Helping people find options and recover from tax debt
A person filing for bankruptcy is attempting to restore their financial stability. Although bankruptcy may help someone clear unsecured debt they cannot pay anymore, many people wonder about how to handle tax debt. Because the IRS has the power to collect debtors’ IRS debt, you must take IRS debt properly. The IRS can also file tax liens or levies that could affect your bank account, job, wages, and property.
Continue reading to learn about bankruptcy and IRS debts. Call our Massachusetts tax debt lawyers at (781) 558-5172 to schedule a complimentary consultation. Our team is committed to financial recovery and will help you explore your options.
Is Bankruptcy Possible with Tax Debt?
A person can file for bankruptcy Chapter 7 or Chapter 13 to have their tax debts discharged. Your IRS debts will be handled differently depending on the type of bankruptcy filed.
Chapter 13 Bankruptcy & IRS Debts
If a person cannot pay their debts, but the court feels that restructuring will allow them to do so, they will need to file for Chapter 13 bankruptcy. A court will order a manageable payment plan for those struggling to pay their debt. The payment plan will include the IRS debts of the person.
Chapter 7 Bankruptcy & IRS Debts
Chapter 7 bankruptcy is used for people who can’t pay off a debt plan. This type of bankruptcy allows a person to liquidate their assets and negotiate with creditors to settle their debts. A Chapter 7 bankruptcy can include tax debt if it meets specific requirements. Fees and interest will be added to a Chapter 7 bankruptcy debtor’s Chapter 7 bankruptcy tax obligations.
Your tax debt will be included in Chapter 7 bankruptcy if you are.
- In the past two years, a person has filed tax returns
- The debtor did not commit any tax crime, such as fraud or tax evasion.
- Tax debts are at least older than three years
- The debt is to be used for income tax
- The IRS evaluated the tax for at least 240 days before a bankruptcy filing.
Call (781) 558-5172 to speak with one of our M.A. tax debt lawyers.
Coleman & Macdonald Law Office is focused on helping clients in the state achieve the financial recovery they deserve. Because we are focused on bankruptcy law, your attorney will have the necessary knowledge to assist you in making the right decisions. Our team meets weekly to discuss the cases they are working on so that our clients can benefit from the experience of multiple lawyers.
FAQ about IRS Debt
Can IRS Debt be Included in Bankruptcy?
Yes. It depends on the bankruptcy that the person is in. A person can arrange payment for tax debts during Chapter 13 bankruptcy. If they meet specific requirements, a person can discharge their tax debts during Chapter 7.
What can the IRS do to collect tax debts?
The IRS can take many actions to secure any debts a person owes. These include wage garnishments and tax liens.
Do I need an attorney to help me with IRS debt assistance?
Yes. An IRS lawyer can help you understand your options and provide the best solutions for your tax debt problems. They will also help you meet deadlines and avoid additional fees.