Monday, March 19, 2012
TaxMasters Inc. Files for Chapter 11 Bankruptcy
TaxMasters, the company that spent around $14 million in advertising in 2009 according to Bloomberg, has filed for Chapter 11 bankruptcy. The company has more than $1 million in debt and only about $50,000 in assets.
This bankruptcy case is especially interesting because of allegations of fraud the company faces. It seems that much of the company's advertising is deceptive, and that TaxMasters has been charged with other deceptive practices as well.
In recent years, TaxMasters has become famous for its commercials. The company promised solutions to people facing burdensome tax payments. Allegedly, TaxMasters would collect thousands of dollars up-front from the customer, promising to help the customer reduce their tax bills significantly. As it turns out, the company rarely delivered on this promise while concealing a no-refund policy. They also deceived customers by touting help from former IRS agents, who were actually just sales professionals.
Similar in nature to Chapter 13, Chapter 11 bankruptcy protection is usually sought by large companies and corporations. Although also an option for individuals, Chapter 11 is usually sought by companies because there is no debt limit under this chapter. Thus, a company like TaxMasters that has debt reaching into the millions can seek to reorganize their business and reduce debt while staying open for business.
To learn more about bankruptcy options, please contact an experienced bankruptcy lawyer in your area.