Taxes & Bankruptcy
Many people think that bankruptcy can’t help with taxes. This is not true.
Our office has filed hundreds of bankruptcy cases to help people deal with back taxes. Probably one of the worst creditors was the IRS.
They can wipe out your bank account and take your paycheck, and leave you without enough money to pay your living expenses.
Believe it or not, filing a bankruptcy will stop the IRS instantly
Some taxes can be discharged in bankruptcy, depending on how old they are and what kind of tax is involved.
Even if the taxes that you owe are non-dischargeable bankruptcy, you can pay them back in a bankruptcy and get up to five years to pay these taxes back to the IRS.
And, as you might expect, because the IRS takes priority over other creditors like medical bills and credit cards, what you pay back to your creditors goes first to the IRS, and then after the IRS is paid whatever is left over can be paid to other creditors.
So, what you pay goes to eliminate debts that can not be discharged, the ordinary creditors get whatever is left over, if anything.
Some taxes are not dischargeable all, like payroll or withholding taxes and sales taxes.
But ordinary income taxes can be discharged in bankruptcy. And, filing a bankruptcy may be the very best way to pay back these taxes.
While it’s true that discharging taxes in bankruptcy is possible, it is a lot more complicated than I’ve explained in this brief video.
This is only general introduction and your specific situation may or may not result in your ability to discharge your tax obligation.
The only way for you to find out is to sit down with one of our attorneys and discuss all of your personal circumstances in detail.