Fort Lauderdale Bankruptcy:  The Best Way To Deal With IRS Tax Debt – Get Rid of It!

I don’t know too many people that are not intimidated by the IRS!  After all, they are a pretty powerful agency that can make your life miserable.  As a former client once said when we were able to eliminate $450,000 of tax debt in a Chapter 13 bankruptcy – “I just got my life back!”

If you owe money to the IRS, you can get your life back too.

The most important thing to do is take action as soon as an IRS agents contacts you about your tax debt.  If you have IRS tax debt that is more than three years old, you may be able to eliminate it through bankruptcy.  Whatever cannot be eliminated, can be paid through a Chapter 13 bankruptcy without additional penalties or interest.

There are many “tax relief” companies that will promise to drastically reduce or eliminate your delinquent tax debt.  Their programs all have one thing in common that doesn’t really work in your favor – they are still relying on the IRS to decide how they will treat your IRS debt.  You are still at the mercy of the IRS for the outcome of your case.

Don’t Fall For an IRS Tax-Debt-Relief Scams

The IRS has released their list of top 20 IRS tax scams.  On the list is the one that you most commonly hear on commercials – Reduce your tax debt!  Most of these companies are running “Offer in Compromise” mills where they have employees filling out offer in compromise applications for the IRS to consider.  The truth is that the majority of offer in compromises are not accepted by the IRS.  In fact, only a small percentage of them are accepted.  But, the tax relief mills made their money from filling out the application for you (which is something you can do for yourself).  What’s the bottom line?  You are paying money to have someone fill out a form that you can do yourself and the IRS still has the final decision-making authority over you and your delinquent tax situation.  There’s a better way to get rid of delinquent tax debt.

Using Bankruptcy Law to Deal with Tax Debt

Bankruptcy puts the power of bankruptcy law on your side when dealing with delinquent IRS debt.  The vast majority of people do not know that in bankruptcy law, there are provisions that, if met, can eliminate delinquent tax debt.

By filing bankruptcy, you can eliminate your IRS delinquent debt completely if you meet all of the following conditions:

  • your delinquent income tax to the IRS became due more than three years prior to the day you file bankruptcy;
  • the debt must be on returns that were filed more than 2 years prior to the day you file bankruptcy; and
  • your taxes must have been assessed by the IRS more than 240 days prior to filing your bankruptcy case.

When taxes are not eligible to be discharged under bankruptcy, you can still get out from under tax debt by filing a Chapter 13 bankruptcy and paying off the debt over 5 years without additional interest or penalties.

What is Chapter “20” Bankruptcy?

A “Chapter 20” bankruptcy is the term given when a Chapter 7 bankruptcy is filed first and then a Chapter 13 bankruptcy is filed to deal with financial situations that require a payment plan.  Examples are delinquent IRS debt, catching up with a mortgage that is delinquent or with car payments that are delinquent.  Chapter 20 bankruptcy allows you to force a payment plan onto creditors who may not want to voluntarily work with you on repayment terms.  The “Chapter 20” bankruptcy option is not a common option but sometimes, it is the best way to structure a repayment plan that fits within your budget and achieves your financial goals.

Schedule a Free Tax Debt Elimination Consultation Today

We all know that tax laws are complex.  Using bankruptcy to your best benefit requires experience and a thorough knowledge of how bankruptcy law intersects with other areas of law such as tax law, exemption law and debt collection laws.  At the Bankruptcy Law Firm of Orfelia Mayor, we have handled hundreds of cases that involve tax debt.  We know how to apply bankruptcy law to your everyday financial problems and help you get to the other side of debt.


Other Links:

Tax Relief Guide