Dallas Bankruptcy Lawyers; Bankruptcy & Taxes in Texas
Plano Bankruptcy Law Attorney – Which Tax Debts Can Be Discharged?
If you find yourself unable to meet your monthly budget due to payments on overdue tax obligations, it may be time for you to consider declaring bankruptcy. If managed correctly, bankruptcy can be a relatively painless process that enables you to quickly begin rebuilding your finances.
While declaring bankruptcy may be a crucial first step in your financial recovery, not all tax debts may be discharged through bankruptcy. You should consult an experienced Dallas bankruptcy lawyer at the Fears Nachawati Law Firm to determine your eligibility by calling .
How Chapter 7 Bankruptcy Can Eradicate Non-Priority Tax Debts
In general, you may completely discharge any non-priority tax debts. Non-priority debts are tax obligations that satisfy the following criteria:
- The income tax return was due at least 3 years before you filed for bankruptcy. This does not include any extensions you received. In other words, you may eradicate your tax debt through a Chapter 7 bankruptcy if the debt is over 3 years old and you filed on time.
- You have filed all tax returns from the past and present.
- The tax assessment is at least 240 days (8 months) old.
- The debt is not linked to a fraudulent tax return.
- You are not guilty of a criminal income tax evasion.
Priority Tax Debts Can Be Paid through a Chapter 13 Repayment Plan
If your tax debt is less than 3 years old, or does not meet the above-listed conditions, it can be considered a priority tax debt and you may not be allowed to discharge it in a Chapter 7 plan.
Priority debts may be paid over the life of a Chapter 13 repayment plan, but you must pay the full amount owed. One positive benefit of paying your priority debts in a Chapter 13 plan is that you will likely be paying 0% interest, which is a much better deal than the IRS would offer you.
A Bankruptcy Judge’s decision takes precedence over any federal, state or county tax authority, including the IRS. The IRS must accept your Chapter 13 payment plan once it’s approved by the Court.
Here is a brief list of priority taxes that must be paid in full over the 3 to 5 year repayment plan:
- Property taxes payable within one year of your bankruptcy filing
- Tax liens
- Excise taxes
Our free consultations are available to you, either in person or by phone. Our trusted Plano bankruptcy law attorneys can explain your options and assuage any concerns you may have about issues such as asset seizure, wage garnishment, interest assessments and tax penalties.
If you are ready to find a permanent resolution to your tax debt problems, call the Fears Nachawati Law Firm at to speak to one of our Dallas TX bankruptcy lawyers.