What Is Bankruptcy?

It is a legal process for both the taxpayers and the businesses. It allows you to repay or possibly eliminate your debts under the federal bankruptcy court’s protection. By selling assets to pay off creditors and restructuring debts, bankruptcy provides you a fresh financial start.

Types Of Bankruptcy

Chapter 7 bankruptcy (liquidation)
Chapter 13 Bankruptcy (Reorganization)
Chapter 11 Bankruptcy (Reorganization for Businesses)

To pay off creditors, bankruptcy Chapter 7 involves the liquidation of non-exempt assets. It is also called a fresh start, and most unsecured debts can be discharged from it. For example, credit card debt, and medical bills.

If you want to protect your assets and have a steady income, this type of bankruptcy is for you. After all, Chapter 13 bankruptcy allows you to create a court approved plan of three to five years for repaying all or part of your debts.

Chapter 11 bankruptcy is primarily used by businesses. After all, it provides you a way to reorganize and continue operations while repaying debts. Clearly, it is a complex process that requires court approval.

Tax Debts and Bankruptcy

Bankruptcy can not discharge all types of back taxes. Payroll taxes, trust fund penalty can’t be discharged in bankruptcy.  Mostly, old income tax year with back taxes may qualify to be discharged but there are specific criteria, including the age of the liability and whether you filed a return. It is often quite difficult to get back taxes eliminated through bankruptcy. Hence, it is recommended to consult a tax professional who will help you throughout the process.

How LifeBackTax Relief Can Help

Navigating bankruptcy laws and making the right choices can be complex. At LifeBack Tax Relief, we have the expertise to guide you through bankruptcy analysis, helping you understand your options and providing support throughout the process. Our team can help you make informed decisions to achieve the debt relief you need. 

We will calculate which years are eligible to be discharged in bankruptcy. Most bankruptcy attorneys lack this knowledge, or have little knowledge in this area. Most taxpayers are still left with outstanding tax liability after the bankruptcy has been discharged, not to mention that extended the Collection Status of Expiration (CSED) date for the taxpayer and added interest and penalties for the duration of the bankruptcy.

Contact us today for a FREE consultation to explore your options and take control of your financial future.

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We have settled back tax cases for thousand of our clients! Call today for FREE Consultation now!

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