When Louisiana residents suffer from considerable debt, they may fear that they will be saddled with this burden forever. Though they may seriously consider Chapter 7 bankruptcy as a way to deal with their liabilities, they may already know that some debts may not be discharged through this process. As a result, they may wonder if they should even more forward with the necessary legal proceedings.
In particular, some parties may have concerns over tax debt. In general, this type of debt is not eligible for discharge through bankruptcy. However, if the debt meets certain stipulations, it could potentially have a chance of forgiveness in Chapter 7. There are five requirements that, if met, could help tax debt become dischargeable.
Three of the requirements relate to the timing of various parts of the tax filing process. For instance, the tax return must have been due at least three years prior to the bankruptcy filing, had to have been filed at least two years ago and had a tax assessment at least 240 days ago. Additionally, the tax return cannot be fraudulent, and the individual filing cannot have been guilty of tax evasion.
Understanding the Chapter 7 bankruptcy process and whether certain debts can be forgiven can be difficult. Fortunately, Louisiana residents can gain reliable information from local legal resources regarding their bankruptcy options and how their personal debt can be affected. Consulting with knowledgeable attorneys could help hesitant individuals feel more at ease with moving forward with this legal and proven debt relief method.
Source: thebalance.com, "Bankruptcy and Tax Debts", William Perez, May 16, 2018