If you meet particular qualifications, you can discharge some or all of your tax debt by filing for this type of bankruptcy.
Become Familiar with the Requirements
Before you file for Chapter 7 in an attempt to eliminate tax debt, you should first become familiar with the discharge requirements. These are as follows:
- The taxes are income based. This is the only type of tax that can be discharged through Chapter 7.
- The tax return was due a minimum of three years ago.
- You filed the tax return a minimum of two years ago.
- The taxes were assessed a minimum of 240 days ago.
- You did not partake in any type of willful evasion or fraud.
If you have an interest in Chapter 7 bankruptcy, if you also have income tax debt, it would be in your best interest to learn more about what the process will bring. More specifically, you should answer this question: can some or all of my debts be eliminated?
For some, the ability to discharge tax debt is reason enough to move forward with a filing. If they are unable to do so, they may consider other options that make more sense at the present time.
There is a lot of gray area when it comes to discharging tax debt through Chapter 7 bankruptcy. It can be difficult to understand what is expected of you. It can be difficult to understand what will and will not be eliminated.
Do you have questions? Are you wondering if Chapter 7 bankruptcy is the answer? You can contact us to learn more about the entire process, including how your tax debt will be handled.