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Bankruptcy is a powerful tool for people who owe money in America, but it cannot eliminate all debts. The idea that it can simply wipe the financial slate clean is a canard. As a general rule, bankruptcy protection can help people get rid of credit debt and other unsecured debts. However, it will not help them settle student loans, child support payments, and most tax debt. In this article we will focus on tax debts, since they are the most common. Over twenty million Americans owe more than two hundred billion dollars in back taxes, according to the IRS. Some taxpayers who are in arrears choose to file for bankruptcy protection. Reducing or eliminating tax debt in bankruptcy isn’t easy, but it is possible. The two most common types of bankruptcy protection for individuals are Chapter 7 and Chapter 13. Of the 1.6 million Americans who filed for bankruptcy in 2010, most of them filed for Chapter 7. This type of protection gives the debtor the opportunity to eliminate most of his debts, including some tax debt. But the applicant must meet some very rigid requirements even to qualify. He may also lose his assets. Chapter 13, on the other hand, will protect your assets from seizure and your home from foreclosure, but it will require you to pay your tax debt within 3 to 5 years. As you might imagine, this type of bankruptcy protection is particularly attractive to taxpayers who have substantial assets. Where to begin? Bankruptcy laws are complex and are constantly changing. Some tax consultants or tax advisors you may visit http://www.txmstr.com.
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