcy can be a great tool for some situations, we also want to work with you so that you will fully understand how it will affect you – and how you can best protect your future and your family’s future in your unique situation.

First of all, it’s important to understand that bankruptcy will affect your credit history. Depending on which type of bankruptcy you file, it may be either seven or ten years. While this may affect your ability to make some major life purchasing decisions, it may also not hinder certain other decisions (ones you may have assumed it would). When we work with you, we want you to have a complete understanding of the process and what it will mean for you going forward. Depending on upcoming purchases or life situations, alternative solutions may be considered. These considerations may also determine which type of bankruptcy to file.

Second, it’s also important to understand that bankruptcy can be a great tool to help you protect you and your family’s future. While the idea of having a bankruptcy on your credit history may sound unappealing, there are many cases where getting out of debt and starting over with a clean slate is definitely the best option. There are countless stories of people who have used bankruptcy to start over and have ended up coming out of the entire process in a much better situation. For some, they have even used the process and the experience to teach themselves about managing money and become very savvy – and even wealthy – as a result.

At Burr Law Office LLC, our bankruptcy attorneys always want to be upfront and honest when we deal with our clients. We’ll always tell you the truth about bankruptcy, and that means sometimes there will be difficult decisions to make. No matter what we do, we’ll always look out for your best interests and work to protect your financial future. For us, that means we will tell you what to expect when filing for bankruptcy, even if it may be something unpleasant. On the other hand, we’ll also be honest with you about letting you know when filing truly is your best option – and the best thing you can do to protect your future.

If you’re facing financial difficulty and need to know what your options are, call Burr Law office and set up an appointment with one of our skilled Milwaukee bankruptcy attorneys today. We’ll provide you with real, honest, no-nonsense information about your options. Our commitment to all of our clients is to always look out for their best interest. When you meet with us, you’ll understand why thousands of clients have trusted us to protect their financial future.

What does it mean to be “in the black” or “in the red?”

 

If you’re even slightly familiar with the world of accounting and finance, you’ve probably heard the phrases “in the red” and “in the black” before. Even if you are not in finance, you may have heard the terms anyway—they have become a part of our everyday speech and they are often used in common conversation.

For those of you not familiar with the phrases, I’ll briefly explain. The phrase “in the black” refers to being financially solvent or profitable, or sometimes more generally, just not in debt. A business that is “in the black” is usually making a profit or, at the very least, making enough to get by without having to worry about going bankrupt. Conversely, the phrase, “in the red” means to be in debt, running a deficit, or generally just not making money—being cash negative. Although cash flow cycles for businesses and people change from year to year, a business that is “in the red” for several years in a row without a plan to get out of debt often fail. Of course, the phrases aren’t always used consistently, and there are always exceptions to the rule, but in general, being “in the black” is a positive thing, and being “in the red” is usually considered to be a negative thing.

So, now that you know what both of these phrases mean, you may be wondering where the terms came from or what their origins are? After all, there aren’t really any other fields in which these colors (black and red) are used to indicate positive and negative. So if you are guessing that these color indicators are somewhat unique to the world of finance, you would be correct.

To understand where these phrases come from, we have to go back to the days before accounting was done on computers. Before computers, accountants did everything by hand and with pen and paper. In order to help them differentiate between deposits and debits, they started using different color ink for each. Because black and red ink were two readily available colors, they were chosen for the purpose. Though it’s only speculation, some say that red was chosen to denote debits/losses/debts because red is considered a harsh color and can catch one’s attention. It also subtly reinforces the idea of negativity or something “bad.” They wanted to make debts stand out and catch people’s attention. It’s the same reason that teachers often correct homework and quizzes and tests with red pens—it grabs a student’s attention and lets them focus on what they did wrong so, hopefully, they can learn from their mistake and correct the mistake on the next test or quiz or homework assignment.

And now that everything is done on computers, the history of the phrases has still stuck around. In many cases, they really are meaningless. Most software now uses parentheses to indicate a negative number or a debit. Sometimes, they also simply put a minus sign before a number or even have a separate column in a spreadsheet for debits. It is, however, interesting to note that some computer programs still do use red type for debts and debits—a nod to the history of accounting. Again, there is really no practical purpose for this, but it fits with the history of accounting.

