Chapter 7 tax costs after discharge??

[rustymich]

Wondering what the costs will be in federal tax for being discharged if God wills this new start to me,I see people talk about tax but not broken down to costs..Wondering if Ill be in the hole to the IRS next due to the tax??Thanks for your thoughts

[daylate]

I don't think there are any. There is a loophole that says if you are insolvent then you don't owe tax on forgiven debt.

[HHM]

None

[octoblonde]

The tax consequences would come into play if you settled the debt with the credit card company for less than what you owe. Chapter 7 is a better deal. You get a clean slate with no tax consequences and the CC companies can't come after you for something that you thought was "settled."

[rustymich]

Thanks all for your help I was very concerned that If discharged I would be hit with a big tax bill because of it,thanks again...

[mycard]

Hi everyone, Getting ready to file bankruptcy tommorrow. Received a letter in the mail that I had a debt cancellation about 3 months ago and the paper work was sent to the IRS. Have not heard anything from the IRS but if I file chapter 7 would I still owe income on that credit card debt. I used a attorney from Houston in 2007 called Hinsley Law Firm and his service was going to help with the debt but after they ran through $3000 dollars in three years and nothing had been release except the about credit card I stopped the service due to the fact that it could go on and their was no end to it. I mean I looked at one of the bills and they billed $900 dollars for three hours and when I asked about it their was no explanation once they got your money up front there was no refund. Well I hope this turns out good I was a die hard to pay off bills but when the interest went up to 32 percent and no one wanted to work with me I have no choice. Thanks for everyones help and if you could give me some tip it would be greatly appreciated.

[shadowb]

To me the whole tax thing is so crazy. I was discharged from my chapter 7 in February of 2010. I was divorced in February of 2010 as well and am now remarried. My current husband and I just received a letter from the state of Louisiana over the weekend saying that they were applying our refund to a 2005 tax debt that my ex and I had, even though my ex stayed in our 13 (he filed motion to sever our case and forced me out into 7) and is paying for the tax debt in his payment plan. Now I am finding out that it is highly possible my chapter 7 attorney gave me the wrong advice as far as my having a "clean slate". My CPA doesn't understand how this happened, nor does my husband's attorney who advised us to file a "prenup" just in case.