FRANK D. TAFF, J.D., Attorney at Law

YOUR HOME

The Kansas homestead exemption protects the equity in your home or principal residence. You can protect the entire value of the real property or mobile home that you occupy, if it is one acre or less within the city limits or 160 acres or less of farm land. K.S.A. 60-2301, Kansas Constitution Article 15 § 9

YOUR LIFE INSURANCE

Life insurance proceeds, if you file bankruptcy more than a year after the policy went into effect. K.S.A. 40-414 and 60-2313(a)(7).  Fraternal society benefits are also exempt BY K.S.A.  60-2313(a)(8)

YOUR MOTOR VEHICLE

You can protect up to $20,000 of equity in a motor vehicle that you regularly use to get to and from work. If the vehicle is equipped to assist with a disability, you can protect the full, unlimited value of the vehicle. K.S.A. 60-2304(c)

YOUR PERSONAL PROPERTY

Furnishings, clothing, earned income tax credits, and supplies, including food and fuel in your possession and reasonably necessary at your residence for up to one year is exempt, along with your jewelry with a value of $1,000 or less per person.  A burial plot or crypt is also exempt.   K. S.A. 60-2304

YOUR PENSION MONEY

Pension, Retirement, and Life Insurance Benefits: ERISA-qualified benefits, IRAs and Roth IRAs and federal government pension needed for support & paid within 3 months prior to filing bankruptcy are exempt. K.S.A. § 60-2308  Payments under a stock bonus, pension, profit-sharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for support are exempt. K.S.A. 60-2312

PUBLIC BENEFITS

Earned income tax credits are exempt. K.S.A. 60-2315

YOUR WAGES THAT ARE DUE AND OWING

75% of disposable earnings or 30 times the federal minimum wage, whichever is greater, is exempt. K.S.A. 60-2310

TOOLS OF YOUR TRADE

The ooks, furniture, tools, and supplies used in your trade or profession or business are exempt up to $7,500 in value. K.S.A. 60-2304

State law usually determines when the statute of limitations expires on different types of debt.  It is different for oral obligations and written obligations.  The statute begins to run when the debt has matured and you fail to make a payment on it.  It stops, or is suspended, if you make a payment, or sometimes, make a new promise to repay.  It depends on two things: the type of debt and the law that applies, being either that of the state where you live or the state specified in your credit contract. For example, the statute of limitations for credit card debt in a few states may be as long as 10 years, but most states impose a period of three to six years. To determine the statute of limitations on different kinds of debts under Kansas law, check with us, if you are being threatened with collection on an old debt or bill.

Bankruptcy will not wipe out prior recorded tax liens.  A Chapter 7 bankruptcy will wipe out your personal obligation to pay the debt, and prevent the IRS from going after your bank account or wages, but if the IRS recorded a tax lien on your property before you file for bankruptcy, the lien will remain on the property.  In effect, this means you'll have to pay off the tax lien in order to sell the property.  Of course, if you rent and own no real estate, a federal tax lien may not be a concern.

Everyday, we see TV ads saying they can get the IRS to drastically reduce your taxes.  You pay them a bunch of money up front and usually receive nothing in exchange!

But, did you know bankruptcy can eliminate a lot of back taxes without paying money up front?  That can be done through a Chapter 13 wage earner plan, if the taxes are more than three years old.  Call us for more information.

Bankruptcy cannot discharge taxes for which no return was filed, however.  To quote one court:  "The goal of bankruptcy is to give the honest but unfortunate debtor a fresh start, but the law has always provided that certain debts cannot be discharged.  Section 523(a)(1)(B)(i) excepts from discharge any debt for a tax with respect to which a return was not filed."

Also, taxes cannot be discharged in bankruptcy where the tax payer has filed a fraudulent return or willfully attempted to evade or defeat the tax.

Finally, the income tax must have been assessed by the IRS at least 240 days before you file bankruptcy, or have not yet been assessed at all.  This time may be extended if the IRS suspended collection activity because of a compromise offer or a previous bankruptcy filing.