FAQs about Tax Debt and Bankruptcy (Pt. 1)

October 31, 2014

Tax debt is a serious problem for many Americans, and what many of these people may not know is that bankruptcy can be a viable option for discharging this type of debt when people don’t have the means to pay it off. Because, however, bankruptcy can’t be used for all types of tax debts, in this three-part blog series, we’ll answer some commonly asked questions about tax debt and bankruptcy to clarify when this may be a debt relief option.

Keep in mind, however, that the answers we will be providing in this blog series are general and that you can readily obtain some info more specific to your situation by contacting the Denver, Colorado bankruptcy lawyers at the Law Office of Jon B. Clarke.

Q – What are the requirements for discharging tax debt through bankruptcy?

Do you have questions about tax debt and bankruptcy? If so, we have answers! Check out these tax debt and bankruptcy FAQs. Or contact us today.

Do you have questions about tax debt and bankruptcy? If so, we have answers! Check out these tax debt and bankruptcy FAQs. Or contact us today.

A – In order to qualify to have your tax debt discharged through a Colorado bankruptcy case, the following requirements must be satisfied:

  • Your outstanding tax debt has to be at least three years old.
  • You must have filed a tax return for the associated tax debt at least two years before you plan on filing for bankruptcy.
  • The tax debt must have been assessed by the IRS at least 8 months (i.e., 240 days) prior to filing for bankruptcy.

If these requirements have been met, then it’s generally possible for people to get their tax debt discharged through a Colorado bankruptcy case. That being stated, however, pinpointing the above-explained time frames may be far less straightforward than it seems, so it’s usually best to figure out your eligibility for discharging tax debt in bankruptcy by working with an experienced bankruptcy attorney like Jon B. Clarke.

Q – What is the best type of bankruptcy case to pursue if I need to get tax debt discharged?

A – We can’t answer this definitively without first reviewing the details of your financial situation and your tax debt. However, what we can tell you is that:

  • Chapter 7 bankruptcy may be the better option if you are unemployed, you are earning a minimal income and you have never (or not recently) pursued this bankruptcy option in the past.
  • Chapter 13 bankruptcy may be a better option for you if you don’t pass the means test because you earn too much money and/or if you have recently pursued a Chapter 7 case.

If you are unsure about which bankruptcy option may be better for you, contact the Law Office of Jon B. Clarke today.

We will answer some more common questions about tax debt and bankruptcy in the second and third installments of this blog series that will be posted in early November – be sure to check them out!

Colorado Bankruptcy Lawyers at the Law Office of Jon B. Clarke, P.C.

Are you overwhelmed by insurmountable debt? If so, contact the trusted Colorado debt relief and bankruptcy lawyers at the Law Office of Jon B. Clarke, P.C.

You can contact us by calling us at (866) 916-3950 or by emailing us using the contact form on this page.

From our offices based in Denver, we provide people throughout Colorado with the highest quality debt relief legal services.

Categories: Bankruptcy, Blog, Tax Debt