You can’t pay your debts. You can make your debt disappear with a bankruptcy. Actually, it’s not true. If you file for bankruptcy, your debt can become even bigger because of accruing penalties and interest in the time it takes for a bankruptcy to be approved. So be careful not to fall in this trap. Here are some tips for tax debt bankruptcy. That helps to understand why bankruptcy doesn’t work for tax debt.
If you have lots of money in the bank to pay your debt, your money will be seized. You won’t escape the IRS if you have money to pay them..
If you filed bankruptcy and paid your unsecured creditors less than 70% of what you owed them, you won’t be able to get another discharge.
You may try to file bankruptcy even if you are able to pay the IRS in monthly installments. Your case for bankruptcy will be examined carefully. And if they see you have enough income to pay for your basic needs and your debts, they will stop the bankruptcy. Your bankruptcy will be dismissed on Issues of Fairness and your IRS Debt will stay.
If a creditor is allowed to take a property to satisfy a debt, that creditor is secured. In this case tax liens survive bankruptcy. You either pay after you filed bankruptcy, or the IRS can claim your property again.
People often transfer money out of their account before bankruptcy to make their odds of it being discharged better. This is a serious business. According to the bankruptcy code all transfers of money or property to friends, relatives, or business associates within one year of filing for bankruptcy are fraudulent transfers. The bankruptcy court can after that seize property from the individual who received it, and use it to pay your IRS Debt.