I need you to help me think this one through

[southernbelle]

Here's the situation. I'm finally discharged and now I'm sitting by the mailbox waiting for the hammer to fall on me from the IRS or local taxing authorities so I'm trying to be proactive and not reactive. I think the IRS has received my discharge paperwork by now and I'm assuming the Insolvency Dept. will be turning my case back over to the local rep., but that's just my assumption based on what I can find on line. (I'm too chicken to call them directly because God only knows what type of action that will trigger )

I went online and downloaded the Offer in Compromise form and started filling it out. I did make one phone call to a local lady at the IRS office (anonymously) and she was able to tell me that I could send an OIC after discharge and didn't have to wait until the case closed completely. So I've been thinking, from what I've read so far since I owe them about $65k after a portion was discharged, they will probably file a lien no matter what I do just to make sure I don't try to sell off my only two assets (house and car) without them getting their cut and I don't make enough money to fund a Chapter 13 to pay all of the taxes back at 100%. So I'm stuck between a rock and a hard place and the way things are looking, I might end up dealing with these guys for the remainder of the SOL (10 Years) if they don't accept the OIC.

At this point I think my only option is to file the OIC and if they accept it great, but if they don't then I'll be out of the 20% required to be submitted with the application plus I'm back to square one anyway. Since my discharge was recently granted, is it worth it to attempt to get one unsecured card for emergencies (I hate plastic ) before the IRS files their lien so that I'm not completely screwed afterwards because the conversation with the local rep. gave me the impression that they would most probably file one anyway and rebuilding credit after the lien is going to be virtually impossible.

Also, does anyone have any other suggestions for dealing with these taxes besides an OIC. I might try a chapter 13 later on, but that might be after my case is closed. Also, it scares me to think that I'm giving them everything they need to make it easier to levy my bank accounts (which might change after I submit the OIC ).

[AngelinaCat]

I didn't think you could file another BK of any kind for another 8 years?

In our case, the IRS had made arrangments with us for payments to be made montly--which we were doing until they got the notice of our 7. Then we got a letter essentially telling us that the payments and all were on hold, I suppose until after our discharge--if it ever comes. I am assuming that the payments will start back up once we are discharged and closed, but am not sure of that. I will go back and re-read that letter more closely.

Good luck.

[Flamingo]

I believe you can file a Chapter 13 after a certain period of time after filing a Chapter 7 but you cannot file another Chapter 7 until 8 years after the filing date of the previous Chapter 7. The situation is what it is as you basically state in your own posting. Since you are anxiety-ridden about this situation, your only two options are to wait to hear from the IRS or, as you state, go ahead and take care of submitted the OIC. If you spoke to the IRS about it as you state, you got your answer and it's up to you as to what to do. Same as to the credit card; if you feel you can obtain one immediately after discharge, it's your choice but know you could get denied.

My dad always used to state to me that the only sure things in life were death and taxes...

[AngelinaCat]

My dad always used to state to me that the only sure things in life were death and taxes...

Mine too!

[rfassett]

No problem filing a 13 right after a 7 (thus the Chapter 20 nomneclature) and it is for cases just like this that it is allowed. Southernbelle, you should have about 30 days from the discharge before you will hear from the IRS. I can't speak to the local taxing authorities. An OIC may be the best approach if you can fund it. At the very worst, it will tie things up for awhile longer which will give you additional time to figure out how you might fund a 13 should the OIC go south.

[AngelinaCatHub]

You are worrying prematurely. First of all, they know you were C7. I’m confident interest and penalties will not be assessed as I understand it. First they will send you a bill for the whole amount with a coupon to send. Don’t panic, it is protocol. If you can afford it, go to a good CPA, they will file the right documents for a payment plan. The IRS does not have debtors prison and as long as you keep them informed they are “nicer” than they used to be. Just stay on schedule and they will also take into consideration your income. You got the big part behind you. Don’t generate another worry to take the place of the ‘Big part’. LOL ‘Hub

[bk4sky]

i collected on personal state income taxes for some time, i dont know if its the same with the IRS, but if the offer and compromise is accepted they only give you so much time to pay in full. so make sure you find out if your offer and compromise is accepted how much time you have to pay back the new amount

oh yeah with state taxes ive seen liens filed against people who had payment arrangments set up, so you may also want to discuss that with the collector as to when liens are placed. for us we were an agency that was contracted by the state and we had no control over when the lein was filed, if you are working directly with the IRS maybe they can hold it off for you, but be sure to ask these things.

