How Bankruptcy Can Help Texans with IRS Debt

Tax season can be stressful, especially when you’re facing substantial IRS debt that feels impossible to manage. For Texans struggling with tax debt, bankruptcy may offer a surprising solution. While not all IRS debts can be discharged, bankruptcy can help you reorganize or eliminate certain tax obligations, giving you a chance to regain financial stability.

Understanding IRS Debt and Bankruptcy

Many people believe tax debt is untouchable, but bankruptcy laws provide relief under specific circumstances. The key is determining whether your tax debt qualifies for discharge and choosing the right type of bankruptcy for your situation.

What Types of IRS Debt Can Be Discharged?
Certain older income tax debts can be discharged in bankruptcy if they meet specific criteria:

• The Three-Year Rule: The tax return for the debt must have been due at least three years before filing for bankruptcy.
• The Two-Year Rule: You must have filed the tax return at least two years before filing for bankruptcy.
• The 240-Day Rule: The IRS must have assessed the tax at least 240 days before filing.

Debts That Cannot Be Discharged:

• Payroll taxes
• Fraudulent tax filings or evasion penalties
• Recent income tax liabilities

Types of Bankruptcy for IRS Debt Relief

Chapter 7 Bankruptcy:
This is a liquidation bankruptcy that discharges eligible debts, including some IRS tax liabilities. It’s ideal for individuals with limited income and few assets. To qualify, you must pass the Chapter 7 means test.

Chapter 13 Bankruptcy:
This type of bankruptcy allows you to reorganize your debts, including IRS debt, into a manageable repayment plan over 3-5 years. Chapter 13 doesn’t discharge tax debt immediately but helps you avoid penalties and interest while paying it off.

FAQs About IRS Debt Relief Through Bankruptcy

Can I include all my tax debts in bankruptcy? Only specific tax debts qualify for discharge. Other types, like recent taxes or payroll taxes, must be addressed through repayment plans.

Will bankruptcy stop IRS collections? Yes, filing for bankruptcy triggers an automatic stay, which halts IRS collection efforts, including wage garnishments, liens, and levies.

Can I keep my property if I file for bankruptcy? Texas’s generous exemption laws often allow you to retain essential assets like your home, car, and retirement accounts.

Does filing for bankruptcy impact my credit score? Bankruptcy will affect your credit score, but eliminating unmanageable IRS debt can help you rebuild your finances more effectively.

How to Determine If Bankruptcy Is Right for Your IRS Debt

Step 1: Review Your Tax Debt: Determine the type, age, and amount of your IRS debt. Use the rules mentioned above to check eligibility for discharge.

Step 2: Assess Your Financial Situation: Evaluate your income, expenses, and other debts to decide if bankruptcy is the best solution.

Step 3: Consult a Bankruptcy Attorney: Work with an experienced attorney like Kisch Consumer Law to understand your options and navigate the legal requirements.

Step 4: Choose the Right Bankruptcy Chapter: Based on your financial situation and goals, decide between Chapter 7 and Chapter 13 bankruptcy.

Step 5: File Your Bankruptcy Petition: Include detailed financial information and tax records to initiate the bankruptcy process.

Why Texans Trust Bankruptcy for IRS Debt Relief

Eliminate Eligible Tax Debt: Bankruptcy can discharge older income tax debts, freeing you from a significant financial burden.

Stop Collection Actions: Filing for bankruptcy halts IRS collection activities, giving you breathing room to address your finances.

Simplify Repayment: Chapter 13 bankruptcy restructures your tax debt into an affordable repayment plan.

Protect Your Assets: Texas’s robust exemption laws safeguard essential assets, ensuring you can keep your home, car, and retirement savings.

Why Choose Kisch Consumer Law for IRS Debt Relief?

Navigating bankruptcy laws and IRS debt regulations can be overwhelming, but Kisch Consumer Law offers the expertise and personalized support you need to succeed.

What Sets Kisch Consumer Law Apart:

• In-depth knowledge of Texas bankruptcy laws and IRS debt relief options.
• Proven strategies for stopping IRS collections and resolving tax debt.
• Compassionate, client-focused service tailored to your unique financial situation.

Ready to regain control of your finances? Visit Kisch Consumer Law to schedule a consultation today.

Alternatives to Bankruptcy for IRS Debt

If bankruptcy isn’t the best option for your situation, consider these alternatives:

Installment Agreements: Work with the IRS to create a payment plan for your tax debt.

Offer in Compromise (OIC): Negotiate a settlement with the IRS to pay less than the full amount owed.

Currently Not Collectible Status: If you’re facing financial hardship, the IRS may pause collection efforts temporarily.

Taxpayer Advocate Service: Seek assistance from the Taxpayer Advocate Service for complex IRS issues.

For additional resources, visit the IRS Tax Relief Options page to explore available programs.

Quick Tips for Handling IRS Debt

Act Quickly: Ignoring IRS debt can lead to severe consequences like liens and wage garnishments.

Organize Your Records: Keep copies of tax returns, notices, and payment records to streamline the resolution process.

Consult a Professional: A bankruptcy attorney can help you navigate complex IRS rules and maximize your debt relief options.

Communicate with the IRS: Don’t wait for collections to escalate—proactively reach out to discuss payment plans or settlements.

Learn More About Bankruptcy and IRS Debt Relief in Texas

Bankruptcy isn’t just for credit card or medical debt—it’s a powerful tool for addressing IRS liabilities. If you’re a Texan struggling with tax debt, bankruptcy can provide the relief you need to regain financial stability. Visit Kisch Consumer Law to explore your options and take control of your finances.

Take Control of Your Tax Debt

Facing IRS debt can be intimidating, but it doesn’t have to define your financial future. Bankruptcy offers a pathway to eliminate or manage tax liabilities, giving you the freedom to focus on what matters most. Whether you need to discharge older tax debts or reorganize your payments, the right legal support can make all the difference.

Ready to tackle your IRS debt? Contact Kisch Consumer Law today and let’s create a plan that works for you. Because in Texas, every challenge is an opportunity for a fresh start!