published by: samcykent334
on: Feb.02.2012 @ 2:52 am
There is no secret that if you owe the IRS taxes and fail to pay them, the Internal Revenue Service will slap on a federal tax lien on all of your property. This kind of lien can exist even if the IRS failed to file a notice of a Federal Tax Lien into the public record. There have been some cases where this lien was attached to an individual's retirement account to pay that tax debt even after the taxes were discharged in bankruptcy filing.
Generally speaking, filing bankruptcy can discharge some of the taxes. The rule for taxes that are dischargeable in a bankruptcy filing have to be over three years old and the individual has to be current on their tax filings. The bankruptcy filers should beware, a properly recorded lien usually will survive a bankruptcy discharge. In fact, this can also include liens that were recorded against the property of the debtor prior to the individual filing for bankruptcy. It's true that the bankruptcy code protects all exempt assets of the bankruptcy estate unless this property is secured by a properly recorded lien. For the property to be considered exempt by the bankruptcy code, it has to be part of the bankruptcy estate.
Back in 1992, the US Supreme Court ruled that any assets that were protected by ERISA or The Employment Retirement Security Act are not necessarily part of a bankruptcy and can be excluded from the bankruptcy if the debtor decided. This act protects the debtor's retirement from being taken in the bankruptcy filing by the creditors or the bankruptcy trustee. In order to protect this asset from an IRS tax lien, the debtor's retirement must be included in the bankruptcy and then protected by the bankruptcy exemption laws.
The bankruptcy code section 11 USC 522 allows the retirement funds to be exempted and freed from any tax liens. If everything is included in the bankruptcy filing by the bankruptcy attorney and protected by the exemption laws clearly and specifically the IRS will not be able to retain their lien and take funds from the retirement account.
These are some other reasons for using a when filing for bankruptcy. Sometimes a bankruptcy can be simple, but there are other occasions where something like this could be overlooked and come back and bite the debtor later. The debtor will not even know what hit them as the money they were counting on for retirement is taken from them. Using a bankruptcy attorney to file will add the extra security that all the I.'s are dotted and the T.'s are crossed. The bankruptcy attorney will have the expertise to use the exemption laws to maximize the protection of the debtor's assets. Filing bankruptcy can be very stressful, but having the peace of mind to have a professional fighting for you in your corner is well worth the money spent.
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