Idaho Representative’s Bankruptcy Plan Rejected by Court

Idaho state Representative Phil Hart recently declared bankruptcy, owing  over half a million dollars in federal taxes, but the plan recently submitted to the U.S. Bankruptcy Court was rejected because federal prosecutors said it was “not feasible.”

Hart, who is a tax protestor and four –term lawmaker, submitted a plan in which he offered to pay back $12,000 of the $600,000 he owes in back taxes and asked the court to dismiss the rest of his debt. He proposed paying $200 a month for the next five years.

U.S. Department of Justice Attorney Adam Strait says that Hart’s plan, “fails to make adequate provision for paying the United States’ priority income tax debts.”

He also owes $50,000 in state taxes and $20,000 for credit card debt.  

Hart initially filed for Chapter 13, but court documents showed that he doesn’t have enough income to qualify for this debt-relief structure. He must decide this week if he wants to convert to Chapter 7 or Chapter 11 reorganization.

Under Chapter 7 bankruptcy, income tax debt can only be dismissed if the filer did not willfully evade taxes, according to nolo.com.

According the Seattle Times, Hart has been a vocal opponent of taxes and quit paying them in 1996. In that same year, he filed an unsuccessful lawsuit which claimed income taxes were unconstitutional.

According the Seattle Times, Hart has been a vocal opponent of taxes and quit paying them in 1996. In that same year, he filed an unsuccessful lawsuit which claimed income taxes were unconstitutional.

Also, during a bankruptcy hearing last month, Hart refused to answer questions about who owned the house he lives in and the car he drives which are assets that could be sold or seized to satisfy his debts, though they can be protected from liquidation in some states. Hart’s refusal to answer ownership question prompted Strait to demand an investigation into the lawmaker’s assets.

Bankruptcy is viable option to help a person get out from under a mountain of debt, but the filer must negotiate with creditors before a plan can be approved. In order to assure that a plan will be approved, the filer should have a skilled bankruptcy attorney assist them.