Filing Bankruptcy With Taxes: How One Affects The Other

Filing Bankruptcy With Taxes: How One Affects The Other filing a bankruptcy with taxes

If there are two financial issues filled with complications, it is bankruptcy and taxes. However, while many people believe filing for bankruptcy instantly wipes out all tax debts, that is not necessarily true. In fact, when filing bankruptcy and your taxes, there are several things to take into consideration. To ensure you make the right choices and learn how one will affect the other, turn to a bankruptcy attorney Selma residents trust by consulting with the Loris Law Firm.

Discharging Your Tax Debt
When you are seeking to discharge your tax debt through bankruptcy, it is important to know not only which type of bankruptcy filing will best serve your needs, but when you will have needed to file your tax return. For many people, filing Chapter 7 bankruptcy is a popular option. If pursuing Chapter 7 in hopes of discharging tax debt, it is a requirement that you have already filed a tax return for the debt you wish to discharge at least two years prior to filing for bankruptcy.

Federal Tax Liens
If you have met the requirements regarding your tax returns when filing Chapter 7, you may think all debts will be eliminated. However, this will not apply to any federal tax liens on your property. Thus, if the tax lien was put on your property prior to you filing your taxes and then filing for bankruptcy, you will be required to pay off the lien before you will be able to sell the property.

Never Commit Fraud or Evasion
Should you try to avoid paying taxes or submit a fraudulent tax return to the IRS, filing bankruptcy will not be able to help you in any way regarding any debts you may owe.

Since you will require expert guidance on this matter, consult immediately with a bankruptcy attorney Selma clients trust at the Loris Law Firm.