Bankruptcy & Tax Debt

Find Out if Bankruptcy Can Eliminate Your Tax Debt

Many people don’t realize that certain tax debts can be reduced or even eliminated through bankruptcy. While not the right solution for everyone, bankruptcy may provide a fresh start if you’re buried in debt and have no other way forward. We’ll help you understand your options and determine whether bankruptcy is a smart move for your situation.

When Tax Debt Qualifies for Discharge

In general, tax debt may be wiped out in bankruptcy if:

  • The debt is income tax debt (not payroll or fraud penalties).

  • The return was due at least 3 years ago.

  • The return was filed at least 2 years ago.

  • The tax was assessed at least 240 days ago.

  • You didn’t commit fraud or tax evasion.

These rules are complex — small details can make the difference between dischargeable and non-dischargeable debt.

Types of Bankruptcy & Tax Debt

  • Chapter 7 Bankruptcy – May completely eliminate qualifying tax debt, but only if strict criteria are met.

  • Chapter 13 Bankruptcy – Allows you to repay tax debt (and other debts) through a court-approved repayment plan, often with reduced balances or interest.

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How We Help

If you’re considering bankruptcy, we’ll:

  1. Review your tax history and debt to determine eligibility.

  2. Explain your options — whether bankruptcy is your best route or whether alternatives (like Offer in Compromise) are better.

  3. Work with bankruptcy attorneys to ensure your tax situation is handled properly during the process.

  4. Protect your future by helping you stay compliant after bankruptcy.

  • Not always. Certain tax debts can be discharged, but others will survive. We’ll analyze your case to know for sure.

  • Yes. Once you file, an automatic stay goes into effect, halting most IRS collection actions, including levies and garnishments.

  • Not necessarily. Bankruptcy is a serious decision that impacts all your debts and credit. We’ll help you explore other IRS programs first to see if they make more sense.

Frequently Asked Questions

Explore Your Options

Bankruptcy isn’t the right choice for everyone — but for some, it’s the best path to a financial reset. We’ll help you understand your eligibility and guide you toward the right solution.