Chapter 7 vs. Chapter 13 Bankruptcy for IRS Tax Debt

Introduction

If you’re struggling with overwhelming IRS tax debt, bankruptcy may provide a way out. But how do you know whether Chapter 7 or Chapter 13 bankruptcy is the right option for your situation? At Advance Tax Relief, we’ll walk you through the process and help you determine the best path forward.

What is Chapter 7 Bankruptcy?

Chapter 7, also known as liquidation bankruptcy, allows individuals to eliminate most unsecured debt, including certain types of tax debt. However, not all tax debts qualify for discharge under Chapter 7.

Requirements for Chapter 7:

• The tax debt must be at least three years old.
• A tax return must have been filed for the debt at least two years prior.
• The IRS must have assessed the debt at least 240 days before filing.

Chapter 13 bankruptcy, or reorganization bankruptcy, allows you to keep your assets while setting up a repayment plan to pay off your tax debt over three to five years. This option is ideal for individuals who don't qualify for Chapter 7 or those who wish to retain valuable assets.

• Debt Discharge vs. Payment Plan: Chapter 7 eliminates tax debt, while Chapter 13 restructures it.
• Eligibility: Chapter 7 has stricter requirements based on income and assets, while Chapter 13 is more flexible but requires a repayment plan.
• Asset Protection: Chapter 13 allows you to keep your property, making it a better option for those with valuable assets.

We’ll help you evaluate whether Chapter 7 or Chapter 13 bankruptcy is the right choice for your IRS tax debt. Our experienced attorneys will guide you through the entire process, ensuring you understand the implications of each option.

Call to Action: "Contact Advance Tax Relief today at 713-300-3965 for a free consultation and find out how bankruptcy can help you resolve your tax debt and regain financial stability."