Using bankruptcy to escape debt?

[Trevor S]

"Galimatias" <clamour@incoherence.org> wrote in
news:qsp2kzhpuo5260c.111120041822@127.0.0.1:

<snip>


> He derives the income, and attracts the tax liability. The income is
> diverted to the partner as maintenance for the spouse/child(ren) where
> was exempt income.

I don't pretend to understand Tax Law but this seems improbable ?

Garnishing of wages for child maintenace is not done by the person being
garnished, i.e they have no "control" over it per se. Ipso facto, it must
have been gifted to the receipent (ie spouse in this instance) regardless
of what they said it was for, it then should have been taxed in the hands
of the receiptent ie the ATO should be going after the recepitent to
recover the money.

If your above scenario is/was the case, business people would have been
doing the same for decades to reduce their tax payable.

--
Trevor S


"Unthinking respect for authority is the greatest enemy of truth."
-Albert Einstein

[Galimatias]

Trevor S wrote:
> "Galimatias" <clamour@incoherence.org> wrote in
> news:qsp2kzhpuo5260c.111120041822@127.0.0.1:
>
> <snip>
>
>
>> He derives the income, and attracts the tax liability. The income is
>> diverted to the partner as maintenance for the spouse/child(ren)
>> where was exempt income.
>
> I don't pretend to understand Tax Law but this seems improbable ?
>
> Garnishing of wages for child maintenace is not done by the person
> being garnished, i.e they have no "control" over it per se. Ipso
> facto, it must have been gifted to the receipent (ie spouse in this
> instance) regardless of what they said it was for, it then should
> have been taxed in the hands of the receiptent ie the ATO should be
> going after the recepitent to recover the money.

If there was a Family Court order that achieved this result, that would
resolve the issue for tax purposes, would it not? The income paid as
maintenance would have been exempt income in the recipient's hands. It has
been quite easy for a married couple to arrange their financial affairs by
the use of such an order. Both as to capital and income. And no stamp
duty.

The ATO might attempt to recover tax from the person deriving the income,
but that person has nothing, legally, The person paid the maintenance was
paid under a court order, and they had no tax liability. All above board,
on the face of it. There have been changes to the tax law since this came
to light.

> If your above scenario is/was the case, business people would have
> been doing the same for decades to reduce their tax payable.

To some extent, they still can. But they also have tax minimisation
techniques not available to some occupations.

[Kelly]

Thankyou to everyone who replied. Your advice that our homes would be
at risk agrees with what i have been told from other sources.
Therefore my parents and i are increasing our mortgages to cover the
debt.

[cc]

Kelly wrote:
> Thankyou to everyone who replied. Your advice that our homes would be
> at risk agrees with what i have been told from other sources.
> Therefore my parents and i are increasing our mortgages to cover the
> debt.

Good luck Kelly.

Apologies for semi hijacking the topic
(re the lawyer scam).

Had not intended to do that.

[The Wog]

"cc" <ccang@iprimus.com.au> wrote in message
news:419200ff$1_1@news.iprimus.com.au...
> Travis Morien wrote:
> > kelly_7_21@hotmail.com (Kelly) wrote in message
news:<9d09917e.0411092340.5a70cb69@posting.google.com>...
> >
> >>Hi
> >>
> >>A few years ago i went into business with my parents. Unfortunately
> >>the business has collapsed and has left us with a $150,000 bank loan
> >>which we are no longer able to service. My parents are on the pension
> >>and i only work part time.
> >>
> >>We are considering whether it is worth declaring bankruptcy. We arent
> >>concerned about hurting our credit rating because none of us envisage
> >>borrowing money for a long time. However i'm worried because i share
> >>ownership of my home with my husband. My parents own their home. Would
> >>bankruptcy take our houses?
> >
> >
> > Get advice from an accountant. The consequences of bankruptcy are
> > more far reaching than you may realise.
> >
> > Bankruptcy could cost you your houses, it depends on how they are
> > owned and who owes the money.
> >
> > Do you now have negative equity in your homes?
> >
> > Bankruptcy should generally be avoided, if possible it may be
> > preferable merely to sell the homes and pay off the loan. If you
> > declare bankruptcy you'll almost certainly lose the houses anyway.
>
> I seem to recall some scam a while ago where lawyers would
> declare bankruptcy every X years for taxation reasons.

Um, they didn't own their homes! Their family trusts did. Big difference!

