Your Tax Debt in Your Bankruptcy

There are many different types of debt that can lead people into considering going bankrupt. Now that the previous tax year has come to a close, there are a lot of people who find themselves with a large tax debt that they may have to add to other types of debt they owe. Many wonder 

There are many different types of debt that can lead people into considering going bankrupt. Now that the previous tax year has come to a close, there are a lot of people who find themselves with a large tax debt that they may have to add to other types of debt they owe. Many wonder if they can have this tax debt thrown out in a bankruptcy.

There are different types of tax debt just as there are different types of bankruptcies. If you are going into a chapter 7 bankruptcy then some types of tax debt can be dealt with. There is the three year tax debt that may be eliminated in this bankruptcy. There is a two year rule, and a 240 day rule which all governs how your tax debt may be dealt with. It isn’t just a matter of presenting the IRS as one of your creditors and having the debt forgiven. If your tax debt is regarding payroll or other tax penalties these will not be dealt with in your bankruptcy.

It is important that you discuss your tax debt and tax situation with your Louisville bankruptcy lawyer. This professional will know what will be applicable for bankruptcy relief regarding it.

Chapter 13 may also be able to assist with your tax debt subject to specific rules as well. In the event your tax debt is not going to be dealt with in your bankruptcy this should not be the reason for not going ahead with this debt relief. It may provide the means for you to reduce the rest of your debt load which in turn will put you in a better financial position to deal with your tax matter.