What Happens To Your Tax Debt During Bankruptcy?
During the bankruptcy process, there are a plethora of exemptions and conditions that can protect your property, ease the financial burden of bankruptcy, and more. However, because every bankruptcy case is unique, these moving parts can be difficult to understand and apply to your situation.
Tax debt, for instance, is one of the more complicated forms of debt when undergoing bankruptcy. While it can, in some cases, be discharged at the end of the process, the criteria to do so can be relatively complex.
On this page, we will briefly examine tax debt and bankruptcy as well as provide you with some resources to address your tax debt in the face of bankruptcy.
Secured And Unsecured Tax Debt Determines What You Can Do
When it comes to tax debt and bankruptcy, there are some possibilities for discharge, but they’re the hardest discharge criteria to meet. Firstly, most tax debts under bankruptcy are classified as priority claims, meaning that they need to be paid back in full to successfully complete the process.
Thus, when considering bankruptcy and your tax debt, the first step is to determine what tax debt is secured and which is unsecured. Secured tax debt needs to be paid as a priority, where unsecured tax debt could be discharged at the end of the process.
If you have property that has had a lien placed on it by the taxing agency, that debt is secured and must be repaid in full. Additionally, if your tax debt is owed for a tax year, within three years prior to your bankruptcy filing date, those debts are also secured and need to be repaid.
If you have unsecured tax debt, you can likely get some of it discharged; however, the amount that can be discharged will be determined by the timeliness of your tax payments and other factors.
Bankruptcy is complicated and can be stressful when you don’t know what you’re doing or have quality representation.
Fortunately, in Louisiana, The Cook Law Firm provides unmatched bankruptcy representation. Not only will we help you through the process, but we also can use our expertise to ensure that any dischargeable debts are fully understood. We make the bankruptcy process as simple and stress-free as possible.
Contact Us Today
Don’t let bankruptcy be a daunting, scary thing. Instead, enlist the experts who will get you the most favorable results from your case. To get started with our expert bankruptcy attorneys, contact us today.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.