I need some advice

BuckiRob · ‎11-10-2015

I have scowered the board here to see if anyone else has had to deal with a situation like mine. I haven’t found any so far.

Background. I am self-employed, wife is a W-2 full time employee of a fortune 100 company. My business was really hurt by the down turn in 2008. As a result I was left with tough choices all of which were bad choices. I had enough to pay my IRS estimated taxes or pay my bills but couldn’t do both. I opted for not paying the IRS in hopes that I could recover and grow my way out of the problem. Option 2 Pay the IRS and not pay my bills which would have resulted in being forced into Bankruptcy relatively quickly.

I chose option 1 because at least it gave me a chance to avoid declaring BK. Fast forward to today…. I have IRS tax liens for 2012 and 2013. The IRS had deemed 2012 as “currently uncollectable status” and 2013 is being reviewed and will end up with the same status. I am current on everything. I got a letter from one of my CC companies informing me of a deduction in my CL and they reported a TransUnion score of 593 (which obviously sucks)

I’ve spoken to a Tax Attorney and her synopsis is that I have a 10 year problem. The 2013 tax will meet the BK discharge guidelines in December of 2016 but that it will fall off anyway in 2023.

Here is my dilemma, If I file for BK in 2016 it wipes out my IRS debt as well as the 50k I owe in unsecured debt. I owe the IRS about 110,000.00. They have 2 liens for each tax year on my home which is fully current and has some equity.

I am seeing confusion about getting a lien released when the debt is discharged in a chapter 7 but most of these are short sales. If the liens remain on the house, it doesn’t make much sense to file BK as I will totally destroy my credit and I am not free from the liens.

Because we are married and even though my wife had absolutely nothing to do with my business and we maintain completely separate finances she is under this mess because we filed joint returns. So her credit is being effected by the liens as well. I am being told the only way she can be freed from the liens is if she either divorces me or we legally separate and she shows separate residence for 12 months.

We thought we could divorce, she could request innocent spouse/equitable relief I would file BK we would remarry and rebuild… but now, I’m not sure that is going to really accomplish what we are trying to do.

Now it’s looking more like we need to sell our home and just ride out the 10 years.

Anyone familiar with something like this?

Anonymous · ‎11-10-2015

I honestly can't help you much - but you might want to check out the BK board too - they may have more help for you there if you can't get assistance here!

Anonymous · ‎11-10-2015

@BuckiRob wrote:
I have scowered the board here to see if anyone else has had to deal with a situation like mine. I haven’t found any so far.

Background. I am self-employed, wife is a W-2 full time employee of a fortune 100 company. My business was really hurt by the down turn in 2008. As a result I was left with tough choices all of which were bad choices. I had enough to pay my IRS estimated taxes or pay my bills but couldn’t do both. I opted for not paying the IRS in hopes that I could recover and grow my way out of the problem. Option 2 Pay the IRS and not pay my bills which would have resulted in being forced into Bankruptcy relatively quickly.

I chose option 1 because at least it gave me a chance to avoid declaring BK. Fast forward to today…. I have IRS tax liens for 2012 and 2013. The IRS had deemed 2012 as “currently uncollectable status” and 2013 is being reviewed and will end up with the same status. I am current on everything.   I got a letter from one of my CC companies informing me of a deduction in my CL and they reported a TransUnion score of 593 (which obviously sucks)
I’ve spoken to a Tax Attorney and her synopsis is that I have a 10 year problem. The 2013 tax will meet the BK discharge guidelines in December of 2016 but that it will fall off anyway in 2023.
Here is my dilemma, If I file for BK in 2016 it wipes out my IRS debt as well as the 50k I owe in unsecured debt. I owe the IRS about 110,000.00. They have 2 liens for each tax year on my home which is fully current and has some equity.
I am seeing confusion about getting a lien released when the debt is discharged in a chapter 7 but most of these are short sales. If the liens remain on the house, it doesn’t make much sense to file BK as I will totally destroy my credit and I am not free from the liens.
Because we are married and even though my wife had absolutely nothing to do with my business and we maintain completely separate finances she is under this mess because we filed joint returns. So her credit is being effected by the liens as well.    I am being told the only way she can be freed from the liens is if she either divorces me or we legally separate and she shows separate residence for 12 months.
We thought we could divorce, she could request innocent spouse/equitable relief I would file BK we would remarry and rebuild… but now, I’m not sure that is going to really accomplish what we are trying to do.
Now it’s looking more like we need to sell our home and just ride out the 10 years.

Anyone familiar with something like this?

How much equity is in the home?

If a debt is discharged (im BK), any liens, garnishments, and account seizures associated with that debt are discharged as well. Thats the whole point of BK - to AVOID all of that messy stuff and allow one to start over. While the tax liens may be visible on your reports as a PR, they are no longer enforceable after the BK, just like a judgement - the underlying debt is discharged, so there simply is nothing to collect.

I would certainly be speaking to a BK attorney ASAP.

Anonymous · ‎11-11-2015

You can always file innocent spouse for her on the tax returns but it is up to the IRS to accept them.