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Forgetting to pay or file your taxes, finding a mistake was made when filing, or the IRS wanting to change your taxes and saying you owe money due to the change, are all ways of incurring tax debt. When someone finds themself overwhelmed by sudden tax debt, being aware of their options may help them save time and money for future endeavors.
How Tax Debt Can Affect You
Tax debt can be troublesome for a number of reasons. Not only does it tack on to your monthly bills, but there are other consequences associated with too much tax debt. Here are some possible negative consequences you may be subject to should you fall behind on tax debt:
- Creditor harassment
- Wage garnishment: when creditors take out a portion of your paycheck to pay debts
- Tax liens against your property
- The threat of foreclosure or repossession
Eliminating Tax Debt
It may seem like a difficult and complex process when attempting to rid yourself of tax debt, but it is certainly not impossible. One of the best ways to getting rid of tax debt is through bankruptcy, a tool that has a number of different chapters that are tailored to your specific financial needs.
One type of bankruptcy typically filed by consumers is Chapter 7. The process can take anywhere from 2-4 months, and the debt discharged by its completion is eliminated permanently.
Chapter 13 bankruptcies can be filed by both consumers and businesses, utilizing a court-approved payment plan to reorganize debts. This process can take 3-5 years and has the possibility of granting a partial discharge, as well as smaller payments, all without forfeiting any property.
Bankruptcies under SubChapter V allow businesses to reorganize their debts to pay them off in smaller increments while still being able to operate their business.
Here are some of the most common tax debts that can be eliminated by the bankruptcy process:
- Income taxes
- Tax returns filed at least two years prior
- Tax returns due at least three years prior
- Taxes that were assessed 240 days prior
Contact Our California Bankruptcy Team Today
We understand how stressful and sudden tax debts may be. When they become too difficult to handle, we are ready to come alongside you to find freedom from your debts.
If you would like to find out more about how we can help you get rid of your tax debts, get in touch with us today through our website or give us a call at (310) 220-4147 to schedule a consultation.