Filing for Bankruptcy

Bankruptcy is a procedure that may help you eliminate your tax debt. This does not mean that it will solve all your IRS issues and you must think about the effects it will have on you and your family. This process should be considered a last resort, but we can consider the possibilities.

Bankruptcy has two kinds. Chapter seven or straight bankruptcy enables you to liquidate the debts. You have the option to repay some debts and cancel the rest through a payment plan (Chapter eleven, 12, or thirteen).

You have to meet these 5 criteria in order to file for bankruptcy:

• Before filing for bankruptcy, tax return deadline should at least be 3 years old.
• Before filing for bankruptcy, tax return should have been filed at least 2 years before.
• Tax assessment is 240 days old, at least.
• Not fraudulent tax return.
• Not guilty of tax evasion

Some tax debts like unfiled tax returns are not good for discharge. You must have filed your last 4 years worth of tax returns and furnish a copy of the most recent tax return to the bankruptcy court so your case can be heard. A copy may also be demanded by your creditors.

Bankruptcy will stay on your credit report for ten years. You and your family will be greatly affected by this. You will not qualify for loans and new lines of credit, change jobs, or rent an apartment.

Bankruptcy has several complicated facets to it and ammendments are being considered. Prior to declaring a tax bankruptcy, confer with experienced professionals.

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