Michigan Bankruptcy Laws from Michigan-Bankruptcy.com | Michigan Bankruptcy Lawyer Walter Metzen

 Detroit Bankruptcy Lawyer Walter Metzen

Detroit Bankruptcy Lawyer .com Attorney Walter Metzen Bankruptcy Law Office is conveniently located just one block from the United States Bankruptcy Court in Detroit Michigan. Suite 3156 Penobscot Bldg., Detroit MI 48226. The US Bankruptcy Court for the entire Metro Detroit area is located at 211 West Fort Street, Detroit Michigan 48226. Call 313-962-4656 or 888-Debt-Gone for a Free Consultation.

has prepared this comprehensive information bankruptcy site to help come to terms with consumer debt and bankruptcy. If consumer debt has you buried, if creditors are calling at all hours, if you have been threatened with lawsuits and other collection activities, you will find information in this bankruptcy site to help you.

This site is about credit management, debt relief,  Chapter 7 Liquidation Bankruptcy, and Chapter 13 Wage Earner Bankruptcy. DetroitBankruptcyLawyer.com Attorney Walter Metzen is an experienced  bankruptcy lawyer who  specializes in helping consumers with credit, debt, Chapter 7 Straight Bankruptcy and Chapter 13 Wage Earner (Repayment Plan/Bill consolidation) Bankruptcy.

MICHIGAN BANKRUPTCY - Income Taxes and Bankruptcy

It is a common misunderstanding that bankruptcy cannot eliminate any income tax liability. Although treatment of income tax liability is one of the most complicated aspects of consumer bankruptcy law, the Bankruptcy Code does offer many debtors substantial income tax relief. Whether or not your bankruptcy filing relieves your tax debt depends on several factors including the nature and the status of tax liability and the type of bankruptcy proceeding.

Type of Tax

Only individuals, not businesses, can discharge (wipe out) certain taxes through bankruptcy. The only taxes eligible for discharge are income taxes. Bankruptcy offers no relief from taxes for which the debtor/taxpayer was responsible for collecting from others such as FICA withheld from employees. Bankruptcy also will not relieve liability for excise taxes such as estate and gift tax, sales tax, or fuel taxes.

Secured Tax Debts

In the course of its collection efforts, the IRS has the power to file a tax lien to perfect its tax claim against individuals. A tax lien, once filed, becomes a secured lien on all of the taxpayer’s property. If a tax lien is in place prior to your filing bankruptcy, the IRS’s secured tax lien has priority over the bankruptcy filing, and bankruptcy cannot dislodge the lien from the your property. Even property which would otherwise be exempt in a bankruptcy, such as homestead, cannot be sold or transferred without payment of the IRS tax lien. In this instance, bankruptcy provides no tax relief.

Tax Relief in a Chapter 7 Bankruptcy

Chapter 7 Bankruptcy will eliminate all income taxes except the following tax liability:

a. Taxes for which a tax return was due to be filed within three years (plus extensions) prior to the date of filing bankruptcy. For example, the tax return for 2003 income taxes was due to be filed on April 15, 2004 (plus any extensions), and therefore, these income taxes cannot be discharged by filing bankruptcy on or before April 15, 2007 (plus the time of extensions); OR

b. Taxes assessed by the IRS within 240 days before the filing of bankruptcy. Assessment date is the date that tax liability is entered on IRS records; OR

c. Taxes not yet assessed but still assessable; OR

d. Taxes for which a tax return was filed late and filed within two years prior to filing bankruptcy; OR

e. Taxes of a debtor who committed fraud related to a tax return or willfully attempted to evade or defeat taxes sought to be discharged.

Income taxes that do not fail any of the above five tests may be wiped out in a Chapter 7 Bankruptcy.

Tax Relief in a Chapter 13 Bankruptcy

Taxes which are non-dischargeable in Chapter 13 are considered priority debts and must be paid in full during the Chapter 13 plan without interest.

Other Points to Remember

Dischargeable taxes are eliminated in Chapter 7 and are treated as general, unsecured creditors in Chapter 13.

Secured tax liens cannot be discharged in Chapter 7. The secured portion of tax liability must be paid during a Chapter 13, in full and with interest, but without further penalty.


Free Bankruptcy Book

Bankruptcy Basics” is a free book prepared by the Bankruptcy Judges Division and the Administrative Office of the United States Courts as part of their Public Information Series. It is not prepared by the Bankruptcy Law Office of Walter Metzen.

This book should be used as a general overview of the bankruptcy process and not as specific legal advice. This book is not a replacement for the advice of a competent bankruptcy attorney, a fact this bankruptcy book itself states in its introduction. The Bankruptcy Law Office of Walter Metzen provides a free Bankruptcy attorney consultation, during which  you will be provided information based on your specific circumstances and current bankruptcy laws. Feel free to contact us by telephone at (800) 398-3328 or via email if you have any questions concerning the materials or filing for bankruptcy.

Please click the link below to review the book. You must have Adobe Acrobat Reader installed on your computer in order to review the materials.

Bankruptcy Basics



The Michigan Bankruptcy Law Office of Walter Metzen, offers each prospective client a free initial consultation to discuss your financial concerns as well as the possible need to file a petition for relief under the United State Bankruptcy Code. The purpose of the initial consultation is to inform you about the bankruptcy process in Michigan, whether you should file a Chapter 7 or a Chapter 13 and how the United States Bankruptcy Code is designed to protect most if not all of your assets through exemptions.  In an effort to make the free consultation more productive, we ask that you bring certain financial information to the meeting, or better yet, complete and send the online Michigan Bankruptcy Consultation Form.


The list of creditors must be complete. It must include ALL of your creditors (including family members, taxes, car loans, mortgages and leases), in one column and the amount owed in the adjacent column. The monthly budget should contain a complete breakdown of your income and expenses.

In addition to the above, be prepared to provide our office with dollar values for certain assets, including your home (if you own), your vehicles, and any other substantial assets, whether real property or personal property. By providing us the opportunity to review your monthly budget and to gain some understanding of the value of your assets and how much you owe to your creditors, we will be better able to assess your situation and advise you appropriately. You may schedule an appointment by either completing the Michigan Bankruptcy Consultation Form, calling our offices directly at (313) 962-4656 or by requesting an appointment via email.


Contact a Detroit Chapter 7 Bankruptcy Lawyer that, not only fully understands the bankruptcy process, but also can realistically advise you of your options. Feel free to schedule your free initial consultation. During this time, we can discuss your case and I can help you take charge of your financial situation. CLICK HERE for a Glossary of Bankruptcy Terms

We are a Debt Relief Agency helping people file for bankruptcy relief under the Bankruptcy Code. Let us help you decide if bankruptcy is right for you.

Bankruptcy attorney Walter Metzen represents clients throughout Southeast Michigan, including the communities of Detroit, Southfield, Warren, Roseville, Farmington Hills, Ann Arbor, Belleville, Canton, Clinton Township, Dearborn, Dearborn Heights, Hamtramck, Highland Park, Holland, Howell, Lincoln Park, Livonia, Macomb, Northville, Plymouth, Port Huron, Redford, Rochester, Saginaw, Southfield, Sterling Heights, Taylor, Trenton, Troy, Westland, Wyandotte, Ypsilanti, Mount Clemens, Howell, Oakland County, Macomb County, Wayne County, Washtenaw County, Livingston County, and all of the surrounding areas.