Filing for Bankruptcy to Discharge the Tax Debts

If you have a lot of tax debt and private student loans that you can't seem to pay off, then you may want to consider the option of filing for bankruptcy. This is one of the many ways that you can deal with removing your tax debt, but it's not going to be something that is right for everyone. If you want to be able to use bankruptcy as the means of eliminating tax debt, then you're going to have to qualify for this.

If you want to get rid of your tax debts using bankruptcy, then there are going to be some conditions that you need to meet. First off, the due date of the taxes that you want discharged must be at least three years ago. Also, you must have filed the return for these taxes at least two years ago. Also, you're going to need an assessment from the IRS that is at least 240 days old, plus you will need to have prepared taxes that are not fraudulent. Finally, you will need to be not guilty of tax evasion.

Considerations when Using Bankruptcy

One thing to keep in mind when you are using this method is that bankruptcy is going to have consequences. It's definitely going to affect your credit score, so you're going to have to deal with that. It may also prevent you from getting any type of loans in the future. If you can get loans, then you may have to pay a lot of interest on these loans. So before you make a decisions regarding this, think of the financial consequences.

Another thing that you need to keep in mind is that not all debts are going to be discharged when you file for bankruptcy. If you have not filed your taxes in a previous year, then filing bankruptcy is not going to relieve you of these debts. You will still be responsible for paying them. If you truly want to get rid of your IRS debt, then you are going to need to make certain that you have filed all of your tax returns and that you have waited the proper amount of time.

Consider Some Other Options

If you don't want to file for bankruptcy to discharge your tax debts, then you may want to explore some of the other options that may be open to you. Although many people are not aware of it, the IRS can offer you a way to make monthly payments on your tax debt. There is a fee for setting up these payments, but it's one way to make sure that your credit is not going to be harmed. You'll be in full compliance with the law, and you can pay back your taxes bit by bit.

Another thing that you may want to consider is trying to find a way to come up with the funds to pay your tax debt off at once. If you can get enough money together, then you may be able to make the IRS an Offer in Compromise. This is where you agree to pay a certain portion of your tax debt to the IRS and then you will be considered to have paid the entire thing off. You may want to look into some of the different ways, such as remortgaging your home, that can help you collect enough money to do this. Sometimes, though, filing for bankruptcy to discharge the tax debts is the only way, but you will be able to cope with this in time.