Share:

Chapter 7 bankruptcy is a way of getting a fresh start by discharging or wiping out debts such as medical expenses and credit card balances. However, if you owe taxes, they may or may not be eligible for discharge. Here’s what you should know about the ability to eliminate tax debts under federal and Hawaii bankruptcy law.

When a Chapter 7 Bankruptcy in Hawaii Can Include Discharge of Taxes

Generally, if you file Chapter 7 bankruptcy, you cannot wipe out state and federal taxes. You must pay the balances owed after the court issues the bankruptcy discharge. However, under the right circumstances, you can receive a discharge of past federal and state income tax obligations when the debts are older than three years. Since Hawaii’s income tax rates rank among the highest in the nation, obtaining debt relief in this way is a big plus.

What You Must Show to Obtain an Income Tax Discharge

Chapter-7-bankruptcyTo qualify for an income tax debt discharge in a Chapter 7 bankruptcy, at least three years must have passed since your returns were last due, including extensions granted. You must have filed your returns on time or filed them at least two years ago. The taxes cannot have been assessed in the 240 days before filing Chapter 7. Finally, there cannot be evidence that you tried to defraud the IRS or the state government or tried to evade your obligation to pay the amounts you owe.

 

If back taxes or other financial obligations are an overwhelming burden, Greg Dunn, Bankruptcy and Debt Relief Attorney, will help you come up with a solution. From his office in Honolulu, this dynamic debt lawyer provides sound advice and effective advocacy backed by over 20 years of experience. Count on his guidance to determine whether a Chapter 7 bankruptcy is your best debt relief option. To request a free consultation with the dedicated bankruptcy attorney, call (808) 524-4529 or visit his website now.

tracking