California Personal Bankruptcy Attorney

Personal bankruptcy is a formal legal program that allows individuals to reorganize or eliminate their debts when they cannot repay them. However, bankruptcy is applicable only in certain instances. If you are facing an unmanageable amount of debt, it is important to have a comprehensive understanding of all debt relief options. What works best depends on your unique circumstances and cannot be compared across cases.

At Coggins Law, our goal is to provide bankruptcy clients with the information and legal resources they need to make an educated decision on their financial future. We are driven every day to help free our clients from the burden of excessive debt. We have seen overwhelmed and scared debtors feeling like they have nowhere else to turn, and they come to us for assistance. We help them find a solution that fits their individual circumstances. Connect with us today if you are ready to explore your options and get started on the exhilarating path to financial freedom.

What Is Personal Bankruptcy?

Personal bankruptcy is a legal proceeding that can offer debt relief to individuals who have accumulated too much debt and cannot repay it. Although bankruptcy can be a last resort option, it can provide a fresh start for individuals struggling with unmanageable debt.

There are two main types of personal bankruptcy that most people in debt choose:

  • Chapter 7 bankruptcy. This is also known as liquidation bankruptcy. With this type of bankruptcy, the court appoints a trustee to be responsible for selling the debtor’s non-exempt assets to repay creditors. In most cases, the debtor’s assets are sold for pennies on the dollar. After the sale, the debtor is relieved of any remaining debt.
  • Chapter 13 bankruptcy. Chapter 13 bankruptcy is also known as reorganization bankruptcy. In this type of bankruptcy, the debtor repays creditors over time through a court-approved repayment plan. The repayment plan is based on the debtor’s income and lasts for three to five years. After the repayment plan is complete, the debtor is relieved of any remaining debt. This option is often best for debtors who have a regular income and want to keep all of their assets but need a more manageable repayment plan.

Will Bankruptcy Eliminate Your Tax Debts?

Tax debt can cause significant problems. If you owe back taxes, you will be hit with penalties and interest will continue to accrue. The IRS can start collections actions against you, including selling your property, garnishing your wages and invading your bank account.

There are ways to negotiate with the IRS, but sometimes it’s not enough to give you the relief you need. In certain circumstances, filing for bankruptcy may be the answer.

Some Tax Debts Are Dischargeable, Others Are Not

Discharging back taxes through bankruptcy is a difficult and complex process. Because very specific rules govern whether a tax debt is dischargeable in bankruptcy, having the guidance of an experienced tax lawyer is extremely important. In general, tax debts fall into one of three categories:

  • Priority, nondischargeable debts are taxes less than three years old, filed by the taxpayer less than two years ago, and taxes that were assessed within 240 days of the filing date.
  • Nonpriority, nondischargeable debts includes taxes from returns that have not been filed, or those filed late within the past two years, taxes from fraudulent returns or taxes owed by reason of evasion.
  • Nonpriority, dischargeable debt: If a tax does not fall into one of the above two categories it is considered a nonpriority, dischargeable debt. In general, this means your tax debt is dischargeable through bankruptcy if:   
    • It is more than three years old
    • It is for income taxes
    • The taxes were filed by you over two years ago
    • The tax was assessed more than 240 days before you filed for bankruptcy
    • You did not commit tax evasion, tax fraud or file your taxes under protest

What Are the Key Benefits of Personal Bankruptcy?

The concept of bankruptcy is frequently misunderstood. Although it often has a negative connotation, bankruptcy can be a positive solution for individuals who are struggling with unmanageable debt. When it is done correctly, bankruptcy can provide a fresh start and a way out of debt.

There are several key benefits of personal bankruptcy, including:

  • The ability to discharge debts. When you file for bankruptcy, you can discharge many of your debts. This means you will no longer be legally obligated to repay these debts. While temporary penalties are associated with bankruptcy, such as a lower credit score, these penalties are typically outweighed by the long-term benefits of debt relief. The only way to validate if you are one of the people who can benefit from this program is by meeting with a qualified professional for an initial consultation.
  • The ability to keep certain assets. When you file for bankruptcy, you can also keep certain assets depending on which route you take. These are typically considered to be essential assets, such as your home or your car. Having these items can make it easier to get back on your feet after bankruptcy.
  • The ability to stop creditor harassment. One of the most common reasons people consider bankruptcy is to stop creditor harassment. Once you formally file for bankruptcy, an automatic stay goes into effect. This means creditors are no longer allowed to contact you or try to collect on your debt. If they do, they can be held in contempt of court.
  • The ability to rebuild your credit. Although bankruptcy will have an initial negative impact on your credit score, it is not a permanent effect. Many people can rebuild their credit and qualify for new lines of credit within a few years of filing for bankruptcy.

Personal bankruptcy can be a helpful solution for individuals who are struggling with unmanageable debt. Connecting with a bankruptcy attorney is a good first step if you are considering bankruptcy.

Why Should I Hire a Bankruptcy Attorney?

It may be unclear why hiring a legal professional for a financial issue is necessary. Many people believe they can save money by representing themselves or that the process is simple enough to do without help. However, this is rarely the case.

There are several reasons why hiring a bankruptcy attorney is a good idea, including:

  • The complexity of bankruptcy law. Bankruptcy law is not common knowledge. It is quite complex, and the stipulations can change as well. Even advanced legal professionals need to spend time studying and staying updated on the bankruptcy code. This is why having a legal professional who specializes in this area of law is beneficial to have on your side.
  • The potential for negative consequences. While bankruptcy can provide a fresh start, there are also potential negative consequences. For example, if your bankruptcy case is not handled correctly, you could lose certain assets or face criminal charges for situations such as tax fraud. Having a professional assist you can help to avoid these negative consequences.
  • The stress of the process. The bankruptcy process can be stressful and overwhelming, especially if you are already struggling with debt. A bankruptcy attorney can handle the paperwork and details of your case, so you have more time to focus on your emotional well-being without being bogged down by the legal process.
  • Validation of your case. When you file for any form of bankruptcy, the court will look at your case to determine if it meets the requirements for the selected program. If it does not, your case could be dismissed. This could leave you in a worse position than you were before you filed for bankruptcy. Having an attorney working with you can help to ensure your case is valid and that you have the best chance of success.

Contact Me For More Information About Tax Debt And Bankruptcy

I am attorney Brian Coggins. I help taxpayers in Roseville, California, and throughout the Sacramento area resolve their tax issues.

No matter how complex your tax issue, my goal is the same: to stop IRS collection action and resolve your tax issue in the most economical and efficient manner possible. I use a variety of tools, including bankruptcy, to accomplish this and get you the relief you need.

Find out if filing for bankruptcy is a good solution to your tax debts. Contact my office online today or call 916-270-2895. I will meet with you for free, review your circumstances and advise you of your options. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.