Facts and Information about Discharging Debt

Debt

Having to discharge debt is a common outcome for people who have filed for bankruptcy. People who have filed under Chapter 7 bankruptcy have the advantage of it discharging their debt. Being confused about how to file for bankruptcy in Oklahoma, you might skip some essential facts. Like you may not know that your tax debt can be wiped clean using Chapter 7. In reality, Chapter 7 debt can dissolve some tax debts; and, it can help you to get relieved of personal tax liabilities.

Therefore, before filing for bankruptcy you should consult with an attorney to know the best course of action.

The tax debt has to be income based. This tax debt should come from either Federal or state incomes or on gross receipts. That means fraud penalties; payroll taxes or similar things cannot be discharged.

You must have filed tax returns over the last two years prior to filing for bankruptcy. To say in detail, if you wish to have your debt discharged today, you should have filed the tax returns two years back. Most courts across the U.S. do not count late return as a return. Filing a late return means the time has already expired and IRS has already filed a return on your behalf in its place. Because of this, your tax balance would not be wiped out.

tax debt

The tax debt needs to be overdue for the last three years, without which you would not be eligible for discharging your tax debt.

There is a 240-day rule that is generally observed regarding a tax assessment. Your tax debt should be assessed by the IRS 240 days prior to a Chapter 7 bankruptcy filing. This time limit can be expanded. There is a clause that if the IRS has ceased activity of collection for the previous bankruptcy filing, this time span can be extended.

If you are guilty of any frivolous activities such as fraud, tax penalty etc., discharging your tax debt from these activities is not possible.

For a detailed guide, on how to file for bankruptcy in Oklahoma, you can come to Chris Mudd & Associates. We will help with everything regarding debt elimination.

** Disclaimer: This blog post does not constitute legal advice, nor does it create a client-attorney relationship.