A common question that people have about bankruptcy is whether they will be able to “wipe out” (referred to in bankruptcy terminology as “discharge”) certain taxes owed to the Federal and State governments if they file bankruptcy.
If you file a Chapter 7 bankruptcy case, then your income taxes can only be wiped out if all of the following are true:
- the due date for the tax return for the tax year in question must be more than three years ago,
- the tax return for the tax year in question must have been filed on time (if the tax return was not filed on time, then it must have been filed more than two years ago), and
- the tax must have been assessed against you by either the Federal or State government at least 240 days (eight months) ago.
A common misunderstanding that people have about bankruptcy is that you cannot keep your home and car(s) if you file bankruptcy. In reality, most people who file for bankruptcy protection get to keep their home, cars, and all of their other property.
When you file for bankruptcy, you must list all of the property which you own at that time. Depending on the value of your car and the nature of your various items of property, you can protect and prevent most property from being taken by the bankruptcy court. Continue reading
The bankruptcy “means test” is the method used to determine whether you are likely to succeed in filing a Chapter 7 bankruptcy case. Chapter 7 bankruptcy is usually preferred because it allows you to receive a “fresh start” without having to pay any money back to your creditors.
The first step in determining whether you are likely to succeed in filing a Chapter 7 bankruptcy case is to see whether your average monthly income (determined by averaging your income over the last six months) is more or less than the median income for a household of your size. If your income is less than the median income, then the means test won’t affect your ability to succeed in filing a Chapter 7 bankruptcy case. The table below shows Wisconsin’s median income figures for households of 1-4 people. Your household size is generally determined by how many family members live with you. Continue reading