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Bankruptcy can help with tax debt under certain circumstances

Facing money problems can often feel like an embarrassment. You may be among the many Louisiana residents who are struggling financially and feel as if it is somehow your fault. Unfortunately, numerous people wind up in difficult financial spots through no blatant fault of their own.

Another difficult reality of financial problems is that suffering in one area, such as accruing considerable medical debt, can often lead to other monetary hardships, such as being unable to pay owed taxes. Fortunately, debt relief methods like bankruptcy can often help address outstanding debt balances, including those involving tax debt.

Tax debt is forgivable under certain circumstances

You may have heard that it is not easy to discharge tax debts through bankruptcy. However, that may not necessarily be the case. In fact, if your tax debt adheres to the following stipulations, you may have the ability to have that debt forgiven through bankruptcy:

  • The tax debt you want to discharge relates to a tax return due three years before your bankruptcy filing.
  • Your tax debt received an assessment at least 240 days before you moved forward with bankruptcy.
  • The tax debt relates to a legitimate tax return and has not resulted from attempts at fraud or the filing of a frivolous tax return.
  • You filed the associated tax return at least two years before filing your bankruptcy petition.
  • You did not attempt to intentionally evade tax laws.

Understandably, you may feel as if drawing attention to your tax debt will cause more harm than good, but it is important to remember that your situation may only continue to worsen if you do not take action to address your outstanding debts.

Bankruptcy is complicated

Though your tax debt may qualify for discharge through bankruptcy, it will likely be a trying process to complete. Depending on the type of bankruptcy that best suits your circumstances, it can take months or years to fully handle your case. During this time, you may face many confusing moments and worries about your ordeal. Luckily, you do not have to try to navigate this tricky process on your own.

If you believe that bankruptcy could help you get your financial troubles under control or if you would like more information on the process itself, it may benefit you to speak with a knowledgeable attorney regarding these matters.

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