Dispelling Myths: Bankruptcy And Tax Debt
At the Michigan law firm of Marrs & Terry, PLLC, we often hear of the confusion our clients and prospective clients face regarding bankruptcy laws and tax debt. A common misconception is that tax debt cannot in any circumstances be lessened through bankruptcy.
Tax debt can, though, be lessened through bankruptcy in some situations. It is true that it cannot be discharged through Chapter 7 bankruptcy, often referred to as liquidation bankruptcy. It can, though, often be released through Chapter 13 bankruptcy.
How Can Bankruptcy Affect Tax Debt?
It works like this. When the federal government places a levy against your personal property, the owed tax becomes secured. Secured debt is not dischargeable so it cannot be eliminated through Chapter 7 bankruptcy.
Under Chapter 13 bankruptcy, however, secured debt can be incorporated into a court-approved repayment plan. At the end of the payment plan, which usually lasts for five years, remaining debt, including tax debt, is discharged.
If you face a federal tax levy or other overwhelming debt, contact the Ann Arbor federal levies lawyers of Marrs & Terry, PLLC. Our firm was founded in 1999. Since then, thousands of people like you have turned to us for debt reduction legal assistance. Our decade-plus of experience in handling all aspects of clients’ bankruptcy processes means we can efficiently manage your case while pursuing all options for your maximum debt reduction.
Contact Us For Personal Guidance
We combine legal skills and knowledge with a caring approach focused on listening to clients’ concerns. For more information about our firm, bankruptcy law in Michigan and your rights, please contact an attorney at our firm. Call us toll free at 734-663-0555. We bring more than 18 years of experience to every case and we offer in-home appointments upon request.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.