When you're burdened with tax debt and are on the verge of bankruptcy, consider talking to a bankruptcy lawyer about your options. The experienced attorneys at The Gil Law Firm in Dothan, Alabama, will help you understand bankruptcy laws and how you can wipe out certain debts permanently.
Here the attorneys share some insight on tax debt and filing for bankruptcy:
- Discharging Income Taxes: If you file for Chapter 7 bankruptcy, you will be able to wipe out federal income taxes, except for payroll taxes or fraud penalties you’ve incurred to date. This can provide enough debt relief for many people who have a significant amount of tax debt they know they will never be able to pay back. Other conditions apply to qualify for a discharge, including having filed your tax return on time and not being guilty of tax fraud or evasion. In addition, the tax debt must have been assessed by the IRS at least 240 days before you filed for bankruptcy.
- Discharging Debts With Chapter 13: If you have tax debt and file for Chapter 13 bankruptcy, you will need to repay your non-priority tax debt through a repayment plan that lasts up to five years. In this situation, your overall tax debt may end up being lower, depending on how your repayment plan is structured—non-priority tax debt is lumped with unsecured debt. Priority tax debt must be paid in full.
- Discharging A Federal Tax Lien: If you have tax liens on your record, bankruptcy will not wipe those out and the lien will remain on your property. You will no longer be obligated to pay that debt since the amount will be discharged, but it will stay on your record. Still, if you plan on selling your property, you will have to pay off that tax lien to complete the sale.
If you're concerned about taxes when you file for bankruptcy, reach out to an experienced lawyer to learn about your options. You can talk to the experienced attorneys at The Gil Law Firm in Dothan, Alabama, to determine whether your tax debts are dischargeable and how to proceed with the filing process. Call the firm at (334) 673-0100 or visit their website for more information.