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Bankrupting Tax Debt

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vV35Hszm
Contributor

Bankrupting Tax Debt

I'm in a weird situation... I owe the IRS like $60K and California around $20K.  I had a decent income for a few years but is' gone and unlikely to return ever.

 

My credit is ok and rebuilding with negative stuff all like six years old so I really don't want to BK but I don't have the money to OIC either.

 

Should I wait it out?  BK?  What happens if I ONLY BK tax debt?  Will I lose all my credit cards with zero balances?

Message 1 of 4
3 REPLIES 3
pipeguy
Senior Contributor

Re: Bankrupting Tax Debt

Tax debt is generally not dischargeable through bankruptcy. I don't know anything about Calif tax relief, but the IRS will work with you including an offer in compromise based on an amount that is painful but payable over time (if I remember correctly it's 18 to 24 months).

 

https://www.irs.gov/payments/offer-in-compromise

 

Should you NOT settle or enter a payment plan with the IRS, things can get very "difficult" including the loss of property and passport.

 

 

Message 2 of 4
Anonymous
Not applicable

Re: Bankrupting Tax Debt

To eliminate a tax debt, the tax return must have been originally due at least three years before you filed for bankruptcy.

Message 3 of 4
vV35Hszm
Contributor

Re: Bankrupting Tax Debt


@Anonymous wrote:

To eliminate a tax debt, the tax return must have been originally due at least three years before you filed for bankruptcy.


Yeah - though mines getting close to ten years old... at least the big stuff, so it'll go away on it's own.

 

Message 4 of 4
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