It can be difficult enough to stay afloat in today’s economy. Paying taxes when you already have so many other bills to pay can become overwhelming very quickly. One way to resolve the issue and have a fresh start is to file bankruptcy. When it comes to individuals, Chapter 7 bankruptcy is often the best remedy. In any case, this solution is often the best for those facing a mountain of overwhelming debt of any kind, including taxes.
Filing on Federal Tax Debt
If you owe tax debt from one year to the next, it is possible to make payments on that debt. However, the same thing might happen the next year whether you have an old debt paid off or not. This means your tax bill just gets higher and higher, year after year, and even more difficult to pay off. Further, there are often other mishaps in life that occur along the way, making your efforts to catch up on tax obligations, even more difficult.
It can seem like just when you start getting ahead of things, something else happens that puts you behind. It may be a car repair bill, dental emergency, or even a serious medical issue. Also, keep in mind that you still have to manage everyday living expenses like rent or mortgage, food, and transportation. Whatever it is, it puts more stress on you and your financial situation. In order to gain control of the snowball of debt, it might be in your best interest to file bankruptcy on your old debts including the federal taxes that are due.
Outside of Income Tax Relief
Other than getting some relief from your income taxes, you might find that you get relief in other areas too when you file bankruptcy. When you file bankruptcy on old debts, you are free of those bills when the debt is discharged, allowing you some room to start putting money back for future taxes and other debts. You may even be able to afford to hire an accountant who can help you create a budget that works for you so that you can avoid tax problems in the future.
For many consumers, bankruptcy is the only opportunity available to catch up. It gives you a fresh start and a clean slate rather than continuously falling into your mound of debt. Bankruptcy is often the only way to gain control of tax obligations, as long as you aren’t facing fraud payments or penalties. At the same time, it’s important to take a look at the methods you were using so that you don’t make the same mistakes again and end up right back in bankruptcy court.
Not all tax obligations can be resolved in bankruptcy court. It’s important to contact a bankruptcy lawyer to go over your options.
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