People who are struggling with their debt in Ramsey, Minnesota may choose bankruptcy as a viable option to reduce debt and create manageable monthly payments. Eliminating interest payments and other expenses can ease the burden and give consumers better control over their finances. Not all debts can be discharged in a bankruptcy, and some have special requirements that debtors should be aware of.
When it comes to past due federal taxes, it is possible to write them off in a Chapter 13 bankruptcy. Rolling this debt into a bankruptcy is not as easy as including a credit card debt because the IRS has stringent requirements that must be followed. Consumers must submit tax returns for any periods ending within four years of the bankruptcy filing. All returns must be filed on a timely basis while the bankruptcy is in process. Finally, any current taxes that come due during the bankruptcy must be paid. Failure to adhere to these guidelines can prevent the debtor from including past due amounts in the bankruptcy.
It is also possible to work with the IRS on a compromise. This allows the debtor to pay a smaller amount or to develop a payment plan that is more affordable. This option is granted on a case-by-case basis with the IRS making the final determination. They look at a range of information, including the debtor's income, expenses, available equity in assets and ability to pay.
Bankruptcy is the most common type of debt relief employed by individuals. It allows people to stop the accrual of interest and eliminate monthly payments on unsecured debts. Creating manageable payment plans allows people to get a fresh start on their finances. People can also choose a Chapter 7 bankruptcy to reorganize debt and lower their monthly expenses without writing off the full debt.
Source: FOX Business, "Can I File Bankruptcy on the Taxes I Owe the IRS?", Judy O'Connor, July 03, 2014