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IRS Warning Sign

It is possible to escape IRS debt in bankruptcy. There are a few important criteria to consider.

The IRS Debt Must Be a Certain Age.

According to the IRS website, Taxes on returns where the due date of the return, counting extensions, must be greater than 3 years of the bankruptcy filing date, and greater than days of the filing date.

You Must Go With a Chapter 7 Bankruptcy.

Chapter 7 is a liquidation plan. Chapter 13 is a repayment plan. There are a number of more stringent qualifications that you must meet to file a chapter 7 bankruptcy. The bar is not quite so high for a Chapter 13 filing.

In a chapter 13 bankruptcy, taxes and interest incurred before the filing date must be repaid. In Chapter 7 bankruptcy, that is not necessarily the case.

If your tax and business debt are larger than credit card debt and house mortgage debt, that allows the debtor to avoid Bankruptcy Code test that kicks debtors out of Chapter 7. There are also some income considerations. If you seek the advice of a good bankruptcy attorney, perhaps your debts and income can be reclassified to fit within the required criteria. Perhaps you should call Caroline Secor.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida. For more information, go to our web site or call 727-335-7151.