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Claiming Your Tax Debt in Chapter 7 Bankruptcy - Busting the Myth

Claiming Your Tax Debt in Chapter 7 Bankruptcy - Busting the Myth
"""Debt heaped on debt... Once upon a time, bankruptcy was comparable to a """"get out of debt free"""" card. Those days are long gone, and it is now much more difficult to obtain a bankruptcy discharge. However, if you want to further confound an already complex procedure, you should attempt to include an IRS tax debt in your bankruptcy.

You cannot get out of this so easily... Although it is possible to include IRS debt in a bankruptcy, it is extremely challenging. Several factors contribute to the impossibility of including a tax debt. In addition, bankruptcy attorneys lack tax law expertise and can easily make an error that prevents your tax debt from being considered.

Removing the curtain... I want to help you understand the requirements and provide an alternative to filing for bankruptcy to deal with your tax debt.

How can an IRS debt be included in a bankruptcy filing, and what are the drawbacks of including an IRS debt in a bankruptcy filing?

You cannot include any tax years that occurred more recently than three years ago. Thus, if you file for bankruptcy in 2008, the most recent year for which you could claim tax debt is 2005.

Despite the fact that the IRS cannot pursue collection actions against you while you are in bankruptcy, interest and penalties continue to accrue during the time it takes for the bankruptcy to be processed. And if your bankruptcy is dismissed, you will owe the IRS all of that money.

The debt's Statute of Limitations is prolonged by the time spent in bankruptcy. Typically, the IRS has only 10 years to collect a debt. However, the duration of your bankruptcy extends this time frame.

There is another option... What other options exist if you cannot discharge an IRS debt through bankruptcy? Since you are petitioning for bankruptcy, your financial situation is quite dire. This can make you a prime candidate for settling your tax debt outside of bankruptcy with the IRS.

There is some good news... Your eligibility for an Offer in Compromise will hinge on the severity of your financial situation. With an Offer in Compromise, you can negotiate with the Internal Revenue Service to settle your tax liability for a single, reduced payment. An Offer can take as long to be certified as a bankruptcy, and it has a much lower chance of success; only 2% of Offers are accepted. Read my article ""Settling Your IRS Tax Debt for Pennies on the Dollar"" for more information on the specifics and prerequisites of an Offer in Compromise. Consult your bankruptcy attorney as well.

Now you have conclusive evidence...Use it!""

" - https://www.affordablecebu.com/

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"Claiming Your Tax Debt in Chapter 7 Bankruptcy - Busting the Myth" was written by Mary under the Finance / Wealth category. It has been read 62 times and generated 0 comments. The article was created on and updated on 02 June 2023.
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