Can I Include Tax Debt in a Bankruptcy?

Tax debts can be included in both chapter 7 and chapter 13 bankruptcies, but you must meet certain requirements in order to eliminate them.  A chapter 7 bankruptcy lawyer in Glendale can explain the rules of each type of bankruptcy and how your tax debt can be integrated.

Chapter 7 Bankruptcy Rules

Most taxes can be discharged through chapter 7 bankruptcy. If you have other tax debt, such as a trust tax, you will still be required to pay it back.

Under chapter 7 bankruptcy rules, the due date for the tax return must have been at least three years ago, a return must have been filed at least two years ago and must not have been fraudulent, the assessment must be 240 days old or more, and you, the taxpayer, may not be guilty of tax evasion.

Under both chapter 7 bankruptcy rules and chapter 13 regulations, you cannot discharge a tax debt that comes from an unfiled return. Tax liens, property taxes incurred before your bankruptcy filing, some employment taxes, and other tax debts that are not related to income, may survive your Chapter 7 filing and may not be subject to discharge.

Your chapter 7 bankruptcy lawyer in Glendale can help you be sure your tax debt meets all of these requirements before filing.

Chapter 13 Bankruptcy Rules

Non-priority tax debt is included in a chapter 13 bankruptcy as a general unsecured debt. It will be paid along with other unsecured debt and after higher priority debts are paid off.  Once your plan is completed all unpaid tax liability, along with other unsecured debt, can be discharged.

Priority tax debt must be paid back in full, with no interest or penalties.  Tax liens must be satisfied and payment is based on the net value of your assets.  Employment taxes and other trust taxes are also paid through a chapter 13, but again at no interest and penalties will be eliminated once the plan is completed.

Choosing a Chapter 7 or 13 Bankruptcy Lawyer – Glendale

Having a chapter 7 or 13 bankruptcy lawyer from Glendale or elsewhere in the state will ensure your bankruptcy filing goes smoothly and in accordance with federal and state law.

Including tax debts in your filing can be a complicated process that requires legal analysis to determine the best course of action that suits your needs.   An experienced bankruptcy lawyer in Glendale will help you collect and fill out all of the needed documentation to make your case for bankruptcy.


This blog is intended as a general discussion of legal issues and not as a statement of fact, legal advice or a legal opinion. No attorney-client relationship is created by this blog. Do not act or rely upon law-related information in this communication without seeking the advice of an attorney licensed to practice in the relevant area.

This blog article was created by Larry P. Karandreas, Esq., on behalf of the Law Offices of Larry P. Karandreas, P.L.L.C., A Lawyer Who Cares™, which concentrates its practice of law to Chapter 7 and Chapter 13 Bankruptcy, and in Debt Negotiation. If you live in or near Phoenix, Glendale, Scottsdale, Peoria or the Surprise, Arizona area and want legal advice or help – please visit the firm website for more information. 
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