Search for wage garnishment solutions on Google and you’ll stumble upon a lot of results that point to Chapter 7 bankruptcy. Also known as liquidation bankruptcy, a Chapter 7 involves the trustee selling some of your properties to creditors in exchange for canceling most or all of your debt, including federal income taxes. However, is it the best solution?
Although many experts recommend it, remember that a bankruptcy record in your credit history is a red flag for financial institutions. It gives them the impression that, at one point in time, you struggled to deal with your finances and failed. Should you need a new home or car as soon as possible, a Chapter 7 is a roadblock to a successful loan application.
Tax lawyers advise looking at other solutions before considering a Chapter 7. One is to exempt living expenses from wage garnishment. The key is to prove to the court that you’re struggling to make ends meet. For that, data on income and expenses will serve as valuable evidence in requesting for exemption.
Non-bankruptcy solutions won’t eliminate wage garnishments entirely, but they can reduce the amount that will be taken from your paychecks. While the IRS has an obligation to penalize taxpayers who fail to meet their dues, it doesn’t have to reach the point where you can’t afford to live decently. Tax lawyers have the experience and the expertise to come up with solutions that will satisfy tax requirements without compromising your well-being.