In a case decided recently in the Massachusetts Bankruptcy Court, Judge Feeney ruled in favor of the IRS and the Massachusetts Department of Revenue. The law is that late filed tax returns may preclude your from discharging your tax liability.
First, as the baby boomer generation is now starting to retire, one unfortunate statistic is that the percentage of bankruptcies filed by seniors is increasing. Folks over 65 made up 8.3% of all consumers filing for bankruptcy protection in 2009, when the percentage was 7.8 in 2006. About 10% of the seniors who filed for bankruptcy were retired.
When you file for personal bankruptcy, all lawsuits are stopped or “stayed”. However, with secured debts, such as mortgages or car loans, the lender, or creditor, can file to get permission from the Bankruptcy Court to lift the stay to recover the debt.
Just over ten years ago, on October 17, 2005, the Bankruptcy Abuse and Consumer Protection Act became law, and amended the federal bankruptcy requirements in many fundamental ways. Folks still call us up and ask about the changes and what the differences are.
This blog has repeatedly reported on what not to do when filing for personal bankruptcy protection and getting a “fresh start” and the reports come down to this: do not submit false testimony, be honest in your bankruptcy petition and schedules, and fully disclose your assets and liabilities to your attorney so he or she can make a plan for you to discharge you debts, if possible.