There is no reason to feel "guilty" for having to file for bankruptcy.
Filing for bankruptcy protection is NOT an indication of permanent failure or of dishonesty, and is
often most HONEST approach to handling a financial crisis than other options.
Things happen; the U.S. Constitution specifically authorized congress to enact legislation for the purpose
of providing bankruptcy protection; therefore, congress enacted laws that are designed to benefit YOU,
your creditors, businesses, and the economy. This is accomplished because the laws attempt to provide
a way for persons and businesses to continue on as normally as possible instead of experiencing such a
blow that they are unable to any longer make any worthwhile contribution to national commerce.
Bankruptcy and IRS Debt
IRS debt can be discharged in bankruptcy. However, the laws that apply to IRS debts are somewhat
complicated. Do not rush into bankruptcy due to an IRS tax debt without obtaining a careful and
meaningful review of your IRS-debt situation by an attorney who does more than just bankruptcy law or
by an attorney who will work with a federal tax professional.
There are several traps when it comes to discharging IRS debt in bankruptcy. One is the 3-year-since-
the-filing-was-due requirement and another is the 280 days-from-assessment requirement. If you meet
the 3-year requirement, you may not have met the 280-day requirement due to many possible factors;
such as, you were involved in negotiations with the IRS, signed an installment agreement, entered
into an Offer in Compromise Agreement, received an IRS penalty for civil fraud or failed to timely file a
previous tax return. In fact, you may find that some of your IRS debt is dischargeable and some of it is
Most surprising to many is that even if the actual tax debt is discharged in bankruptcy, certain IRS tax
liens placed on your property because of the IRS debt that was discharged will remain in effect against
your residence or other certain property that was actually exempt from the bankruptcy. The result is
that the tax debt is discharged in bankruptcy; but, if you try to sell property that you retained because it
was exempt property (e.g., your residence) after the bankruptcy case is closed, the IRS may still step in
and seize the proceeds from the sale to satisfy the IRS debt.
A person needing to file for bankruptcy protection in California, should
AVOID "BANKRUPTCY MILLS".
He or she should instead seek out an Experienced Bankruptcy Attorney that is known to thoughtfully
review each client's individual circumstances and assist that client accordingly.
Do not get "talked into" legal services that you do not need! Many people are talked into filing for
Chapter 7 Bankruptcy protection by large "Bankruptcy Mills" when it may not be in their best interest. If
you are underwater on your mortgage; that is, you owe more on your home loan than your home is
worth, filing may not be your best option. If your mortgage is your only substantial debt, there are other
methods by which you can fix this problem without going through the experience of filing.
Choosing the right bankruptcy attorney in northern California. If you go to meet with a lawyer about
your issues and you are met by a receptionist behind a glass barrier that hands you a long form to
complete; that requires all of your personal and financial information BEFORE you ever meet with a real
attorney, you may want to run.
It is not uncommon for a person who files for bankruptcy to think everything is going to be fine; but are
rudely surprised when they attend their meeting of creditors and the court ends up taking from them all
of their money and other property. Most attorneys who run "Bankruptcy Mills" do not even know the
client or the client's information. There are many times when we have seen attorneys show up in court
and not even recognize their own client. If the attorney does not familiarize themselves with the client,
and allows their paralegal to do all the work, the entire process ends up being more stressful and
damaging to the client. It has been common for us to have a person contact us who is frustrated with
their bankruptcy lawyer because they are not giving them the one-on-one attention needed to ensure
that their experience is a good one.
An attorney who states "That's ALL We Do" may not be equipped to do little more than try to talk you
into filing a bankruptcy in order to fix your real estate debts; because that is "What They Do" and
nothing else. They do no profit by explaining to you all the options available, so they often are not
interested in meeting with you UNLESS you are going to actually file. Choosing an attorney that has the
Experience necessary to fully inform you of ALL of the options available to you is VERY important.
There are some bankruptcy attorneys who do nothing but bankruptcies who are good, and who will not
conduct themselves in this unprofessional manner.
Bankruptcy law has undergone some changes lately. Filing has become more difficult than in the past
due to the recent changes in the law. Many may not easily qualify for protection when in the past they
would have. However, if you speak to an Experienced attorney, you will be pleasantly surprised at what
options may be available to you by either filing or by using other strategies to manage or control your
financial matters. What about those Low Cost Firms that advertise everywhere? Do not get fooled by
the "Bankruptcy Mills" that offer filings for just a few dollars. Most of the time the advertised fee is not
an honest representation of the total fees you will need to pay using an actual lawyer. When looking for
a lawyer, choose one that is up front regarding the TOTAL cost of filing. $100 dollars down will get you
The "Free Consultation" sales gimmick. You get what you pay for. In most cases, the "free consultation"
is simply a sales ploy to get you into their office so they can obtain your personal information and
determine how to sell you on using their services. In more cases than not, information obtained in free
consultations is not enough to prepare you to handle your legal matters. For useful, legal assistance, you
will need to pay for it. Instead of a "free consultation", it is easier and quicker to spend a few short
moments on the phone with a lawyer so he or she can provide you with all of the initial direction you
may need to determine whether or not you need a lawyer and if the lawyer with whom you are
speaking is the one for you...and that short communication should be FREE!