As mentioned earlier, businesses and people too (in their personal finances) often go through cycles of “being in the black” and “being in the red.” Maybe you had an exceptionally good year at work or in your line of business and you have a year where you are really making good money. Maybe you inherited some money and it puts you in a good place for the short term, but it’s not money you can count on as reoccurring and consistent income. These would be scenarios where you would be “in the black” for a period of time, but maybe not consistently year to year.

On the other hand, maybe it’s a large but necessary purchase that puts you “in the red” for a brief period of time. The goal, however, should be that running deficits or being heavily indebted should not be standard operating mode. If you have to run in debt, it should be briefly and for a purpose with a specific plan to get back into “the black.” Many times businesses or people can fall into a pattern of consistently running in “the red” without a plan or any practical way of turning things around.

This may be a point where one needs to consider the option of bankruptcy. Bankruptcy laws are created to protect people and give them a way to turn around their finances. The expert Milwaukee bankruptcy lawyers at Burr Law Office know the laws and can help you explore your options. Contact them today to see what options are available.

Getting the Most of Your Chapter 7

Given the circumstances of filing for bankruptcy, everyone wants the process to be as comfortable as possible. There are a number of things you can do to help make make your Milwaukee Chapter 7 go smoothly. Take a look at these tips and contact Burr Law Office LLC for more information.

Stay organized

One of the most crucial elements to a successful filing is paperwork. Your legal documents like bank statements, pay stubs, tax returns, and others need to be well organized so they can be accessed at any point during the process. This also helps to ease communication and build trust with everyone involved.

Don’t be afraid to talk

You don’t need to go blabbing to anyone and everyone who will listen, but discussing your financial situation with trusted family members or friends can help you cope. Plus, they may know someone else that’s gone through something similar and have some advice to offer.

This isn’t forever

The most important thing to help ease the pain of filing for bankruptcy is this: it won’t be like this forever. The process may be difficult, and you’ll likely experience quite a bit of stress, but life will go on. If you don’t allow yourself to see the light at the end of the tunnel, you’re making it more difficult for yourself.

To learn more about Milwaukee Chapter 7 bankruptcy, contact attorney Michael Burr at Burr Law Office LLC for a free consultation. He will be happy to assist you with your case!

Legal Aid Milwaukee: Why to File at the Beginning of the Year

When you’re looking for legal aid in Milwaukee and you visit a bankruptcy attorney, they’ll like say “now is the best time for you to file,” regardless of when it is. There is some truth to this statement. If you’re in a situation of financial distress, waiting to file may only increase your risk for things like repossession of belongings, garnishment of wages, or even foreclosure on your home. However, now that we’re just into the new year, it truly is a good time to consider filing. Here’s why.

Tax debts

Income tax debt specifications state that you aren’t required to pay off income tax debt until the first day of the following year in bankruptcy. If you have a large amount of debt from taxes, a Chapter 13 bankruptcy is a popular option. In this case, waiting until after the first of the year is a good idea – that means your tax debt from the previous year is considered pre-petition debt.

Holiday debt

It’s no secret that people spend more during the holidays, and often it’s done on a credit card. After having built up additional debt from the holidays, the new year is a good time to file as it’s when this debt comes due.

As a rule of thumb, if you’re filing for bankruptcy you should stop using your credit cards right away. If you continue to use your credit cards after you’ve filed, it appears to the courts that you’re doing so with no indication of repaying the debt incurred.

If you’d like to learn more about when to file for bankruptcy, contact the legal aid experts in Milwaukee at Burr Law Offices LLC.

Is Your Tax Return Taken in Bankruptcy?

As we make our way into February, it’s time to start getting our finances in order to prepare for taxes. For those looking to file for bankruptcy in the Milwaukee and Waukesha area, the topic of tax returns often comes up. At Burr Law Office, we want to make sure you fully understand the process and feel confident in your case.

