Tax Debt Dischargeable in Chapter 7 or 13 Bankruptcy?

Written by CFB Blogger. Posted in Blog

Many people, when they come to Client First Bankruptcy for reliable advice on how to extricate themselves from their overwhelming debt, ask their lawyer if their tax debt is dischargeable when they file for Chapter 7 or Chapter 13 bankruptcy. The short answers are as follows. For more precise answers and how this may affect your own personal bankruptcy filing, please call the experienced bankruptcy attorneys at Client First Bankruptcy. We answer our phones Monday – Friday from 8:30 a.m. – 6:00 p.m. (Central Time). For trustworthy answers any time, please log onto www.clientfirstbankruptcy.com. •    Is Tax debt dischargeable in Chapter 7 or Chapter 13 Bankruptcy? Tax debt is dischargeable in Chapter 7 or Chapter 13 bankruptcy if it meets certain criteria. If a tax debt satisfies the following five requirements it can be discharged through your bankruptcy. 1.    The tax debt is income tax debt.  You may only discharge income taxes in bankruptcy.  Taxes such as payroll taxes or fraud penalties may not be eliminated in bankruptcy. However, any interest accrued on dischargeable tax debt may be expunged and penalties are dischargeable even if the tax debt is not. 2.    The tax debt is at least three years old.  In order for the tax debt to be dischargeable it must have been due at least three years prior to filing bankruptcy. This date includes any extensions. For example, if your 2014 tax debt which was due in April was not filed until October 2010, you are not eligible to eliminate the tax debt until October 2017. 3.    The tax return was filed a minimum of two years ago. The tax debt must have been the result of a tax return that was filed at least two years prior to filing bankruptcy. 4.    The tax debt must have been assessed at least 240 days prior to the bankruptcy filing. However, if the taxing authority was prohibited from making an assessment through bankruptcy or offer in compromise, the time limit may be extended. 5.    The tax return must not have been fraudulently filed or you must not have willfully evaded paying your taxes. Willful evasion means deliberately reporting less income than what was earned or deducting erroneous expenses. If, as ascertained by your Client First Bankruptcy attorney, your tax debt satisfies the above criteria and you file Chapter 7 bankruptcy, you are entitled to a complete discharge of the debt.  If you are filing for Chapter 13 bankruptcy and your tax debt qualifies, you will need to repay some or all of the tax debt, depending upon your income and assets, during your court-approved three-to-five-year repayment plan. The Client First Bankruptcy attorneys are an unsurpassed staff of the most knowledgeable consumer bankruptcy attorneys in the country, representing thousands of new clients each year in consumer bankruptcy matters. Client First Bankruptcy attorneys are current on all of the new Chapter 7 and Chapter 13 bankruptcy laws and are familiar with specific bankruptcy law in many states. Client First Bankruptcy attorneys answer their phones Monday-Friday from 8:30 a.m.-6:00 p.m. (Central Time) so you can get your initial complimentary consultation at a time that is most convenient for you. Our aggressive representation and extensive experience have earned the Client First Bankruptcy attorneys a national reputation for excellence in the representation of debtors in financial distress. Call us toll-free at 800-383-6004 and log onto our newly designed, easy-to-navigate, interactive website, www.clientfirstbankruptcy.com. Do it for yourself; do it for your family. Do it today.