With the approach of the tax season in Santa Clarita, the possibility of added tax debt approaches as well. This is a terrifying thought for those who are already so far into debt that they feel like they are suffocating.

If this is the case for you and you have already tried everything you can to find yourself out of debt with no success, then bankruptcy might be the next best option for you. Though it may be scary, bankruptcy can help to make your payments more manageable or may even get rid of them altogether — including debt from taxes!

There are 2 types of bankruptcy that you can file for, depending on your situation. Chapter 7 helps to rid all of your debt and help you start over, while chapter 13 helps you pay off your debt with more manageable monthly payments. Chapter 7 is the most commonly filed bankruptcy. In this process, the court takes legal possession of your belongings and can sell what it needs to in order to pay off most of your debt.

Related Article: Residents Can Count On Experience Of Bankruptcy Attorney In Santa Clarita

Then, if there is any left, the courts will discharge, or forgive, the rest of it. Chapter 13 is different. Instead of selling your property, the courts appoint someone to help you better manage your debts and will lower payments on them to make it more feasible. The main difference is this: in chapter 7, you are left with no remaining debt, while you are left with debt in chapter 13.

Chapter 7 bankruptcy can also help you discharge tax debt! First you must meet certain criteria, then the courts will discharge certain types of debts. The criteria is as follows. First, only income tax and some other types of debt can be forgiven. Payroll taxes and fraud charges cannot be removed. Secondly, the debts must be over 3 years old and you must have filed tax returns on them for the last 2 years.

If the debt isn’t old enough, or if you failed to file tax returns on time for the last 2 years, you can kiss away your hopes of discharging these debts. Lastly, you must pass the “240 day rule.”

This rule states that you have to wait 240 days after the IRS has assessed your debts in order to file bankruptcy in order for the discharge to go through. Once these 240 days have passed, or if the IRS has never assessed your debt, you can file for bankruptcy with the hopes of having the debt removed. If you are able to check off all of these conditions, you are more likely to have your debts forgiven with chapter 7 bankruptcy.

Though a seemingly “magic” way of removing debt from your life, bankruptcy should not be rushed into. Even if it seems like the best option for you, you should always consult a bankruptcy professional to help you decide if filing bankruptcy is the best option. Professionals in Santa Clarita, such as the Law Offices of Louis Esbin, are willing to help you discover your options and help you find the absolute best way to rid yourself of debt.

For more information about The Law Offices of Louis Esbin, click here.

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