Tax debts are treated differently in the two bankruptcy chapters: Chapter 7 & Chapter 13. Tax debt may be classified as secured, priority or unsecured debt. Secured means that the taxing service has a lien on your property, and thus you have no exemptions for the IRS debt. Priority means it is non-dischargeable in a chapter 7 but you can stop interest and penalty in a chapter 13 and could pay the tax off in a 3 to 5 year plan. Unsecured means it can be discharged in a chapter 7 and you have no liability left after the discharge: though, in a chapter 13, you would pay it through the repayment plan. To discharge tax debt in a Chapter 7 bankruptcy following requirements must be met:
If you have a tax lien against you and consequently file a chapter 7, the lien would attach only to the property you own till the date of the bankruptcy and would not be attached to the after-acquired property. The lien will not be discharged but only be enforceable against your property that you owned till the file date of the bankruptcy. Thus, a Chapter 7 discharge eliminates your personal obligation to pay the tax and will prevent the taxing authority from attaching your bank account or wages. Although you would no longer be personally liable for the tax debt, your property will remain subjected to the amount of the tax lien.
The unsecured tax debt is treated as a credit card and get pennies on the dollar, while the tax debt less than 3 years old will be treated as a priority creditor. Priority debts must be paid in full but do not receive interest nor do accumulate penalties. On the tax debt that has liened up on you, payment equal to the value of all of your property must be made, but you can cram tax liens just like you cram a car, the difference is that you have no exempt asset for the purposes of IRS. Thus, if you owe IRS $25,000 but your property is valued at $20,000, then you would have to pay back $20,000 but the $5,000 would be unsecured and will receive a percentage on the dollar.
Austin County Texas tax debt, Brazos County Texas tax debt, Colorado County Texas tax debt, Fayette County Texas tax debt, Fort Bend County Texas tax debt