Using Bankruptcy to Wipe Away Old Tax Debts
and Put a Stop to Interest Charges and Penalties
It's an easy way to add a few more dollars to the monthly budget or to get through a temporary budget crunch: Pay less in taxes.
It starts with making a change to the withholding on your weekly or biweekly paycheck. Soon enough, though, the tax bill comes due and there is no money to pay it. You'll make it up next year, you say to yourself. Next year's tax bill comes, however, and you still haven't filed your return from last year. Meanwhile, the interest and penalties are adding up faster than you care to count.
At The Law Offices of James Flexer, we understand just how quickly a tax decision can snowball into an avalanche of trouble. What's important is that you take steps to deal with this problem before it gets any bigger. We can help you do that. In fact, we may even be able to wipe away older tax debts through the bankruptcy process.
Contact us for a free consultation with an experienced bankruptcy lawyer. We have offices in Nashville, Murfreesboro and Columbia.
Let Our Tennessee Bankruptcy Attorneys Start Helping You Today
There are many myths about bankruptcy and one of the most common is that bankruptcy can't do anything about your tax debts. The truth?
- A Chapter 7 bankruptcy can get rid of certain tax debts. The general rule is that the tax debt must be at least three years old (meaning three years from the date the tax return for that year was due), and if you filed your tax return late, you must have filed the late return for those taxes at least two years before you filed your bankruptcy petition.
- In a Chapter 13 bankruptcy, nondischargeable tax debts can be rolled into your repayment plan and paid off over the course of that plan. Additionally, the balance can be stretched out over five years. Interest and penalties will stop adding up and may even be wiped away.
- Business and payroll taxes can also be discharged under certain circumstances. If you own or owned a business and didn't pay the Internal Revenue Service (IRS) all that you should have, you're not alone. You need to know that bankruptcy may allow you to discharge certain portions of that debt.
Making the Most of Bankruptcy's Automatic Stay
As soon as you file a bankruptcy petition, an automatic stay goes into effect that prevents your creditors from continuing to take actions against you. This is true even for the IRS. In real terms, this means that no creditor can continue to garnish your wages, add interest charges or penalties to the amount you owe, call your home or workplace, or mail you letters.
Timing is everything, however, which makes it especially important for you to talk to an experienced bankruptcy lawyer as soon as possible.
Our lawyers have handled approximately 25,000 bankruptcy petitions in middle Tennessee and are ready to start helping you. Contact us today for a free consultation.
