There is one area of an individual’s finances that really peeves bankruptcy lawyers, and that’s their taxation returns. You can only file for a Chapter 7 petition for bankruptcy if your tax returns are all up to date. It’s not unusual for a bankruptcy attorney to send a client to the local tax office as [...]
When a creditor has a debt discharged through bankruptcy, they will often try to claim a tax break on that discharged debt. In order to do so, they need to lodge a tax document known as a Form 1099. For debt forgiveness, it’s a Form 1099-C. However, technically speaking, the debt has not been forgiven. [...]
The IRS has a provision within its statutes that gives it the power to take any forgiven debt and consider it to be income. If you undergo a a bankruptcy process, or have your home foreclosed, any debt that is erased through these processes is considered to be ‘forgiven’ debt. This means you may have [...]
