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Is tax debt dischargeable through Chapter 7 bankruptcy?

The income tax filing deadline is only about a month away. Tennessee residents may be pulling together their documents in order to have their taxes completed by professionals or to undertake their own plans for meeting this annual requirement. Some may have already filed their taxes and paid what they owe based on the income they earned in the prior year.

As readers of this bankruptcy and debt relief blog may know, there are many ways that individuals can end up with heavy debts. One way is through the failure to pay their income taxes to the government. A person who fails to do this may end up incurring fees, penalties, and other costs as they struggle to cover just the principal amount that they owe to the government.

In some cases, Chapter 7 bankruptcy may be used to eliminate tax debts, but to do so certain requirements must be met. For example, the reason that the individual did not pay their taxes must not be based on fraud or tax evasion. If a crime was committed in the process of their failure to pay, then their debts may not be dischargeable in bankruptcy.

Additionally, a debtor must have filed a tax return for their tax debts in order to qualify for discharge through bankruptcy. The debt must be at least three years old and must be for income tax owed and not for other costs. If a debtor meets these and other requirements they may be able to work with a bankruptcy attorney to have their tax debts addressed through the Chapter 7 bankruptcy process.

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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