A common misconception is that all debt, including taxes, can be eliminated by filing bankruptcy. Unfortunately, this is not always true for all types of taxes and all types of bankruptcy because most taxes are Federal and not Consumer. If you’re in trouble with tax debt it’s important to know your bankruptcy alternatives.
While most tax debt can’t be eliminated in bankruptcy, there are a few exceptions. You can discharge Federal income taxes in Chapter 7 bankruptcy if they qualify and you’re eligible to file. However, you’ll still responsible for payroll taxes or fraud penalties. In a Chapter 13 or Chapter 11 bankruptcy, tax debt is often included in the repayment plan.
The Federal Government can seize your bank accounts, put liens on your house, garnish your wages and your social security. Filing for personal bankruptcy can be a protection against these actions. If you meet the conditions and qualify to file, you may be able to discharge Federal income tax debt
Tax debts are associated with a particular tax return and tax year. Bankruptcy law sets out specific eligibility criteria to determine whether a debt is dischargeable, and if the debt meets all five of these rules it can be discharged in Chapter 7 and Chapter 13 bankruptcy petitions.
If you’re struggling with unpayable tax debt, you need a strategic plan from a bankruptcy lawyer who cares about your case and will work for you and your future. You CAN rebuild your life after bankruptcy. Trust your future to a proven a bankruptcy lawyer at Curtis, Casteel & Palmer, PLLC Law in Lynnwood.
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