[Moneymarket]

If u are in Australia u can contact Fox Symes on1300660032. They set up a
debt relief for u in conjunction with the goverment and u do not have to
loose everything
"Kelly" <kelly_7_21@hotmail.com> wrote in message
news:9d09917e.0411092340.5a70cb69@posting.google.c om...
> Hi
>
> A few years ago i went into business with my parents. Unfortunately
> the business has collapsed and has left us with a $150,000 bank loan
> which we are no longer able to service. My parents are on the pension
> and i only work part time.
>
> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?
>
> Thanks
> Kelly

[Moneymarket]

Call Fox Symes on1300660032
"Kelly" <kelly_7_21@hotmail.com> wrote in message
news:9d09917e.0411092340.5a70cb69@posting.google.c om...
> Hi
>
> A few years ago i went into business with my parents. Unfortunately
> the business has collapsed and has left us with a $150,000 bank loan
> which we are no longer able to service. My parents are on the pension
> and i only work part time.
>
> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?
>
> Thanks
> Kelly

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"Sylvia Else" <sylvia@not.at.this.address> wrote in message
news:4191cc1f$0$2677$afc38c87@news.optusnet.com.au ...
>
>
> Kelly wrote:
>
>> Hi
>>
>> A few years ago i went into business with my parents. Unfortunately
>> the business has collapsed and has left us with a $150,000 bank loan
>> which we are no longer able to service. My parents are on the pension
>> and i only work part time.
>>
>> We are considering whether it is worth declaring bankruptcy. We arent
>> concerned about hurting our credit rating because none of us envisage
>> borrowing money for a long time. However i'm worried because i share
>> ownership of my home with my husband. My parents own their home. Would
>> bankruptcy take our houses?
>
> Yes, if that's what it takes to pay back the loan. Bankruptcy is not just
> a way of wiping the slate clean debtwise, otherwise everyone would be
> doing it.
>
> Sylvia.
>

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"Travis Morien" <travismorien@yahoo.com> wrote in message
news:2efc0b72.0411100334.24673616@posting.google.c om...
> kelly_7_21@hotmail.com (Kelly) wrote in message
> news:<9d09917e.0411092340.5a70cb69@posting.google.com>...
>> Hi
>>
>> A few years ago i went into business with my parents. Unfortunately
>> the business has collapsed and has left us with a $150,000 bank loan
>> which we are no longer able to service. My parents are on the pension
>> and i only work part time.
>>
>> We are considering whether it is worth declaring bankruptcy. We arent
>> concerned about hurting our credit rating because none of us envisage
>> borrowing money for a long time. However i'm worried because i share
>> ownership of my home with my husband. My parents own their home. Would
>> bankruptcy take our houses?
>
> Get advice from an accountant. The consequences of bankruptcy are
> more far reaching than you may realise.
>
> Bankruptcy could cost you your houses, it depends on how they are
> owned and who owes the money.
>
> Do you now have negative equity in your homes?
>
> Bankruptcy should generally be avoided, if possible it may be
> preferable merely to sell the homes and pay off the loan. If you
> declare bankruptcy you'll almost certainly lose the houses anyway.
>
> Travis
> www.travismorien.com

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"Lionheart" <nullabore@austarnet.com.au> wrote in message
news:cmsil8$jtc$1@austar-news.austar.net.au...
>
> "Kelly" <kelly_7_21@hotmail.com> wrote in message
> news:9d09917e.0411092340.5a70cb69@posting.google.c om...
>> Hi
>>
>> A few years ago i went into business with my parents. Unfortunately
>> the business has collapsed and has left us with a $150,000 bank loan
>> which we are no longer able to service. My parents are on the pension
>> and i only work part time.
>>
>> We are considering whether it is worth declaring bankruptcy. We arent
>> concerned about hurting our credit rating because none of us envisage
>> borrowing money for a long time. However i'm worried because i share
>> ownership of my home with my husband. My parents own their home. Would
>> bankruptcy take our houses?
>>
>> Thanks
>> Kelly
>
> Almost certainly you will lose your share of homes and other substantial
> holding you may have. Bankruptcy means you are insolvent/unable to pay
> your way under current circumstances
>

