2005 I earned a few hundred thousand I could invest. Being young I took a risk, I provided a bridge loan of $135,000, Prepared by and attorney. In the same year I loaned the money the loan defaulted. So I wrote off the loan through the advise of an attorney and accountant. I was audited by the IRS which followed by the CA franchise tax board. IRS stated it was an investment and not eligible to be written off. We disagreed and scheduled a tax court date to dispute. My attorney went to arbitration and called me with two options. Agree to pay $65k or go to court and fight it. My attorney’s had a word of caution, the judge basically told him he did not want to see us in court. My attorney gave me the pros and cons of each decision and out of fear of loosing I took the reduced penalty. Since then through attorney costs, the loss of my business I started in I accumulated debt.
Here is the lay out of my situation:
Owe Fed and State a combined total of $85k
-State on a 3 year payment plan
-Fed on a $250 mo plan (this will take over 2 decades to pay off)
Roughly $50k in Credit card debt
-Debt comprised of Attorney fees, property tax payments on my home and living expenses (Fuel, Groceries Utilities). If my credit card statements were audited since 2005 all charges were made out of living necessity.
Current Credit is great, I make all my payments on time.
I have a mortgage, interest only @ 3% maturing in Nov 2013 adjustment will be Libor + 2%
I make enough money to pay my minimums and exist.
I am in my 40s Married with kids
I do not have a college fund for the kids
I am unable to save anything for retirement
Occupation – I am an independent sales rep (1099)
I have the ability to pay, but at the sacrifice of my family’s future
I feel very vulnerable about our financial future
The only way to get out of this debt especially the tax debt is bankruptcy
I paid $3,500 to file an offer and compromise but the IRS denied it because their calculations show I have the ability to pay
I visited a bankruptcy attorney and he says I pass the 4 tests to discharge the tax debt
I left the bankruptcy attorney with an uneasy feeling. All my life I have always honored my commitments. Recently I spoke to a friend who I respect, just filed bankruptcy and got me thinking again. I am now once again leaning to bankruptcy. My debt or my family. My debt was a result of a bad business decision not irresponsible spending.
Should I file bankruptcy at the risk of my family?”
If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.Should I File Bankruptcy at the Risk of My Family? by Steve Rhode