Some people file a bankruptcy because all of the debt is overwhelming, while others find that it is one specific debt that is overwhelming. Tax debt is one reason clients consider filing bankruptcy.
The IRS will certainly set up payment arrangements with you, with interest accruing during the repayment period. Bankruptcy may be a better solution for you!
There is a multi-part test to determine if your tax debt is dischargeable, or forgiveable. If your taxes were:
(a) due at least three years ago;
(b) filed at least two years ago; AND
(c) assessed more than 180 days ago (in addition to two other factors)
You may be able to have your tax debt forgiven in a Chapter 7 for those years that pass the test.
What if the taxes are more recently due, or I know I don’t pass the test? What can I do? Filing a repayment plan, a Chapter 13 bankruptcy, may be your best solution. In a Chapter 13, we are able to establish a repayment plan for you in which your past-due taxes are paid in full. The tax debt, additionally, will be repaid without interest, in most cases, during your bankruptcy.
Of course the repayment or discharge of tax debt is complicated and must be examined on a case-by-case basis. If you have tax debt for which you are seeking debt relief, call our office to make an appointment for a free consultation today. If you are able to bring a statement from the IRS showing what amounts and for what years you owe, this will assist our office in giving you the most accurate information.
