In terms of bankruptcy and taxes, there are many things that you will want to think about. If you are going to file for bankruptcy, you are going to want to make sure that you are doing everything you can to save yourself as much trouble, money, and time as you can.
You should know that some income tax debts may be eligible for being discharged in either a Chapter 7 Bankruptcy or chapter 13 Bankruptcy. The United States Bankruptcy Code has certain requirements that you must meet to be able to get your taxes discharged . It's best to visit a bankruptcy attorney before you file regarding your individual situation so as to determine if your tax debts are eligible.
Keep in mind that not all tax debt that you might have will discharged should you file for bankruptcy. Should you file for Chapter 7, you are likely to be able to get fully discharged of the debts that are allowable without requiring a repayment plan. With Chapter 13, there is going to be a payment plan that's required so that you can pay back some of your debts, and the remainder will be discharged. Non-dischargable income tax debt is considered a "priority unsecured debt" in a Chapter 13 plan. If you happen to file for a Chapter 13 Bankruptcy with non-dischargable income tax debt, 100% of that debt has to be paid in 3 to 5 years in order for your plan to be confirmed.
There are five criteria in order to see whether a tax debt will be discharged in a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. The 1st is that the date that the tax return was due was at least three years ago. The second is that the tax return had been filed not less than two years ago. The third is that the tax assessment is a minimum of 240 days old. The fourth is that the tax return cannot have been fraudulent. And the fifth is that you're not guild of tax evasion. If you can meet all these criteria, you are likely to be able to more than likely get your tax debt discharged when you file for bankruptcy. Bankruptcy is an exceptionally complicated area of law and the above 5 criteria is a quite simple set of guidelines for a complex problem. Before determining your debt is or is not dischargable, it's best to speak to a knowledge bankruptcy attorney. Michael Dye