Legal Question in Bankruptcy in California
Taxes/2nd Mortgage/Keep Paying?
I am considering bankruptcy due to a marital seperation. I have several questions:
1. I owe back taxes (federal) for the years 1994 and 1995 totalling about $19,000. Are they dischargeable?
2. I would like to keep my home. I have a first mortgage (141,000) and a 2nd mortgage (12,500). The home is worth, I believe, less than the combined total.
3. In the process of bankruptcy do I continue to pay my creditors until the completion of the petition or do I pay my estimated taxes for this year (I'm self employed)?
Thank you.
2 Answers from Attorneys
Taxes/2nd Mortgage/Keep Paying Response
To answer your questions in order: 1. Your 1994 taxes might be dischargeable depending on numerous facts. The 1995 cannot be discharged at this time. 2. You should be able to keep your home. You may even be able to avoid the second mortgagor's lien (if the value of the home is less than the $141,000 you owe on the First). 3. After you file bankruptcy you do not have to pay any creditors except those that you have an ongoing obligation to (i.e. those that are secured, like your mortgages, car payments, etc.). Yes, you need to continue to make your estimated tax payments. The answers to your questions also depend on what Chapter of bankruptcy you file and some facts which you have not given. If you desire representation or further assistance, please visit my web page (address below) and give me a call. I will be happy to give you a more comprehensive consultation. Best Wishes,
Mark
the answers vary
1. the general rule is that taxes are dischargable after 3 years have passed since they were due and you must have filed a return.2. It depends on the type of bankruptcy filed and whether you are behind in the payments. If you are not behind in the payment you can keep the home. If you are behind you may loose the home in a chapter 7 but could probably keep it in a 13.3. Once you know you are going to file a bankruptcy you should stop all payments to unsecured creditors immediately. Continue to pay secured creditors if you intend to keep the property subject to the security interest. Do pay the estimated taxes.