When looking to file a Chapter 7 bankruptcy, your tax return is an important consideration. People who will receive a return right before filing often wonder – will I be able to keep my return or will it be taken as part of the bankruptcy? The answer is dependent upon a number of factors (including the size of the return), but generally the person filing for bankruptcy will be able to keep the return. Under federal bankruptcy exemptions, you’re generally good to go – the exemptions are normally large enough to protect most tax refunds.

While being able to keep your return is great news, you should take precautions as to how you plan to use the money. It’s often recommended that people use their tax return money to pay for the costs and fees associated with bankruptcy. In essence, it’s best to use the money towards making the bankruptcy process easier as opposed to purchasing other things. One thing to note – you should consult your bankruptcy attorney if you plan to use the money to pay off debt you owe to a creditor or family member. Often the trustee has the ability to take the money back from whomever you paid.

If you’re unsure of your situation, the best idea is to call our bankruptcy attorney team at Burr Law Office. We’ll help make the bankruptcy process as smooth as possible for you.

Is It Time for You to File for Bankruptcy?

We all know how stressful the holidays can be on our wallet and bank account. Sometimes it can be hard to come to terms with the fact that you need to reach out to external sources for help. One of the most important things to understand is that open communication is key to successfully getting out of debt. Whether your spouse, bankruptcy attorney, or other source, open communication and willingness to cooperate will help make the process smoother and much less difficult. Here are a few ways to know if it may be time to file for a bankruptcy.

Credit Card Payments

If you’re consistently making the minimum payments on your credit card, it can mean one of two things. You may be making purchases you shouldn’t be which is more linked in irresponsible spending, or you may need help getting your credit situation figured out. If the latter is the case, contacting an experienced bankruptcy attorney may be a smart idea.

Debt Collectors

If you’ve been receiving phone calls from debt collectors, you’d be smart to consider contacting a bankruptcy attorney. One of the main reasons working with an attorney is smart is because they have the capability and knowledge to resolve issues like debt collectors.

Unsure About Debt

If you’re not sure how much money you owe, it would be in your best interest to contact a bankruptcy attorney. If you aren’t aware of your financial situation, it’s hard to determine the next steps.

For a free, no-obligation consultation, contact Burr Law Office today. Our expert Milwaukee and Waukesha bankruptcy team will help you find the best debt relief solution for your needs.

How to File for Bankruptcy

Waukesha bankruptcy adviceMany people find themselves in difficult financial situations and come to a point where they need to decide whether or not bankruptcy is the right option. The best thing to do in this situation is schedule a complimentary consultation with Attorney Michael Burr. He will help guide you through the entire process of how to file for bankruptcy, catering to your specific needs. Here are a few quick bits of information that can help you determine if you should move forward.

You won’t lose everything.

It’s a common misconception that filing for bankruptcy means you’ll lose everything. Depending on your particular situation, you are allowed to exempt a certain amount of property. You cannot, however, hide possessions or “sell” things to family or friends in attempts to keep them. There are serious penalties for such actions, as they are considered fraud. An experienced Milwaukee bankruptcy attorney, like Attorney Michael Burr, can explain how to properly list your assets to maximize your exemptions.

There are multiple types of bankruptcy.

Depending on your situation, you may only qualify for certain types of bankruptcy. Chapter 7, or “straight bankruptcy,” is quite difficult to qualify for. More common is Chapter 13, or “wage earners bankruptcy,” which reorganizes your debts into a repayment schedule. In order to qualify for bankruptcy, you will be required to complete a means test which determines your eligibility.

Work with a lawyer.

New bankruptcy laws in 2005 have made it much more difficult to file for bankruptcy. While it’s not required by law, it is highly recommended that you work with a lawyer when filing. Milwaukee Bankruptcy Attorney, Michael Burr, has over 20 years of experience in bankruptcy law and truly cares about his clients. At the very least, we recommend scheduling a consultation to learn why working with Attorney Burr can help save time, money, and pain.

These tips are by no means legal advice and should be considered a guide as to whether or not you should inquire further about how to file for bankruptcy with Attorney Burr. At Burr Law Offices, we want to give you the fresh financial start you’re looking for. Contact the best bankruptcy lawyers Milwaukee us today to schedule your consultation.