5 Need-to-Knows For Those with Tax Debt

Are you considering filing for bankruptcy? Bankruptcy is one of the best ways to get your life back on track and can be a solution to many of your financial troubles. From credit card debt to tax debt, bankruptcy can help you get rid of your stress and help you put your life in order. But before you begin the process, there are a few things you should know that will make everything easier to understand. Here are 5 things you should know.

1.      Bankruptcy Can Eliminate Most Types of Debt

Are you facing extreme credit card debt? Bankruptcy can help. Have you or a loved one been injured and do you have more medical bills than you can manage? Bankruptcy can give you the breathing room you deserve. Are you facing tax trouble because you lost your job or had some other serious issue arise? Bankruptcy can help with that, too. While every individual's case is unique, chances are good that bankruptcy will be able to help with your specific debt situation.

2.      Bankruptcy Doesn’t Have to Be a Lengthy Process

Every bankruptcy case is going to be unique. Because of that, it is impossible to predict how long the entire process will last. However, it is possible to go from the first consultation with your attorney to the final discharge in as little as a month (and sometimes less). Certain factors can make the process longer, such as how many assets you own, what type of bankruptcy you are filing, if you are married or divorced, if you have tax debt, and if you have children. However, the entire process can usually be done in as little as a month or two.

3.      There Are Different Types of Bankruptcy

You need to pick the right type of bankruptcy for your specific situation. There are a variety of ways you can file, but Chapter 7 and Chapter 13 are among the most common. Chapter 7 usually involves eliminating your debts but can mean losing some of your assets to pay them. Chapter 13 is for those of you who make more money and want a repayment plan for your debts. Some types of bankruptcy are specific to small business owners as well. Make sure you speak with a bankruptcy professional so you know exactly what is right for you.

4.      Lawyers Can Get Results

Speaking of professionals, while it is possible to file on your own, you will be much better off emotionally and financially if you hire a bankruptcy attorney. If you are dealing with tax debt, there are a lot more specifics and issues you will need to overcome than if you just wanted to get rid of credit card debt. Lawyers and attorneys know the ins and outs of tax debt and will help you come up with the best possible plan for your specific situation.

5.      You Can Eliminate Tax Debt

Federal income taxes can indeed be eliminated through Chapter 7 bankruptcy. You might have heard a lot of myths about bankruptcy and taxes. While it's true that fraud penalties or tax evasion debt cannot be eliminated through bankruptcy (no criminal fines or penalties can be removed through bankruptcy), traditional income tax debts can be.

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