If you owe a substantial amount of debt, you know this can take a significant emotional toll on your life. Owing a lot of debt can lead to debt collectors calling at all hours of the day, threatening letters from creditors and the possibility of losing your personal property.
The way that debt can negatively impact your life is disheartening and overwhelming. If you are facing this type of difficulty, you might consider the benefits of filing for consumer bankruptcy. However, if a significant portion of your debt comes from tax debt, you would be wise to learn about what that means for you and how bankruptcy can still help.
What can this legal option do for you?
For Wisconsin consumers, bankruptcy could be a viable way to discharge some debt, stop collection efforts and reclaim a better financial standing in the future. However, in many cases, tax debt is not eligible for discharge through a Chapter 7 or Chapter 13 bankruptcy filing.
This may be discouraging to you, but there are some exemptions to this rule. You could be able to discharge some of your federal tax debt if you meet the following criteria:
- You owe income tax debt.
- You filed a tax return at least two years before seeking to discharge tax debt through bankruptcy.
- You are innocent of any intentional act of tax evasion.
- The tax you owe is at least three years old, and you are eligible for the IRS 240-day rule.
Taxes are extremely complicated, and your situation can be even more complex when you owe several different types of debt. It is beneficial to start with a complete evaluation of your case in order to learn the specific ways bankruptcy can help you and how you can pursue a better future after owing tax debt.
Should you consider bankruptcy?
You may not think that bankruptcy is the right choice for you, especially if you owe a significant amount of tax debt. You may find it helpful to learn about how bankruptcy can help with specific types of taxes and how this process works.
Regardless of the nature of your individual situation or your assumptions about your legal options, it is always smart to know your rights and legal options. There may be a chapter of consumer bankruptcy that could allow you to fight for a better tomorrow, one that is free from the burden of certain types of debt.
