Filing for IRS bankruptcy is one way of paying your debts. It is a legal process wherein a certain person or organization can pay their outstanding taxes by discharging them with the help of the court. When one declares bankruptcy, it only means that they can’t personally pay anymore their tax debts. With IRS bankruptcy being the solution to unpaid taxes, it can also be a huge dilemma to the filer. This is the main reason why some individuals take bankruptcy as their last option. However, filing for IRS bankruptcy should be acted sooner rather than having it as the last resort. This can help lessen the possibility of having your assets totally drained down by your debts.
IRS Bankruptcy can have several negative effects. It can affect mainly your assets, credit reports, public records and employment. If one files an IRS bankruptcy, it can cause them to loss of personal properties especially if they own a huge sum of assets. It can also give them bad records to the creditors. When they knew that you have gone into bankruptcy, they can’t easily lend you money and loans. Also, companies can’t easily hire you if they knew that you have undergone bankruptcy.
Related articles on filing IRS bankruptcy can be read on the Bankruptcy Code chapters 7, 11 and 13. Each chapter has its different focal point. The first two chapters, chapters 7 and 11 focus on individuals and businesses that want to file an IRS bankruptcy. The difference between the two is that chapter 7 focuses mainly on clearing all assets as payment for the debts while chapter 11 is for those who wants to pay their debts by having payment plans. Chapter 7 is stating for total closure of the business while chapter 11 is for those companies who wants to continue their operation. Meanwhile, chapter 13 is for those individuals, mainly business owners who owns a huge sum of assets but can’t find their income as cover payments for their debts.
One can file a petition for bankruptcy if they can comply with the given five rules. The criteria are the following:
1. The due date for filing a tax return is at least three years ago.
2. The tax return was filed at least two years ago.
3. The tax assessment is at least 240 days old.
4. The tax return was not fraudulent.
5. The taxpayer is not guilty of tax evasion.
Before filing for IRS bankruptcy, one should consider its effects first, if you are willing to risk all of it at once. This is a serious matter obviously and may cause you total loss of assets if not acted upon immediately. Whether willing to file it or not, it all depends on the current state of your financial status.