Can Taxes Be Avoided?

In a Chapter 7 Bankruptcy case, the only taxes that can be eliminated are older income taxes. Chapter 7 does not have any effect on withholding or sales taxes. If you have older income taxes due, it may be worthwhile to at least talk to a qualified Bankruptcy attorney.

When Chapter 7 eliminates tax due for a particular year, it also gets rid of the interest and penalties on that tax. For other types of taxes and more recent income taxes, Chapter 13, may be a better solution. Chapter 13 can provide a repayment period not exceeding 5 years. This will lower payments more than what the IRS will generally agree to.

Once a Chapter 13 case is filed, the IRS cannot garnish your wages, seize your bank account, close your business, file a tax lien or take any other action against you or your property to collect a debt. There may be relief for you, even if you owe the IRS! The same applies to State taxes.

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