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  1. #1

    Default Filed Bankruptcy 13 and Now Filing Taxes

    Question in the State of: NY

    In February 2009 I settled with one of my credit cards. However, trying to settle with the rest and not being successful I decided to file for Bankruptcy Chapter 13 in September 2009. I already have my confirmation hearing and I am current paying it. Now, I just received a 1099-C for Cancellation of Debt in which I have to include in my tax. This is for the settlement I did back in February 2009, before filling Bk. Now I have to file my income tax and I was wondering if by filling BK chapter 13 will help me decreasing my income or at least with the amount I will have to include as income for the settlement I did. I owed $ 15,000.00 and I settled for $ 2,000.00 and now I have to claim $ 13,000.00 for debt cancellation as income. Can BK 13 help me?

    Thank you.

  2. #2
    Join Date
    Sep 2005
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    Default Re: Filed Bankruptcy 13 and Now Filing Taxes

    I'm not sure what you mean. How do you propose that filing Chapter 13 bankruptcy would change the amount you earned last year?

  3. #3

    Default Re: Filed Bankruptcy 13 and Now Filing Taxes

    Can I claim myself insolvent? If I filed for BK in 2009, that means I did not have more assets than liabilities.

  4. #4
    Join Date
    Jul 2007
    Location
    Florida
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    2,344

    Default Re: Filed Bankruptcy 13 and Now Filing Taxes

    This is a tax question really. The bankruptcy helps only if the debt was discharged as part of your bankruptcy. That does not appear to be the case. As you've pointed out, your other potential salvation is if you can establish that you were insolvent at the time of the cancellation of the debt. Add up all your assets - cars, real estate, personal effects, etc. - and also your debt obligations. Do this as of the date the debt was cancelled. You are insolvent to the extent that your debts exceed your assets and to that extent you can exclude the cancelled debt from your income for tax purposes. Otherwise, I cannot see any way to exclude this debt. You will need IRS form 982 to do this, and be prepared to document your debts and your assets if your tax return is examined by the IRS.

  5. #5

    Default Re: Filed Bankruptcy 13 and Now Filing Taxes

    Thank you for your response. Now, I just have a question. When my BK 13 plan was confirmed, no all credit cards filed a proof of claim. Therefore, those that did not filed a proof of claim will not get anything from me during my bankruocy plan. Now, Can those who did not file a proof of claim send me a cancellation of debit form (1099-R) later on the year that I will have to pay taxes on?

    Thank you.

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