There are many things that can contribute to someone’s decision to declare bankruptcy. However, few debts are more daunting than past-due federal income taxes. Because of the federal government’s inherent authority over its citizens, unpaid past-due taxes can lead to all kinds of legal and financial problems down the road. Perhaps that is why a common question we receive is whether filing for bankruptcy can help get someone out from under past-due income taxes.
While it is impossible to give an answer that can apply to everyone’s circumstances, the general answer to this question is yes. Filing for bankruptcy may result in unpaid past-due taxes being forgiven. However, several criteria must be met before establishing eligibility for such forgiveness.
Before You File For Bankruptcy
Before filing for bankruptcy to avoid a past-due tax debt, you may consider contacting the IRS and asking if you can be put on a payment plan, or if they have any other possible solution to help you get current on your tax debt. In some cases, the IRS will look at a person’s assets, expenses, ability to pay, and asset equity and determine that they are a good candidate for alternative means of repayment.
However, this will not work for everyone. In some cases, the past-due tax debt is just too much to repay, even while on a payment plan. In those cases, filing for bankruptcy may be the best option.
Filing For Bankruptcy to Relieve a Tax Burden
Below are just a few tips that should be kept in mind by anyone filing for bankruptcy in hopes of getting his or her past-due taxes forgiven as a part of a bankruptcy proceeding:
- All tax returns should be filed for the four years preceding the year in which a person files for bankruptcy.
- Tax returns should also be filed during the pendency of the bankruptcy.
- Taxes should be paid as they come due for the period during which the bankruptcy is filed.
These tips are just a few things to think about when considering filing for bankruptcy. If you are seriously considering filing for bankruptcy, you should consult a dedicated Kentucky bankruptcy law attorney to discuss the specifics of your situation.
Are You Considering Filing for Bankruptcy in Kentucky or Indiana?
If you live in Kentucky or Indiana and are considering filing for bankruptcy, consult with the Schwartz Bankruptcy Law Center before proceeding. The Schwartz Bankruptcy Law Center has helped hundreds of people get back on their feet and start fresh again. Through in-depth knowledge of the bankruptcy laws, the lawyers at the Schwartz Bankruptcy Law Center will deal with you personally, one-on-one to help you obtain the financial freedom you have dreamed of. To learn more about the bankruptcy laws in Indiana or Kentucky, and to speak to a dedicated and skilled bankruptcy law attorney about your situation, click here, or call 866-366-3328 to schedule a free initial consultation.
More Blog Posts:
Bouncing Back After Bankruptcy in Kentucky, Kentucky Bankruptcy Lawyers Blog, published July 16, 2014.
Pizza Chain, Sbarro, Has Its Bankruptcy Plan Approved By Federal Court, Kentucky Bankruptcy Lawyers Blog, published May 28, 2014.