Some taxes don’t qualify for bankruptcy discharge. Most often this is because they were due less than three years ago or were filed less than two years ago. Many of our potential bankruptcy clients worry about a big tax bill after bankruptcy, particularly clients with large balances owing to the Oregon Department of Revenue.
Certainly you can wait until the taxes become eligible for discharge and yet this is rarely a great option. Most clients come to see us after the returns in question have only recently been filed or are in the process of getting filed.
Waiting two to three years rarely makes sense, particularly when the tax debts are only part of the problem. If that is something that you are contemplating, it would probably be a great idea to set a phone appointment with me or see one of our attorneys at any one of our offices in Portland, Salem, Sandy or Vancouver.
One option that often makes a ton of sense is a Chapter 13 Bankruptcy. A Chapter 13 Bankruptcy filing to deal with non-dischargeable tax debt can often be hugely appealing where your income minus your expenses dictates that you pay a certain amount back to your unsecured creditors.
If you are going to have to pay back at least some money back to your unsecured creditors regardless of whether you file now or later, why not file now and route those payments to pay off your taxes rather than U.S. Bank.
In other words, if you owe, say, $10,000 in non-dischargeable tax arrears, but your income minus your expenses is going to allow you to pay back that amount over five years in order to eliminate all your debts regardless of when you file, what’s the point of waiting?
Even if you would not otherwise have to pay anything back to your creditors in bankruptcy, it can still make sense to file bankruptcy sooner rather than later. Are you really going to wait for years for a fresh start and get harassed by your creditors while you wait. The immediate alternatives are attractive.
If you file Chapter 13 now, you eliminate all your other unsecured debts and you have only the taxes to worry about. You can put those non-dischargeable taxes right into a Chapter 13 Bankruptcy. The best part is that you will be able to pay off all your secured loans on your personal property first and make the IRS and ODR wait until you are done. When you do pay the taxes, it is at zero percent interest and no penalty.
This means that your car loan gets paid off first and usually at a reduced interest rate. The tax collectors are forced to wait until you are done, get paid off slowly and don’t get a dime in interest and penalties. Meanwhile your unsecured creditors get nothing. Pretty nice result.
Please set an appointment at any one of our Oregon or Washington offices if you would like to investigate a strategy for using a bankruptcy filing for dealing with tax debts.If any of these strategies for dealing with tax debt. We can see you in Vancouver, Portland, Sandy and Salem. If time is tight you can always book a video or phone appointment with me to go through your options. Sometimes the automatic stay of bankruptcy is the best barrier that you can put between you and the taxman.