Ask The Get Out of Debt Experts Tax Related

I’m Tackling My Tax Problems Before Filing Bankruptcy. – Lewis

“Dear Steve,

Left corp world 2006 started company with partner did okay for ahwile but economy hurst last 2 years. Now maxed out making 16-20k gross monthly but barely make credit card debts payments 3 autos etc – currently 100k cc debt (1/2 to help fund business) 3 mortgaes on house underwater 100k on that (600 k on 500k value) also 100k fed and state back taxes for 2009 / 2010. recently bus partner and I split my contracts 100% income providing 20k gross monthly end June 2011 trying to replace that amount or more to survive, possibly can replace but est 45% probability. wife also makes 110k a year.

Working with bnckrpty attorney first on tax workout to try and get budget under control and focus on paying cuurent fed and state taxes then 2010 then 2009. He basically says try to do all until actually run of of money (possibiliy 2011 aug if can’t find new business) then potentially wait six months and file chap 7 wipeout bankrpty possibly and start anew.

But if I think I can probaly only replace 10k a month in august forward but maybe full 20k monthly needed in aug forward, shouldn’t i just may essenial house and tax payments and stop all cc payments saving about 2,500k a month x 5 months = extra 12,500 k in my pocket , eg at what prorability % now would suggest I start acting in bankruptcy now to preseve cash if infact I can not replace any or all needed 20k for august 2011 going forward. what crieria and when do I make the decision to stop cc payments and all other non essential payments (assuming I am under decreased real budget making good faith effort at lowering expense as much as possible?

Lewis”

Dear Lewis,

It sounds like your bankruptcy attorney is giving you some good advice. Excellent approach on the tax issue. At this point you should coordinate any strategy with the bankruptcy attorney moving forward.

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Please post your responses and follow-up messages to me on this in the comments section below.

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

2 Comments

  • Lewis- without all the details, it sounds like your strategy on paying back taxes is solid as they are recent taxes that will take priority in bankruptcy. Stay with a good bacnkruptcy attorney who knows the tax aspect.
    As Steve said- post on comments so we can follow your progress.

    Jim

  • Lewis- without all the details, it sounds like your strategy on paying back taxes is solid as they are recent taxes that will take priority in bankruptcy. Stay with a good bacnkruptcy attorney who knows the tax aspect.
    As Steve said- post on comments so we can follow your progress.

    Jim

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