Can Chapter 7 eliminate tax debt?
It can be highly distressing to fall into debt, particularly when there is no clear way out of the situation. Interest rates often mean that once your debt gets out of hand, it can be extremely challenging to cover the cost of repayment while still managing your basic living expenses. Sadly, countless families in Florida go through this experience at some point in their lives, and many spend years fighting to become more financially stable.
Fortunately, there is a way out even if the situation initially appears hopeless. There are many debt relief options available, but one that can often wipe out a significant portion of your debt within a relatively short period of time is Chapter 7 bankruptcy.
As this article on debt relief explains, it is even possible to eliminate some of your debts from taxes in this way. However, this can only be done for income taxes, and there are certain conditions that must be adhered to. For example, the debt in question needs to be 3 years old or older, and if the IRS has assessed it, this needs to have happened no fewer than 240 days prior to your bankruptcy filing. On top of this, you cannot have been found to have committed either willful evasion or fraud, and your tax return needs to have been filed.
If you tick all the boxes, there is a chance that the court will discharge the income tax debt for you. However, each case is unique, so it is difficult to predict the outcome of any given petition. As such, you might benefit from the support of a lawyer as you prepare your claim. He or she can advise you about your options and may be able to help ensure that nothing is overlooked as you pursue the best possible resolution to your financial situation.