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pkassa · Jan 26, 2008, 05:56 PM

We filed for chapter7 personal bankruptcy in 2007. We gave up our house and business (franchise) because we could get fresh start. We wiped out ~200k in debt in the process.WE lost ~50OK in EQUITY from the house and money initially invested over the last 3 years in the business. Do you recommend that we get professional help to file our taxes or try orselves.I usually did taxes using turbo tax software.

George_1950 · Jan 26, 2008, 06:00 PM

Just my opinion, but the fact that you are asking should indicate the answer to your question.

Fr_Chuck · Jan 26, 2008, 07:28 PM

Of course equity is only paper, since if there really was that much in the hosue, you could have sold it for that much an paid the debts.

So you are looking at a old appraisal value, which loss value because of the housing market, so your real equity loss was not really the bankruptcy but the economy.

I don't believe these losses effect your taxes, esp if the house was sold by the courts.

But I would have a professional do the taxes anyway, We have a couple expert tax people here, I am sure one of them will jump on this in a day or two and give you a more exact answer.

mldubose · Jan 26, 2008, 07:35 PM

I personally think you should always have an expert do your taxes. The extra you spend is well worth it instead of having some wanna-be tax preparer at one of the chains just filling in the forms.

When you do it yourself, there's always something you could miss, no matter how good at it you are. Unless you are a CPA.

And I'm kind of wondering why you didn't sell the house to pay off everything. Instead of "losing" the equity in it. And then you wouldn't have had a bankruptcy on your credit report.

AtlantaTaxExpert · Jan 28, 2008, 09:25 AM

All points are valid, though I am REAL skeptical about the $500 lost equity, because, as noted, you could have sold the house at a $250K DISOCUNT, and had enough to pay ALL debts and STILL have $50K in the bank.

And ANY bankruptcy lawyer or judge worth his salt would have figured that out and stopped the bankruptcy in its tracks. The judge would have DIRECTED the sale of the house to settle the debts.

That said, get a CPA to do your tax return this year. Make sure he knows about EVERYTHING that has happened for the past five years.