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Warwick tells IRS to 'walk on by' in Chapter 7 bankruptcy case

In March 2013, legendary soul singer Dionne Warwick sought Chapter 7 bankruptcy largely as the result of tax debts that accumulated over the years. In total, the Internal Revenue claims that Warwick owes nearly $7 million in unpaid federal taxes. Under some circumstances, tax debt can't be discharged in personal bankruptcy, and it may be a possible in this case.

Readers in Detroit who are facing large tax debts incurred as the result of financial hardship may be looking for debt relief options. It's important to note that recently accumulated back taxes generally aren't dischargeable in Chapter 7, but older tax debt can be discharged under certain conditions.

Despite the possibility that Warwick will be able to discharge a large portion of her tax debt, the IRS is aggressively trying to collect the $7 million from companies associated with Warwick. However, the musician and her legal advisors have fired back, saying that she has no ownership in the companies being targeted. Rather, they are agencies that simply provide services to Warwick.

It may seem intimidating for an individual to try to rebut the IRS's efforts, but Warwick's attorneys indicate that the actions being taken are outside the scope of what the federal agency should be doing. As a result, it's important for the case to be handled properly and allow Warwick the opportunity to find a fresh start after bankruptcy proceedings are completed.

Once the current bankruptcy-related dispute is handled, it appears as though Warwick will attempt to have most of her debt discharged. Reports indicate that the tax debts -- all but $25,000 -- can be cleared through Chapter 7. Once the bankruptcy process is finished, Warwick can work on rebuilding her financial life and focus more on her music career.

Source: Wall Street Journal, "Dionne Warwick Takes on the IRS," June 10, 2013

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