Bankruptcy attorneys are essentially required when you are contemplating filing bankruptcy. The lawyer can guide his clients to discharge unsecured, secured and tax debts. There are many people who contemplate bankruptcy to discharge their tax debt, when other debt solutions fail. After the recent economic meltdown, many people defaulted on their payments. In order to generate more revenue to pay off the government debt to stabilize the economy, the IRS has become more aggressive in its tax collection. Therefore, many people are filing bankruptcy with tax and non–tax related debt to start afresh.
But you are required a proficient attorney while you file bankruptcy petition with the court.
This is because the bankruptcy procedure has become more complicated with passing phase.
Here are the following reasons why you're required a bankruptcy attorney while filing petition with the court:
1. A bankruptcy attorney can guide you by analyzing the amount of tax debt that can be discharged through bankruptcy. He may determine the amount on the basis of the type and amount of tax owed. It can be determined when the IRS or state assessed the tax inclusive of interest and penalties. The bankruptcy lawyer based on this analyzes may design a repayment plan under chapter 13 bankruptcy. This can help you pay back the non–dischargeable portion of the tax interest and penalty fee. An efficient bankruptcy attorney can negotiate with the IRS to lower the priority and non–priority tax debt, as well as stop tax garnishments. He can guide you to file an Offer in Compromise simultaneous with chapter 7 or 13.
2. Debtors under chapter 7 or chapter 13 can keep a considerable amount of tax refund. The attorney may comparatively analyze your income tax withholding with exemptions, before you file bankruptcy. The amount you save is determined on the basis of when you file bankruptcy.
3. The small business owners may have to deal with issues like payroll and withholding issues. An attorney may calculate your overall gross income with deductions from disposable income. This calculation can be completed once you undergo Means Test in order to evaluate the amount of tax you are required to pay the IRS. He help you go through the correct tax forms to complete the process. The bankruptcy lawyer can be able to advise you on how much income and deductions you need to claim. The attorney may help you reorganize your business in order to legally pay as low amount of tax as possible. Therefore, it can be beneficial for the filer as he can allocate funds. This process is known as smart pre–bankruptcy planning like contributing to a retirement plan or mutual fund.
4. A bankruptcy filer who hires the services of an attorney can legally protect assets from creditors and the trustee. The lawyer with his deft knowledge can use Exemption laws in order to ensure that his client's assets are protected from being liquidated.
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Therefore, these are the four most important reasons behind hiring a bankruptcy attorney for discharging tax debts.