Bankruptcy: The Facts
How should you proceed if your IRS issues are so severe that filing for bankruptcy is a good option? You'll determine how bankruptcy will impact you and your family by research. Of the 2 types of bankruptcy, figure out which one will work best for you. 2 Bankruptcy Types Chapter 7: Liquidation Bankruptcy. Your debts, dischargeable and non-exempt, are liquidated. Most or all of your tax debts over three years old might be wiped out. Recent taxes won't be impacted. You can pay your tax debt over an extended period of time with a repayment plan bankruptcy (Chapter 11, 12, or 13). If you stick to the deadlines for payments scheduled, in time you'll have settled your entire tax bill. Bankruptcy Disadvantages There are numerous disadvantages you need to consider before making a decision about bankruptcy. One is that you can still owe taxes when you reach the end of your bankruptcy term. This means the IRS is given additional time to collect these taxes. The statute of limitations left on the bills is extended to include whatever time remains on the original 10 years plus the time the bankruptcy case was pending plus 180 days. Your credit rating may be affected by bankruptcy since it's public record that could remain there for as long as ten years, an indication that you have a debt problem. You'll have a hard time renting an apartment and getting a credit card, a loan, or insurance because lenders will refuse to extend you credit. Something to Consider Bankruptcy is a last resort, especially if your only debt is to the IRS and you don't want it on your records for as long as 10 years. It is an option to consider, though, if you owe considerable debts as bankruptcy could discharge them.
