Chapter 13 bankruptcy an option for discharging taxes

Chapter 13 bankruptcy an option for discharging taxes

Though it is every citizen's duty to pay taxes annually, there are probably some Arizona residents who struggle with fulfilling this obligation at the end of the year. Rather than run from this duty, one of the options available to those who are unable to pay their taxes or have accumulated taxes over previous years is to file for bankruptcy.

One of the federal protections available to those overwhelmed with debt is to file for Chapter 13 bankruptcy. Chapter 13 bankruptcy is an option for those debtors who have a steady source of income but it is not enough to make ends meet. In addition, it is an option for those who have some assets they do not want to lose possession of. Under this bankruptcy plan, debtors make court supervised and calculated payments over a period of three to five years to repay their debt.

Before filing for Chapter 13 bankruptcy however, there are some tax requirements that should be kept in mind and fulfilled. First of all, it is important to ensure that all tax returns for tax periods ending within four years of the bankruptcy petition have been filed. Tax returns should also be filed during the bankruptcy. If a debtor is unable to do so, he or she should file for an extension. If someone does not fulfill these requirements and stay current with their taxes, it is possible that his or her bankruptcy case may get dismissed.

Making ends meet may not be easy in today's turbulent economic times, but there are protections offered to those who are struggling so they do not feel overwhelmed by financial pressures. Those Arizona residents considering filing for bankruptcy but unsure of how to proceed and whether they qualify or not, may want to consider consulting an experienced attorney for assistance.

Source: IRS, http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Declaring-Bankruptcy, Accessed on Nov. 25, 2014

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