Can I Use Bankruptcy to Discharge Tax Debts?

File bankruptcy to settle your tax debts

While some tax debts can be discharged through bankruptcy liquidation, there are exceptions. Section 523 of the Bankruptcy Code identifies three debts you must repay: 1. Unfiled tax returns. If you did not file a tax return for the year the debt is assessed, you cannot obtain a discharge. If you filed late tax returns, you must wait two years before you can seek a discharge. 2. Priority tax claims. If the tax debt is a Section 507 priority claim, it cannot be discharged in bankruptcy. Priority claims must be paid in full. They include: A tax required to be …

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How Will Business Bankruptcy Affect Me?

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Whether or not you suffer personally from filing bankruptcy to protect your business depends on the chapter you file. If you file chapter 7, you (and the shareholders of your corporation) can lose your stock values if shares are liquidated with the corporation’s assets. If you file chapter 13, the shares of the corporation will be protected. Instead of liquidating, you’ll enter into an agreement to repay your creditors, and keep your business open during that time. Which bankruptcy is right for your business?  Chapter 13 bankruptcy is not an ideal solution for every business. If you have personally guaranteed …

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