Serena Law LLC  
Free Consultation 513.824.1144 or 513.448.4096

   Providing personalized legal services in resolving tax controversies through pursuit
   of administrative remedies, negotiation and litigation.

Special Counsel for Bankruptcy Tax Issues
Assisting Clients Who May Need Tax Resolution Before and After Bankruptcy

Filing bankruptcy is an honorable remedy of last resort for the honest but unfortunate individual who, in spite of his or her best efforts, can no longer struggle under the weight of oppressive debt.  Bankruptcy relief for qualifying persons and companies is guaranteed under federal law having its origin in the United States Constitution.  We can assist you in deciding whether bankruptcy is the solution for you and can file the appropriate type of bankruptcy on your behalf.

    What are the various types of bankruptcies and how do they differ?
Bankruptcies are divided into various “Chapters” depending on the nature of the person or entity who is “the debtor”, and in some instances, the amount or nature of debts which will be dealt with.  Careful analysis must be applied to every prospective debtor’s unique situation before any particular type of bankruptcy is filed, if filed at all.

    •    Chapter 7 bankruptcy relief is available to qualifying individuals and to business entities where the debtor’s property over that which is “exempt”  or “excluded” from bankruptcy is liquidated by a Chapter 7 Trustee for payment to creditors. Most debts are “discharged” in individual Chapter 7 cases, although some types of debts are not.  Non-individual debtors, such as corporations or LLCs, do not receive a discharge but rather cease operations upon, or shortly after, the bankruptcy is filed while the debtor’s property that has value is sold off to pay creditors.

    •    Chapter 9 bankruptcies are filed only by municipalities and similar governmental units. 

    •    Chapter 11 bankruptcies may be filed by individuals and non-individuals, and may involve “rehabilitation”, where the person’s or the company’s debts are restructured and a repayment plan is approved by the Court, or “liquidation” which bear similarities to Chapter 7 cases.  Individual Chapter 11 cases are generally filed by person’s whose total amount of debt exceeds the allowable amounts for Chapter 13 bankruptcy filings.

    •    Chapter 13 bankruptcies may only be filed by individuals, and involve the creation of a plan of repayment over 3 to 5 years.  Many debts can be discharged in Chapter 13 cases, and those which cannot be discharged are repaid, generally without interest, through the plan.  Chapter 13 cases are administered by the Office of the Chapter 13 Trustee which receives payments and makes distributions to creditors pursuant to the plan, among many other duties.    

What Are the Immediate & Long-Term Benefits of Filing Bankruptcy,
and What Are the Detriments of Doing So?

Creditors are prohibited from attempting to collect debts from a party in bankruptcy.This is an immediate and very effective benefit from a bankruptcy filing, and includes actions such as foreclosures, collection letters or telephone calls, and filling or continuing law suits.  This is known as the “automatic stay”.  Depending upon the type of bankruptcy, many and sometimes nearly all debts are completely eliminated (“discharged”).  These benefits come with a price.  Individuals who have filed Chapter 13 cases must live within a very strict budget for up to 5 years after their repayment plan is approved by the Bankruptcy Court.  Bankruptcy can also substantially lower a person’s credit ratings, although often this has already occurred before the bankruptcy is filed as the individual struggles to make end’s meet.  Bankruptcy cannot be taken lightly, but neither should it be avoided if this is the best solution to a very difficult situation.  

Can Bankruptcy Eliminate or Reduce Tax Debts?

Yes, but not all tax liabilities.  The dischargability (see above) of tax debts is complicated, and depends on the type and age of the tax debt, the particular type of bankruptcy (Chapter) which is filed, whether tax returns were filed on time or at all, and a number of other factors.  For some 27 years, Terry Serena constantly dealt with the issue of dischargability of taxes.  If you owe taxes, whether federal, state or local, we at Serena Law will be able to provide you with a reliable, clear answer to this question before you decide to file for bankruptcy.

Should I file bankruptcy if my debts are mostly for taxes?

This also depends on your particular situation.  Often the best solution for overwhelming tax debt is to work directly with the IRS or the State or municipal tax authority.  This is because bankruptcy may not eliminate the tax debt as effectively as some alternatives such as “offers-in-compromise” (see above).  On the other hand, there are circumstances where bankruptcy can largely, or even entirely, eliminate tax debts more efficiently and more fairly for the taxpayer.  These are issues that someone contemplating bankruptcy should discuss with a knowledgeable legal advisor before deciding on any particular course of action.

Creditor Solutions in Bankruptcy – When Your Customer or Supplier Files

Terry Serena has represented institutional creditors, including the IRS and private lending institutions, in bankruptcy cases for over 30 years.  We can assist you in protecting you or your company’s interests by:
    •    Timely filing a proper Proof of Claim for the amount you are owed.
    •    Protecting your security interests in property of the bankruptcy estate.
    •    Defending against challenges to your claims for payment.
    •    Seeking dismissal of the bankruptcy case where possible.
    •    Defending “preference actions” against demands that you return money you received prior to the
         bankruptcy filing.
    •    Defending against claims that you or someone in your company violated the automatic stay or the
         discharge injunction.
    •    Seeking relief from the automatic stay, and/or release of particular property against which you have a lien,
         so that you can pursue your remedies against the debtor outside of the bankruptcy case.
    •    Analyzing how a discharge will affect your right to payment, and contesting discharges if appropriate.
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