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 Posted: Tue Feb 26, 2008 11:25 am |
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I have heard that when you file bankruptcy you have to claim the debts as a capital gain. Is this true? I am filing a chapter 7 and am worried how much it will cost me next year if I have to claim this $45,000 as a capital gain.
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OneDumbBlonde
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| Posted: Wed Feb 27, 2008 2:54 am |
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hello!
according to bankruptcy courts, tax refunds or a portion of it can be considered as a part of your assets, which are taken up by the trustee appointed by the court, who in turn converts them into cash to pay up to your creditors. but there are exemptions on them and it differs from state to state, and you need to find out the laws of your state.
however, assets are those that you possessed at the time of filing bankruptcy. so only the tax refund for that particular time or year will be considered as asset. the tax refund of the subsequent years will remain with you.
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laurel188
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| Posted: Wed Feb 27, 2008 9:00 am |
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I was in KS the first time I had to file (sep & divorce). Depending on when you file. Mine was filed toward the end of the year, I believe and they kept 3/4 of my tax return that year. I would talk to your attorney, if you have one, and see what he/she has to say. They would be more able to answer that question in regards to your particular state.
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2nband
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| Posted: Thu Feb 28, 2008 7:36 am |
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I guess I didn't word that right or something because my question isn't so much about what I would be getting back. I have heard that when you are filing your taxes and you get to the question about capital gain you have to claim all discharged debt as a capital gain. I wanted to know if this was true or not because I have about $45,000 in debt that is going to be discharged with the Chapter 7. I am worried that next year I will file taxes for 2008 and have to claim this $45,000 as a capital gain.
As far as what I get back, my lawyer told me to just wait until after the 341 meeting to file and the tax return would then be mine to keep.
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OneDumbBlonde
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| Posted: Sat Mar 01, 2008 6:03 pm |
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I am no professional but from my knowledge-NO you would not owe taxes on the debt that was discharged through bankruptcy. I know if you settle debts you would receive a 1099 and YES that would have to be claimed but then there is the subject of being insolvent. Talk to your attorney. He will know. If I see mine soon, I will ask as well. Good luck to ya.
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girlndebt
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| Posted: Fri Mar 07, 2008 12:21 am |
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girl in debt! you are so helpful and nice!
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socksfullofrocks
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| Posted: Thu Mar 27, 2008 6:35 am |
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Thanks for your reply, I just had my 341 yesterday. Apparently the rule is any discharged debt is a capital gain, but bankruptsy is an exception to the rule so it does not count. As fr my taxe return for 2007, it falls under my "wildcard exemptions" and I get to keep the entire thing. Finally my life can begin again!
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OneDumbBlonde
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| Posted: Thu Mar 27, 2008 7:19 pm |
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we just did this well my fiance did. We were afraid that cause we canceled the debt that we would be taxed on it. You know like you are when you settle. And nope they dont even take the bankruptcy into consideration on your tax return
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jarjoecharclin
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| Posted: Tue Apr 29, 2008 11:33 am |
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I am glad I read this thread, as I was wondering how my discharged debt was going to affect my 2008 tax return. I'm glad it won't be an issue. Since the debt discharged in bankruptcy is exempt from capital gains, I'm assuming the amount of debt discharged doesn't even have to be listed on the tax return?
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Tiffany99
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