If you’re struggling with debt, the odds are you may have some back taxes on your record, too. And if you’re considering bankruptcy, you may have heard the myth that you can’t include back taxes in your case.
In fact, most income taxes over 3 years old, and most inheritance and estate taxes can all be discharged through bankruptcy, assuming the taxes fit within certain time constraints and the taxpayer hasn’t knowingly committed fraud or tax evasion. These allowances also hinge on the debtor having filed a tax return in the first place.
Bankruptcy lawyers Memphis, TN trusts will tell you Chapter 7 bankruptcy can often include your income taxes, allowing you a fresh start and essentially wiping out the debt. However, Chapter 7 does not include property taxes, or other secured taxes like payroll taxes.
In Chapter 13 bankruptcy, even secured taxes like property taxes can often be included. If you owe these type of back taxes, Chapter 13 allows you to pay them back without interest over a set period of time.
None of this information is conclusive, because each situation is different. No one’s taxes or debt is exactly alike, and the law can be very particular about what kind of taxes may be included in a bankruptcy and why. Our Memphis bankruptcy attorneys work with tax debt all the time and can help you determine your best options moving forward.
Contact us today to talk with an attorney for free, or give us a call at 901-327-2100.
(Photo by Steve Woods)