A common misconception about bankruptcy is that a person will not be able to discharge their tax debts. This is untrue! While most outstanding tax debts will indeed still need to be repaid, old income tax debts can be sometimes be eliminated when filing for Chapter 7 bankruptcy.
In order for tax debt to be discharged, it must:
- Be income based
- Be at least three years past due
- Have been filed at least two years prior
- Have been assessed at least 240 days prior
- The taxes were not evaded willfully or fraudulently
While Chapter 13 bankruptcy does not allow you to completely eliminate your debt, it is highly likely that any nonpriority, unsecured debts will only need to be paid back in part. An advantage of this is that you will be given the opportunity to pay off your tax debts over the life of your established repayment plan with zero interest, rather than being required to liquidate your assets for immediate payment under Chapter 7 bankruptcy. Some taxes, however, are deemed to be "priority" and are not subject to being reduced or discharged.
Tax debts that generally must be repaid include:
- Tax liens
- Erroneous tax refunds
- Property taxes
- Some employment taxes
- Non-punitive tax penalties
Eliminate You Debt with a Bronx Bankruptcy Lawyer
If you are overwhelmed by back taxes and constant collection efforts, a Bronx bankruptcy attorney from the Law Offices of David Brodman can help you eliminate your debt and get you back on track towards a fresh start. Having gained a solid collection of positive client testimonials throughout our more than 15 years of dedicated practice, we are intimately familiar with the ins and outs of bankruptcy law and can use our skills to negotiate for a positive outcome for your situation.
Get started towards retaining the representation you deserve by contacting our office online or by calling us today (718) 354-8027.
Additional Reading