Asset Protection. Once your bankruptcy petition is filed, your creditors are prohibited from contacting you and must halt all collection efforts. Your assets are protected from seizure, and business equipment and vehicles cannot be repossessed.

Debt Reorganization.. You can reorganize your business debts, present a more feasible repayment plan to your creditors, and bring your accounts current over time. This solution is ideal for small and large corporations that are in serious financial trouble.

Stress Relief. Imagine being able to operate your business in peace, without debt collectors nagging and threatening you every day. This is what you can expect under bankruptcy protection. Creditors are forbidden from contacting you, giving you the time and space you need to successfully reorganize your business debts.

More Questions about Bankruptcy?
We have the answers you’re searching for. Schedule a consultation with Attorney Brown to discuss all options available to your business.

With two convenient office locations, we serve clients in and around Upper Darby, PA and Wilmington, DE. Dial (610) 734-0750 or use this online form to request a consultation.

The post Are There Any Benefits of Filing Business Bankruptcy? first appeared on .

Section 523 of the Bankruptcy Code identifies three debts you must repay:

1. Unfiled tax returns.

If you did not file a tax return for the year the debt is assessed, you cannot obtain a discharge. If you filed late tax returns, you must wait two years before you can seek a discharge.

2. Priority tax claims.

If the tax debt is a Section 507 priority claim, it cannot be discharged in bankruptcy. Priority claims must be paid in full. They include:

1. A tax required to be upheld and for which the debtor is liable.
2. Taxes on income and gross receipts (i.e. federal income taxes).
3. Unsecured property taxes assessed prior to the bankruptcy filing.
4. Some employment, excise and custom duties taxes.

3. Tax evasion and fraud.

If the court finds that you evaded or attempted to evade taxes, or that you filed a fraudulent tax return, the debt is excluded from discharge.

Everything from submitting false documentation to withholding income can constitute fraud. Failing to pay taxes over an extended period of time and attempting to defeat tax liabilities can be considered tax evasion. However, underestimating your income does not always constitute fraud or willful tax evasion.

Now that you’re clear on what cannot be included in your bankruptcy, learn more about the debts that can be discharged here.

More Questions about Bankruptcy?

We have answers! Contact our law office today to discuss all bankruptcy options available to you. Dial 610.734.0750 or click here to schedule a complimentary consultation.

The post Can I Use Bankruptcy to Discharge Tax Debts? first appeared on .

In most instances, a bankruptcy filing, through the power of the automatic stay, halts any lawsuit against you and your business or prevents a threatened lawsuit from being filed in court. But there are a few exceptions to this rule; situations in which the automatic stay would not apply.

In these cases, a creditor’s lawsuit could continue in spite of your bankruptcy filing.

Because stopping such a lawsuit is likely one of the reasons you’re filing bankruptcy, it’s extremely important to understand these exceptions.

The automatic stay protects YOU, not any other “person.”

The automatic stay protects the “person” filing bankruptcy and his/her assets. Other “persons” are generally NOT protected. The issue is whether you and your business are considered to be the same or separate “persons” for this purpose.

If your business is a sole proprietorship, the law considers you and your business to be the same “person.” So a lawsuit against the business would be stopped by your personal bankruptcy filing.

But what if your business was set up as a corporation, a limited liability company (LLC) or a partnership?

Business litigation against your corporation, LLC or partnership

If your business was set up as a corporation or LLC and is still operating when you file a personal bankruptcy, that filing does not “stay” any litigation against the corporation because it is a separate legal entity, a separate “person.” To the extent the dispute and/or lawsuit is against you personally, that portion would be stayed.

But this may not help much if the lawsuit continues to disrupt and threaten your business.

If your corporation or LLC is no longer operating but still owns assets, those assets are not protected by your personal bankruptcy filing. This includes property that your business owns outright, such as anticipated receivables and assets that are used as collateral on business loans, auto loans or equipment loans. Your personal bankruptcy filing will not stop a creditor or adversary from seizing these business assets.

If your business is a partnership at the time of the bankruptcy filing, creditors and adversaries can continue pursuing the partnership and its assets, as well as your partner and his/her assets, in spite of your personal bankruptcy filing. That’s because partners are generally jointly liable for the obligations of a partnership, and your partner and the partnership itself are both “persons” separate from you. So you have the same problem outlined above.

The bottom line

If your business legally qualifies as a separate “person” and has assets that need protection, you may have to file a separate bankruptcy, presumably a Chapter 7, to make an orderly distribution of those assets to the appropriate creditors.

Before you file a bankruptcy petition, speak with a knowledgeable attorney to discuss debt relief options for your business. You can reach our firm at (302) 225-8340 or use this online form to email us.

The post How Will My Personal Bankruptcy Affect My Business? first appeared on .

All priority debts must be paid in full. They cannot be reduced or discharged in bankruptcy. Not sure if your debt gets priority status? Read our article Tax Debts you Cannot Discharge in Bankruptcy.

If your debts are not priority, you may have options: You can repay them through a chapter 13 plan or an IRS installment agreement. If paid through chapter 13, you will save money as you won’t pay any interest or penalties from the day the petition is filed. However, in an IRS installment agreement both interest and penalties continue to accrue until the debt is paid in full.

Tax liens are marked satisfied after you successfully complete the repayment plan.

The bankruptcy court can reduce all tax penalties assessed by the IRS, including penalties resulting from fraudulent tax returns.

The two year rule does not apply to chapter 13 debtors. If you have tax debts assessed by the IRS for unfiled tax returns, you can include them in your chapter 13 plan. You can also ask the bankruptcy court to reduce those debts.

Chapter 13 Bankruptcy Debt Limits

While chapter 13 is an ideal solution for many taxpayers, there are requirements you must meet before you can file. Let’s see if you quality:

Are you a wage earning individual? While you don’t have to earn wages from a traditional job, you must provide proof that you have a steady flow of income. This can include monthly pension payments, social security or money earned as a self-employed professional.

How much do you owe?  Your secured debts (i.e. tax liens, home mortgage, car loans) cannot exceed $750,000. And your unsecured debts (i.e. unpaid taxes, medical bills, credit cards) cannot exceed $250,000.

Schedule a Bankruptcy Consultation

Navigating the bankruptcy process is not something you want to do alone. The good news is you don’t have to. We’re here to help. Contact our bankruptcy team to learn how to best protect your home, automobile and other assets from creditors.

Dial 610.734.0750 or click here to schedule a judgment-free consultation today. We look forward to hearing from you.

The post What Type of Bankruptcy Is Best For Tax Debts? first appeared on .

But not all debts are dischargeable.

Those that are include: business loans, unpaid rent and credit card expenses.

Debts that cannot be discharged include: some taxes, salaries owed to employees, penalties and fines that have been imposed on the company by the government.

It’s also important to note that personal expenses cannot be discharged in a business bankruptcy; only debts incurred on behalf of your company.

More Questions about Bankruptcy?

We have answers! Contact our bankruptcy team to discuss all options available to your business. Dial 610-734-0750 or use this online form to request a consultation.

The post Can All Debts Be Discharged in Bankruptcy? first appeared on .