If you're considering filing bankruptcy, should you first prepare and submit any unfiled income tax returns? Should you prioritize paying them?
The huge emergency coronavirus law will provide, "as rapidly as possible," over 80 percent of American adults with money, many getting $1,200.
Chapter 13's advantages in paying off your priority income taxes become clearer when you see what you don't have to pay.
Do you expect to owe income taxes for the 2018 tax year? Starting January 1, 2019 you can wrap that tax into a new Chapter 13 payment plan.
Chapter 13 is a riskier, longer, and maybe more expensive way to escape a dischargeable income tax deb--but may still be your best option.
Filing bankruptcy stops tax collection just like it stops other debt collection by more conventional creditors. But there are exceptions.
Filing a Chapter 7 case prevents tax liens from hitting your home, and so avoids a dischargeable tax from turning into one you must pay.
Usually you can discharge--write off--an income tax debt by just waiting long enough. Here's how to discharge a tax debt under Chapter 7.
File your Chapter 13 "adjustment of debts" case at the right time to include all possible tax debts. Then budget right to prevent new ones.
During the last 13 blog posts we've covered the automatic stay--crucial protection that filing bankruptcy gives you. Here's a helpful summary.
Chapter 7 sometimes doesn't give much help with tax liens. But Chapter 13 hugely helps with tax liens already recorded, and stops new liens.
The recording of an income tax lien turns your home into collateral on the tax you owe. Stop the IRS/state from getting that huge advantage.
Bankruptcy DOES discharge--permanently write off--certain income taxes. It's mostly just a matter of time.
You owe income taxes, and now the IRS or state has recorded a tax lien on your home. Chapter 13 may get rid of both the tax and the lien.
During the first months of 2016 your bankruptcy can write off more of your tax debts.