Can I Eliminate Tax Debt In Bankruptcy?

Tax debts can be costly in many ways. Unlike other types of debt, defaulting on paying your taxes can result in having your wages garnished, your property placed under lien, and even land you thousands of dollars more in debt. Additionally, tax debts are different than traditional forms of debt in that they often are more complicated to resolve and often have few options other than full repayment.

Can I Eliminate Tax Debt In Bankruptcy?

In a Chapter 7 bankruptcy, federal and state tax debts may be treated as part of your non-exempt assets. In a Chapter 13 bankruptcy, you can pay back your tax debts over a period of three to five years.

If you have income, it’s possible that your tax debt is not dischargeable. This means you will not be able to eliminate this debt once your bankruptcy case is over. Potential tax debt that may not be discharged include:

• Tax debt that is not listed on the bankruptcy petition
• Tax debt from a year you didn’t file a tax return or a year you filed a fraudulent return
• Tax debt from a year where you received a fraudulent refund
• Tax debt from a year where you received a refund for a false deduction
• Filing a fraudulent return
• Other taxes that are determined to be nondischargeable by the court

If you are considering filing for bankruptcy with tax debt, it is important that you speak with a Dallas bankruptcy attorney to discuss whether these debts may be eliminated. A bankruptcy attorney can help you understand whether your tax debt can be eliminated and whether it is worth filing for bankruptcy. Further, a Dallas bankruptcy attorney can discuss all of your options with you to help you make an informed decision regarding your tax debts.