Is There a Way Tax Debt Can be Discharged in Bankruptcy?

Is There a Way Tax Debt Can be Discharged in Bankruptcy?

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When you work with bankruptcy lawyers in Houston, one of the first things you may ask has to do with what happens to your tax debt. There is no standard answer, since every situation is unique. However, when you work with the best Texas bankruptcy lawyers, you’ll have a better chance of getting your tax debt discharged, or having your payments reduced at the very least.

Some of the main factors that contribute to how much tax relief is available to you include:

  • How old your tax debt is
  • Whether you are filing Chapter 7 or Chapter 13 bankruptcy
  • The overall value of your assets
  • Whether your debt is priority or nonpriority

Here’s more of an in-depth look at how you can relieve as much of your tax debt as possible when filing for bankruptcy.

Tax Debt in Chapter 7 Bankruptcy Cases

You should always consult with a tax attorney before filing for bankruptcy. When it’s determined you are eligible for filing for Chapter 7 bankruptcy, the tax attorney will evaluate whether you are eligible for a tax debt discharge. There are several criteria points that must be met, but the first main point requires the tax debt to be more than three years old. When you determine you meet this first point, visit a tax attorney to confirm you meet the remaining criteria points and to get a thorough explanation of each determining factor. It’s important to remember that any tax filing extensions or failure to file your tax return can negatively impact your chances of getting a tax discharge, so you’ll need the best Texas bankruptcy lawyers to help you out in those situations.

Tax Debt in Chapter 13 Bankruptcy Cases

Most of the time the best solution you can hope for in a Chapter 13 bankruptcy case is reduced payments. Any priority debts, however, will have to be paid in full. Only nonpriority debts are available for discharge. Your bankruptcy lawyers in Houston can explain whether your debts are priority or nonpriority, since the answer isn’t always as simple as it seems. Tax rules change frequently and one of the biggest factors in determining debt discharge is timing. The amount that could potentially be relieved will also depend on various aspects of your bankruptcy case, including wages, assets and more.

Bryeans & Garcia, PLLC wants to help make sure you get the most out of your bankruptcy case. When you call our offices in Houston or Fort Worth, we will do a full evaluation of your case and determine the most appropriate action to take for your benefit. Tax debt can be tricky, so working with a tax attorney is critical in any bankruptcy case. We are here for you when you need us, so contact us today to schedule your consultation.