Bankruptcy - The Fact | Financial Blog Network

Bankruptcy - The Fact

Posted: 17 Mar 2008 | Categories: Bankruptcy

If filing for bankruptcy is an option you are thinking about to resolve your IRS problems, choose the type that’ll work best for you and find out how it’ll impact you and your family.

Two Bankruptcy Kinds

Liquidation Bankruptcy (Chapter 7).. Your debts, dischargeable and non-exempt, are liquidated. Most or all of your tax debts that are more than 3 years old might be wiped out. It won’t impact recent taxes.

Chapter 11, 12, or 13: Repayment Plan Bankruptcy. These enables you to pay the debts over an extended period of time. The debt has to be paid by a specific deadline, and when that is finished, the entire tax bill would be paid in full.

Bankruptcy Disadvantages

Even when you reach the end of your bankruptcy term, you will still owe taxes. The IRS has extra time to collect your debt and the statute of limitations is extended to the time remaining on the initial ten years plus the time your bankruptcy case was filed plus an additional 180 days.

Your credit rating may be affected by bankruptcy because it is public record that could remain there up to 10 years, indicating that you have a debt problem. You’ll have a difficult time leasing an apartment and obtaining a credit card, a loan, or insurance since lenders will not extend you credit.

Another Consideration

Bankruptcy must be a last resort, especially if your only debt is to the IRS and you don’t want it on your records for as long as 10 years. If you owe considerable debts that bankruptcy could discharge, though, then it’s an option you should think about.

Darrin T. Mish is a Nationally recognized Attorney whose practice focuses on representing clients across the United States with IRS Problems. He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel’s Bar Register of Preeminent Lawyers. His passion is providing IRS help to taxpayers with both individual and payroll tax problems. He teaches attorneys, CPAs and Enrolled Agents in the finer aspects of IRS representation all around the United States. He can be reached at his website at http://www.getIRShelp.com

Article Author :Darrin_Mish