Using Bankruptcy to Help Pay and Discharge Debts

This week Warren Sapp’s Chapter 7 bankruptcy case was completed after filing in April earlier this year.  When he filed his petition he had an overwhelming amount of debt totaling close to $7 million.  Sapp’s assets were just over $6 million which included personal items of value such as a signed boxing glove by Muhammad Ali and more than 200 pairs of Air Jordan shoes.  While he still has certain financial obligations he’ll be responsible for, the bankruptcy filing helped wiped out a large chunk of his debt.  At the time Sapp filed he also owed alimony, child support and back taxes.

While bankruptcy can be a powerful financial tool, there are certain debts that may not qualify for discharge. Child support, alimony and certain tax debts may not be discharged but, if you qualify you can have eligible debt discharged or eliminated to help you meet financial obligations of other debts.  Tax debt may be eligible for discharge under certain circumstances.  Tax debt should be at least 3 years old with tax forms being filed for each year and they should be assessed by the Internal Revenue Service (IRS).  Sapp reported owing close to $1 million in back taxes for 2 separate tax years (2006 and 2010).

Bankruptcy can make your financial situation easier to deal with while helping you gain control of your finances.  If you are considering bankruptcy as an option, contact an experienced Dallas bankruptcy attorney to review your options.