CALL FOR A FREE
INITIAL CONSULTATION
813.254.5696

BRIDGING YOU TO A BRIGHTER FUTURE

Three Important Things to Know about Bankruptcy and Taxes

TaxBankruptcy offers relief when debts have gotten out of control.

Chapter 7 bankruptcy results in a discharge of certain debts, which means creditors must stop pursuing you for payment and you’re no longer legally obligated to pay the debts.

Unfortunately, there are some debts that aren’t treated the same as others in bankruptcy, which means even if you file, you’ll still be responsible for those debts.

Tax debt – money you owe to the IRS on your income – is one of those bankruptcy exceptions. In most cases, if you file for bankruptcy, the discharges you’re granted will not include money you owe in back taxes.

However, bankruptcy can offer some relief for IRS debt, so it’s important to work with a bankruptcy professional so you know exactly what to expect concerning tax debt.

What are three things you should know about how tax debt is treated in bankruptcy?

Tax Debt Can Be Managed in Bankruptcy

Even though filing for bankruptcy doesn’t outright eliminate tax debt, it can help you gain control of your situation.

For starters, some penalties related to tax debt are dischargeable. Since many people are dealing with huge tax bills that are due, at least in part, to the penalties that come from not paying taxes, this can be a big relief.

There are also certain tax debts that can be discharged.

For instance, older tax debt owed in tax years where you filed but did not pay might be dischargeable, depending on how old it is. A bankruptcy attorney can review your tax situation and help you determine if what you owe is dischargeable.

Income taxes due more than three years before you file for bankruptcy for which you filed an on-time and non-fraudulent return might be dischargeable in bankruptcy, whether you file for Chapter 7 or Chapter 13.

Chapter 13 Can Make It Easier to Meet Tax Obligations

Of course, not everyone is dealing with a tax debt that is more than three years old.

In many cases, mounting tax debt spirals into other financial problems and within a couple of years, bankruptcy is the most viable option.

Despite not being able to discharge some of what you owe to the IRS, filing for Chapter 13 can make it easier to pay what you owe. A Chapter 13 repayment plan allows you to pay your taxes without interest, which means overall you won’t owe as much.

To learn more about Chapter 13 repayment plans, check out this article from The Balance.

Bankruptcy Provides the Relief of the Automatic Stay

One of the biggest advantages of filing for bankruptcy is the relief the automatic stay provides.

The automatic stay legally restricts collection efforts against you. This means once you file, debt collectors must stop contacting you. They can no longer call you, file lawsuits against you, or pursue debt collection in any other manner.

And the automatic stay applies to tax debt collectors as much as everyone else pursuing you.

Filing for bankruptcy stops some collection actions by the IRS, including wage garnishment and seizure of bank accounts and other assets, at least temporarily.

Whether you’re dealing with tax debt, or medical bills or consumer debt, or a combination of any of the above, bankruptcy can offer the relief you’ve been searching for. It’s one of the best tools you have for getting your situation under control and gaining some breathing room to sort through your situation.

If you’d like to know more or you have questions about how bankruptcy affects tax debt, contact the Law Office of Robert M. Geller at 813.254.5696 for more information.

Tampa Bankruptcy Law Blog

Credit Reporting Errors: Why You Need to Review Your Credit Report before Filing for Bankruptcy

Credit Reporting Errors: Why You Need to Review Your Credit Report before Filing for Bankruptcy

The importance of correcting credit errors before filing for bankruptcy Some people are shocked to learn how common it is...
Read More
Why Delaying Bankruptcy Might Be Your Biggest Financial Mistake Yet

Why Delaying Bankruptcy Might Be Your Biggest Financial Mistake Yet

Bankruptcy Mistakes There are those who are pushed into bankruptcy because of a medical emergency or the unexpected loss of...
Read More
Bankruptcy Dismissal vs Discharge: What’s the Difference?

Bankruptcy Dismissal vs Discharge: What’s the Difference?

The difference between bankruptcy dismissal and bankruptcy discharge For many, bankruptcy is unfamiliar territory and there are a lot of...
Read More
Filing for Bankruptcy When You Have a Reverse Mortgage

Filing for Bankruptcy When You Have a Reverse Mortgage

Filing for Bankruptcy with a Reverse Mortgage More and more people, especially those who are nearing or have entered retirement,...
Read More
Social Security and Bankruptcy: Do I Need to Worry about My Income?

Social Security and Bankruptcy: Do I Need to Worry about My Income?

How Bankruptcy and Social Security Are Related Bankruptcy is one of the best tools available for managing significant debt and...
Read More
Bankruptcy and Cross-Collateralization: What You Need to Know

Bankruptcy and Cross-Collateralization: What You Need to Know

Everyone’s financial situation is different, which makes each and every bankruptcy unique – and potentially complicated. One of the things...
Read More
Foreclosure on the Horizon? Here’s What You Can Do to Stop the Process

Foreclosure on the Horizon? Here’s What You Can Do to Stop the Process

Preventing Foreclosure Out-of-control debt can cause a number of problems in your life, but few are as intimidating as the...
Read More
Can I Keep Any Credit Cards If I File for Bankruptcy?

Can I Keep Any Credit Cards If I File for Bankruptcy?

Credit Cards and Bankruptcy One of the most common questions bankruptcy attorneys hear from clients is whether or not they...
Read More
How Does Bankruptcy Affect My Possessions?

How Does Bankruptcy Affect My Possessions?

Bankruptcy and Possessions Filing for bankruptcy can improve your financial situation, but it also has a major impact on many...
Read More
Bankruptcy and Renting: What You Need to Know

Bankruptcy and Renting: What You Need to Know

Renting a home after bankruptcy There are plenty of people who rent their homes. Many of them are faced with...
Read More

Contact Us

Search Website

Archive

Request a FREE Consultation

For The Next 5 Days Get A Free Book About Bankruptcy


 
comodo 10.0Robert Marc Geller
Robert Marc GellerClients’ ChoiceAward 2018 Robert Marc GellerReviewsout of 32 reviews LEA

We are A Debt Relief Agency.
We help people file for
bankruptcy under the Bankruptcy Code

Pay Online     Bankruptcy Courses    

Tampa Office

$Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 254-5696
T: (800) 853-7549
F: (813) 253-3405


Tampa Law Office Map

St. Petersburg Office

$Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G

St. Petersburg, FL 33701
T: (727) 532-3939


Map and Directions

Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 336-2320

Maps & Directions

At the Tampa Bay law firm, the Law Offices of Robert M. Geller, P.A., we help people with consumer bankruptcy matters in the Tampa Bay-St. Petersburg,  Florida communities such as Clearwater,     St. Petersburg, Tampa, Thonotosassa, Riverview, Lutz, Plant City, Brandon, Carrollwood, Wesley Chapel, St. Petersburg Beach, Lakeland, Mulberry, Dade City, Pinellas Park, Largo, Seminole, Odessa, Oldsmar and Lithia, and counties such as Hillsborough County, Pinellas County, Pasco County, Polk County and Manatee County.