We often talk to clients who are surprised to find that some types of taxes can be discharged in a bankruptcy. While it’s true that taxes are debts that are treated differently in a bankruptcy case, they can be discharged under certain conditions. One of the factors you’ll discuss with your attorney is when the taxes became due, and when you filed a return (or if the taxing authority filed a return on your behalf). Tax timelines can be a tricky area, so your attorney will want to gather as much information as possible about your return. If you don’t have a copy of your return, we can usually get a transcript for you from the taxing agency.
Even if your taxes don’t qualify to be discharged in a Chapter 7 bankruptcy, you may be able to pay them through a Chapter 13 bankruptcy. Paying tax debt through a Chapter 13 bankruptcy may result in lower payments and a significant reduction in fees and interest on your debt.
If your taxes became due more than 3 years ago and you’re still struggling to pay them off, or if you’re being garnished for past-due taxes, it’s a good idea to talk to an experienced bankruptcy attorney to discuss your options. Bankruptcy might give you the relief you need to pay your expenses and keep more of your own wages.