Tax debt can be a huge burden for many people. What a lot of people do not know is both Chapter 7 and Chapter 13 bankruptcies can help consumers with tax debt owed to the IRS. First, it is important to understand the basic differences between the two types of consumer bankruptcy and how tax debt is handled in the different bankruptcy processes.
A Chapter 7 bankruptcy is a great option for people who are unable to make payments on their debt, and are looking for a fresh start to get rid of their unsecured credit cards, medical debts, judgments and other deficiency balances or overdrawn accounts. In a Chapter 7, most tax debt accrued 3 years prior to filing bankruptcy is also dischargeable.
A Chapter 13 bankruptcy is a great option for people who have a little extra income each month that allows them to pay back a portion of their debt to their creditors in a bankruptcy. A Chapter 13 bankruptcy also allows the consumer to pay back any tax debt they owe in more recent years through a manageable monthly payment in the bankruptcy.
Tax debt can be a large portion of a person’s debt and can be the deciding factor in why they ultimately choose bankruptcy as an option to get a fresh start from past debts. The professional bankruptcy attorneys at Hoglund Law Office are happy to sit down with you to discuss and review your tax debt and discuss your bankruptcy options. Please contact our office to set up a no-cost consultation.