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"cc" <ccang@iprimus.com.au> wrote in message
news:419200ff$1_1@news.iprimus.com.au...
> Travis Morien wrote:
>> kelly_7_21@hotmail.com (Kelly) wrote in message
>> news:<9d09917e.0411092340.5a70cb69@posting.google.com>...
>>
>>>Hi
>>>
>>>A few years ago i went into business with my parents. Unfortunately
>>>the business has collapsed and has left us with a $150,000 bank loan
>>>which we are no longer able to service. My parents are on the pension
>>>and i only work part time.
>>>
>>>We are considering whether it is worth declaring bankruptcy. We arent
>>>concerned about hurting our credit rating because none of us envisage
>>>borrowing money for a long time. However i'm worried because i share
>>>ownership of my home with my husband. My parents own their home. Would
>>>bankruptcy take our houses?
>>
>>
>> Get advice from an accountant. The consequences of bankruptcy are
>> more far reaching than you may realise.
>>
>> Bankruptcy could cost you your houses, it depends on how they are
>> owned and who owes the money.
>>
>> Do you now have negative equity in your homes?
>>
>> Bankruptcy should generally be avoided, if possible it may be
>> preferable merely to sell the homes and pay off the loan. If you
>> declare bankruptcy you'll almost certainly lose the houses anyway.
>
> I seem to recall some scam a while ago where lawyers would
> declare bankruptcy every X years for taxation reasons.

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"Phil Herring" <phil_herring@yahoo.com.au> wrote in message
news:36565b6e.0411101549.7cd2b94@posting.google.co m...
> Tom N <me@privacy.net> wrote in message
> news:<Xns959E3849B8Endt601946x@130.133.1.4>...
>
>> IIRC, they had no assets in their names, and weren't paying income taxes.
>> When the ATO issued an order to pay that they couldn't delay or get out
>> of,
>> they just went bankrupt to avoid paying.
>
> The exta step that they took was to get a family court order to pay
> their entire income to their partner. At the time, bankruptcy law
> didn't allow such payments to be garnished, so the barrister kept
> paying 100% of their income to the wife, and the ATO got nothing.
>
> I believe that this loophole is now closed.
>
>
> -- Phil

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"Tom N" <me@privacy.net> wrote in message
news:Xns959E3849B8Endt601946x@130.133.1.4...
> cc wrote:
>
>> I seem to recall some scam a while ago where lawyers would
>> declare bankruptcy every X years for taxation reasons.
>
> IIRC, they had no assets in their names, and weren't paying income taxes.
> When the ATO issued an order to pay that they couldn't delay or get out
> of,
> they just went bankrupt to avoid paying.

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"Galimatias" <clamour@incoherence.org> wrote in message
news:qsp2kzhpuo5260c.111120041822@127.0.0.1...
> Trevor S wrote:
>> phil_herring@yahoo.com.au (Phil Herring) wrote in
>> news:36565b6e.0411101549.7cd2b94@posting.google.co m:
>>
>> <snip>
>>
>>
>>> The exta step that they took was to get a family court order to pay
>>> their entire income to their partner. At the time, bankruptcy law
>>> didn't allow such payments to be garnished, so the barrister kept
>>> paying 100% of their income to the wife, and the ATO got nothing.
>>
>> Which begs the question as to why the wife did not have to pay tax ?
>
> He derives the income, and attracts the tax liability. The income is
> diverted to the partner as maintenance for the spouse/child(ren) where was
> exempt income.
>
>
>
>
>
>
>

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"Kelly" <kelly_7_21@hotmail.com> wrote in message
news:9d09917e.0411092340.5a70cb69@posting.google.c om...
> Hi
>
> A few years ago i went into business with my parents. Unfortunately
> the business has collapsed and has left us with a $150,000 bank loan
> which we are no longer able to service. My parents are on the pension
> and i only work part time.
>
> We are considering whether it is worth declaring bankruptcy. We arent
> concerned about hurting our credit rating because none of us envisage
> borrowing money for a long time. However i'm worried because i share
> ownership of my home with my husband. My parents own their home. Would
> bankruptcy take our houses?
>
> Thanks
> Kelly

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"Trevor S" <bill@gates.com> wrote in message
news:Xns959EABE639B45billgatescom@130.133.1.4...
> phil_herring@yahoo.com.au (Phil Herring) wrote in
> news:36565b6e.0411101549.7cd2b94@posting.google.co m:
>
> <snip>
>
>
>> The exta step that they took was to get a family court order to pay
>> their entire income to their partner. At the time, bankruptcy law
>> didn't allow such payments to be garnished, so the barrister kept
>> paying 100% of their income to the wife, and the ATO got nothing.
>
> Which begs the question as to why the wife did not have to pay tax ?
>
> --
> Trevor S
>
>
> "Unthinking respect for authority is the greatest enemy of truth."
> -Albert Einstein