[fltoo]

I didn't think you could file another BK of any kind for another 8 years?

In our case, the IRS had made arrangments with us for payments to be made montly--which we were doing until they got the notice of our 7. Then we got a letter essentially telling us that the payments and all were on hold, I suppose until after our discharge--if it ever comes. I am assuming that the payments will start back up once we are discharged and closed, but am not sure of that. I will go back and re-read that letter more closely.

Good luck.

NOT TRUE

[fltoo]

Not always true about penalties.

Southernbelle, you are truly a remarkable person, a study in perseverence and stamina.

[southernbelle]

I've started filling out the OIC forms, and just made the assumption that the penalties and interest kept accumulating during my Chapter 7. I didn't know there was any relief, but that's good to know. Also if I'm given at least 30 days after my discharge that will help me as well because that will give me just enough time to fill out the forms I need.

I was initially considering a Chapter 13 immediately after my 7 because although it is true that I would have to wait 8 years before re-filing, but from what I've read, I could file the Chapter 13, but I wouldn't be able to receive a discharge at the end. The attractive part about it (if I could afford it) would be that I would be able to pay the taxes back without continued penalties and interest (or very little interest).

My biggest worry when I think about being placed on an Installment plan directly with them is the amount they would require me to pay back monthly. One rep. I spoke with early on told me the amount I would have to pay would be a lot because of how much I owe (he wasn't the nicest person in the world). If that's true, it's almost like a chapter 13 plan with the privilege of paying penalties and interest.

I think you guys are right, I already have my answer, but I'm too worn-out, scared and broke to persevere. Thank you guys again for helping me to think this through because several heads are better than one and I respect your opinions which is why I keep coming back.

OIC it is. I'll keep you guys updated with what happens and hopefully my case will get transferred back to the sweet little lady at the local IRS office. When I get everything filled out and feel I have nothing left, I think I might make an appt with her to talk face to face.

Thanks you guys. I feel better already. I think the amount I owe is what's freaking me out.

[BKParalegal]

I have filed a number of OIC's for clients with almost 100% success. The key is to make sure you send all the supporting documents and it doesn't hurt to send a sob story along with it. Also, I have sent the required 20%(it is 20% of what your settlement offer is not of what you owe) and in some cases I have sent a token amount, especially when I was compromising for close to 0.

In regards to the interest and penalties, they still accrue during the period you filed the Chapter 7. I am not in front of my BK code book, but I think it is 4 years from the date you file a Chapter 7, before you can file a Chapter 13 and get a discharge. The issue with yours is you are not in need of a discharge, because you are paying 100% of your tax debt, and there isn't any debt to forgive(discharge) at the end of the 13. The benefit of a 13, in regards to the taxes, is that all interest and penalties stop the day you file, so you can figure out your payments real easy. Take your attorney fees, taxes owed, add 10% trustee fee, and then divide by 60( assuming you are going the whole five years).

Good Luck

[southernbelle]

Thanks for the advice BKParalegal. Since you have 100 times more experience at this than I do, can I run some basic questions by you when I get everything filled out and ready to submit. I plan to have everything ready in about a week, but I don't have any money to pay an Enrolled Agent or CPA to do it for me so I'm having to do it myself. I'm pretty paranoid about everything so I plan to send as much supporting documentation with the OIC as possible.

I just received the market analysis from the BK realtor so that will help a bit. I can't afford a full-fledged appraisal so hopefully her analysis, email with her recommendations on how much my home is worth along with a color copy of her business card will suffice. Since my only assets are my home and car hopefully the market analysis and a copy of kelly blue book for my car will be enough. The only thing that might actually help is the fact that I have 2 cross coll. loans on my 2nd mortgage which greatly decreases the amount of equity in my home.

My only concern is the fact that they might assume that I have more disposable income to repay them than I actually do because they don't allow the same expenses BK schedules do, i.e. I was able to use my voluntary retirement contributions in my Chapter 7, but it isn't allowed as an expense on the OIC. Another thing I noted was the OIC will only allow certain expenses, but only if you can provide 3 months of receipts for those expenses. They call these "actual expenses". Bankruptcy isn't that strict. The IRS stinks.

I've also kept copies of most (but not all) receipts for gas, groceries, etc. so I was also thinking about sending those as well to prove expenses.

If all else fails, maybe the time to process the OIC will give me enough time to get into position to successfully file a Chapter 13. Thanks for the help.