Bankruptcy, tax lien
6 attorney answers
Filing of bankruptcy will stay most collection proceedings including IRS. Clarify the following - is the business a corporation? What type of bankruptcy is your friend intending to file - corporate or personal bankruptcy? Facts as stated in your question are not clear. Consult a bankruptcy attorney who may be able to temporarily "stay" the shut down of the business.
Taxes represent a very complex part of the U.S. Bankruptcy Code. Your friend should immediately contact a qualified Bankruptcy Attorney to discuss his options. It is possible that the taxes involved are of the nature that your friend will be held personally liable for the same if they are any type of "trust fund violations". Remember that the State Tax agency wants the taxes to be paid, so there may be other options available as well, if there is adequate communication with the taxing agency. If they are not willing to cooperate, then it is likely there are options under the Bankruptcy Code to require that cooperation. However, the issue is too complex to address without knowing all the relevant facts, so have your friend contact an Attorney today, don't delay.
A bankruptcy filing immediately initiates the "automatic stay". That prevents any and all creditors from taking any collection action against the Debtor. A creditor, at any time during the bankruptcy, may request the Court to lift the stay, for cause. So, in the short term, it would stop the DoR from shutting them down. However, it may just be delaying the inevitable, unless your friend can come up with a plan (in bankruptcy through a Chapter 11 or Chapter 13) to pay what is owed. I would suggest that your friend immediately meet with a bankruptcy attorney to determine his/her options and do not wait until the day before. Your friend may be required to take a consumer credit counseling course prior to filing, so waiting till the day before may not provide for enough time to get everything done.
It would stop it in the short term, but what is the plan in the days after the Bankruptcy case is filed? The taxes still have to be paid.
Maybe. One things that will have a significant effect on the answer is whether his business is incorporated or not. Another is time. Since a business bankruptcy can be complex, the more lead time he gives a lawyer the better. That means he should be calling a lawyer now and in someone's office within the next 24 hours.
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It's possible, but there is much more information needed. I suggest your friend meet with a local, experienced bankruptcy attorney, asap. Use avvo to find someone. many offer free consultations. Good luck to you and your friend!
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