Filing for bankruptcy will temporarily stop the IRS and your other creditors from trying to collect money from you. You can eliminate certain tax debt as long as you meet specific criteria. You may be able to discharge tax debt if:
- The tax debt is at least three years old before you file for bankruptcy
- The tax return was filed two years before you file for bankruptcy
- The tax debt has been assessed at least 240 days before you file for bankruptcy
- The tax return is not fraudulent
- There was no tax evasion involved
Chapter 7 Bankruptcy
Most people prefer this type of bankruptcy. Your qualifying debts can be wiped out in a matter of months. If your tax debt met the criteria above, it could also be wiped away. If not, a qualified bankruptcy attorney can help you decide if you should wait to file bankruptcy when the tax debt will qualify.
Chapter 13 Bankruptcy
Filing Chapter 13 will stop the interest from accruing on your tax debt. It may also stop or eliminate any penalties added to your debt. The IRS is considered a priority debt and will be paid accordingly while in bankruptcy. When you finish the Chapter 13 terms, any remaining IRS debt will be eliminated.
Non-Dis chargeable Tax debt
- Property taxes, especially if there is a lien attached to your property.
- Tax Liens, the lien will remain on your property until you sell the property, at that time you must pay off the debt with the proceeds of the sale.
- Sales tax, Medicare, FICA, any taxes required to be collected.
If you are struggling with tax debt, contact a Cincinnati bankruptcy attorney to discuss what options you have. Eliminating tax debt and other unsecured debt would give you a fresh start to a brighter financial future.