Legal Question in Bankruptcy in New York

Paying taxes on bankruptcy debt??

Sir or Madame,

My husband and I are currently in the process of filing personal bankruptcy. My husband is worried that we would have to pay taxes on the amount that is discharged as we would have used money that ''isn't ours'' (i.e. our credit card debt).

Given the amount of debt we have, he calculated approximately $8,000 that would have to be paid in taxes if what he read about today is correct.

He is somewhat confused as to what type of bankruptcy this would apply to, but it is not something I have ever heard of relative to a personal bankruptcy. Could you please shed some light on what taxes may need to be paid on a personal bankruptcy, if any? Thank you!


Asked on 4/12/04, 3:31 pm

2 Answers from Attorneys
Andrew Nitzberg Andrew Nitzberg & Associates

Re: Paying taxes on bankruptcy debt??

No, you do not pay taxes on this. The debt is not 'forgiven', rather it is 'discharged'.

No taxes.

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Answered on 4/12/04, 11:20 pm
Eric Kochel The Law Office of Eric David Kochel, Esq., P.C.

Re: Paying taxes on bankruptcy debt??

No you dont pay taxes. Taxes must be paid on "forgiven" debt but never on debt discharged in a bankruptcy.

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Answered on 4/13/04, 2:48 pm


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