About filing bankruptcy to reorganize his tax debt

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Reference no: EM132179865

Your business has gone great but your college roommate has not been so lucky. He comes to you with the following information and asks for your advice before he consults an attorney. He does not want his ex-wife to know what is going on.

Jerry, a professional with a salary of $10,000 a month from his corporation, comes to ask your advice about filing a bankruptcy to reorganize his tax debt. He has over $100,000 in a 401(k) and $50,000 equity in his house. The stock in Jerry’s business is all owned by him and has been valued at $75,000. The value of all his other personal assets is $15,000. The IRS has filed a personal tax lien for $100,000. In addition, the IRS and the Franchise Tax Board have priority tax claims of $45,000. Jerry has a $550,000 unsecured bank loan and he owes $15,000 to his divorce attorney. Both of these debts are dischargeable. Joseph’s average monthly expenses include $2,000 in child support and $1,500 to his unemployed former spouse on a marital equalization judgment of $75,000. His other ordinary and necessary living expenses average $5,000 a month. Jerry still lives in Bulloch County, Georgia trying to re-live his glory days from college.

What options Jerry may have under chapters 7, 11 and 13 bankruptcies and the advantages and disadvantages of each option. What steps must he take if he chooses to file for bankruptcy. Don't offer to bail him out!

Reference no: EM132179865

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