When you are trapped in the cycle of overwhelming debt, you might dread when tax time comes around. You might not have enough in the bank to pay your income taxes. An unpaid tax bill can only add to your debt and the stress it causes yourself and your family.
Chapter 7 bankruptcy might be the answer. Many people mistakenly believe you cannot discharge income taxes through bankruptcy. This is a myth. However, not everyone who goes through Chapter 7 bankruptcy qualifies to discharge their unpaid taxes.
Dischargeable tax debt
To qualify, a tax debt must meet the following requirements:
- It must be an income tax
- Including valid extensions, the bill must have been due at least three years ago
- You must have filed the return at least two years ago
- The taxes must have been assessed at least 240 days ago
- You cannot be guilty of tax evasion or fraud
If some or all of your tax debt qualifies, you can get it discharged. Depending on how large your tax bill is, this could be a huge relief. Along with things like credit card debt and medical bills, tax debt is one of the largest debt burdens affecting people in Dutchess County and throughout the country.
Halting debt
Of course, it is not unusual for families to deal with multiple debts at the same time. A medical emergency can lead to huge hospital bills, while the injured person’s inability to work can force the family to rely on credit cards to pay for necessities. The snowball effect that spins debt out of control can be halted using personal bankruptcy tools like Chapter 7 and Chapter 13 bankruptcy.