Get Rid of Tax Debt When in Bankruptcy

Bankruptcy is not a happy time, but it is a time when you need to keep your wits about you the most. If you have an income tax debt hanging like a sword above your head, you can get rid of it under Chapter 7 or Chapter 13 of the Bankruptcy Code if:

Only if you have cleared all these five points can you get the IRS to forget about your tax debt, forever.

What about Liens?

If the IRS placed a tax lien on your property and/or assets before you filed for bankruptcy, the bankruptcy will not automatically remove the lien. The IRS still has legal right over the property and/or assets under the lien. The only thing a bankruptcy order will do is alter the value of your equity in the property to the time when you filed for bankruptcy.

Managing Assets

When you file for bankruptcy, you need to know which of your assets can be seized and which can be retained by you. Every state has a different take on it, but in most states, your household goods, furniture, personal belongings, social security, unemployment benefits and some kinds of properties can be retained by the owner. If you have a major equity in a property, stock or IRA, you run a risk.

Of course, you should consult a specialist before filing for bankruptcy, but if you have already filed for bankruptcy under Chapter 7 in the past six years, you will only be able to file for it again after the completion of six years.

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