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"Peter" <peterwn@parazzdise.net.nz> wrote in message
news:4192af58.451423@news.paradise.net.nz...
> On 10 Nov 2004 15:49:48 -0800, phil_herring@yahoo.com.au (Phil
> Herring) wrote:
>
>>Tom N <me@privacy.net> wrote in message
>>news:<Xns959E3849B8Endt601946x@130.133.1.4>...
>>
>>> IIRC, they had no assets in their names, and weren't paying income
>>> taxes.
>>> When the ATO issued an order to pay that they couldn't delay or get out
>>> of,
>>> they just went bankrupt to avoid paying.
>>
>>The exta step that they took was to get a family court order to pay
>>their entire income to their partner. At the time, bankruptcy law
>>didn't allow such payments to be garnished, so the barrister kept
>>paying 100% of their income to the wife, and the ATO got nothing.
>>
>>I believe that this loophole is now closed.
>>
> Interesting it was a barrister. A solicitor declared bankrupt would
> either stop practicing or convince the Law Society that his future
> area of practice would have nothing to do with money or trust.
>

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"Trevor S" <bill@gates.com> wrote in message
news:Xns959F5E438C576billgatescom@130.133.1.4...
> "Galimatias" <clamour@incoherence.org> wrote in
> news:qsp2kzhpuo5260c.111120041822@127.0.0.1:
>
> <snip>
>
>
>> He derives the income, and attracts the tax liability. The income is
>> diverted to the partner as maintenance for the spouse/child(ren) where
>> was exempt income.
>
> I don't pretend to understand Tax Law but this seems improbable ?
>
> Garnishing of wages for child maintenace is not done by the person being
> garnished, i.e they have no "control" over it per se. Ipso facto, it must
> have been gifted to the receipent (ie spouse in this instance) regardless
> of what they said it was for, it then should have been taxed in the hands
> of the receiptent ie the ATO should be going after the recepitent to
> recover the money.
>
> If your above scenario is/was the case, business people would have been
> doing the same for decades to reduce their tax payable.
>
> --
> Trevor S
>
>
> "Unthinking respect for authority is the greatest enemy of truth."
> -Albert Einstein

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"Chad Sexington" <mad@theworld.com> wrote in message
news:4191c814$0$29941$afc38c87@news.optusnet.com.a u...
> What was the business ?
>
> "Kelly" <kelly_7_21@hotmail.com> wrote in message
> news:9d09917e.0411092340.5a70cb69@posting.google.c om...
>> Hi
>>
>> A few years ago i went into business with my parents. Unfortunately
>> the business has collapsed and has left us with a $150,000 bank loan
>> which we are no longer able to service. My parents are on the pension
>> and i only work part time.
>>
>> We are considering whether it is worth declaring bankruptcy. We arent
>> concerned about hurting our credit rating because none of us envisage
>> borrowing money for a long time. However i'm worried because i share
>> ownership of my home with my husband. My parents own their home. Would
>> bankruptcy take our houses?
>>
>> Thanks
>> Kelly
>
>

[Moneymarket]

Call Fox Symes for a debt relief program in conjuntion with the goverment.
1300660032 in Australia
"Travis Morien" <travismorien@yahoo.com> wrote in message
news:2efc0b72.0411100334.24673616@posting.google.c om...
> kelly_7_21@hotmail.com (Kelly) wrote in message
> news:<9d09917e.0411092340.5a70cb69@posting.google.com>...
>> Hi
>>
>> A few years ago i went into business with my parents. Unfortunately
>> the business has collapsed and has left us with a $150,000 bank loan
>> which we are no longer able to service. My parents are on the pension
>> and i only work part time.
>>
>> We are considering whether it is worth declaring bankruptcy. We arent
>> concerned about hurting our credit rating because none of us envisage
>> borrowing money for a long time. However i'm worried because i share
>> ownership of my home with my husband. My parents own their home. Would
>> bankruptcy take our houses?
>
> Get advice from an accountant. The consequences of bankruptcy are
> more far reaching than you may realise.
>
> Bankruptcy could cost you your houses, it depends on how they are
> owned and who owes the money.
>
> Do you now have negative equity in your homes?
>
> Bankruptcy should generally be avoided, if possible it may be
> preferable merely to sell the homes and pay off the loan. If you
> declare bankruptcy you'll almost certainly lose the houses anyway.
>
> Travis
> www.travismorien.com