Tax Forgiveness During Bankruptcy

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In many cases, taxes cannot be discharged through bankruptcy.

However, there is are exceptions to almost any rule. Filing for bankruptcy can leave you with back taxes, interest, and penalties being discharged. You just have to qualify for tax forgiveness for back taxes owed to the IRS.

In order to receive tax forgiveness and have your tax debt discharged, you must meet these three qualifications:

  • Tax debts need to be reviewed by the IRS at least 240 days before filing for bankruptcy
  • Your tax returns regarding the debt must be on file for at least two years
  • The debt you owe the IRS must be at least three years old

As long as you meet these specifications, you might be able to file Chapter 7, Chapter 11, and/or Chapter 13 bankruptcies. Chapter 7 bankruptcy will enact an automatic stay in order to enforce any of your creditors to stop all collection efforts. In approximately 90 days after your case started, your debt should be dropped. Once your debts are discharged, the IRS can pursue collection. You can create a plan to repay the debt that won’t be discharged while the automatic stay is in place. Chapter 13 bankruptcy gives you an opportunity to reorganize your debts and make smaller payments to repay your creditors. Some of your debts may be discharged through Chapter 13 bankruptcy too.

Contact Detroit Bankruptcy Law to schedule a free consultation

Detroit Bankruptcy Law represents Southeast Michigan. We are experienced and board-certified in our field and can help you find the right path to your financial freedom. We are determined to help you with your case. We’re available to help you resolve existing tax liens and wage levies. Call us to discuss your tax debt and we can provide you with relief solutions that are available to you.