What Happens to My IRS Tax Debt if I File Bankruptcy?
Filing for bankruptcy can be a difficult decision, but it may be necessary in order to manage overwhelming debt. The question of what happens to IRS tax debt when someone files for bankruptcy is one that many people have. Generally, taxpayers should know that filing for bankruptcy does not automatically cancel the amount owed to the IRS.
When considering filing for bankruptcy, it is important to remember that not all debts are dischargeable in this way. Tax debts are generally considered priority debts and must be paid back even after a successful bankruptcy filing. However, depending on the type of tax debt and how long ago it was incurred, some forms of tax debt may qualify for being discharged in a Chapter 7 or 13 bankruptcy petition.
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