Tax debt is generally not discharged as the result of a bankruptcy filing; most tax debts must be paid in full. Filing Chapter 13 bankruptcy in Arizona is still a smart way to handle back taxes. In the Chapter 13 bankruptcy process, the bankruptcy court will determine which of your creditors are repaid, at what amount, and in what order. The tax owed to the IRS takes a priority position in the distribution process. The tax debt will be fully repaid over 3-5 years with payment amounts that fit within your budget.
There may be other benefits to an Chapter 13 bankruptcy filing if you have a large tax debt. It may be possible to reduce or eliminate the interest and penalties added to the tax debt. An experienced bankruptcy attorney can help evaluate the benefits of Chapter 13 bankruptcy in dealing with your back taxes.
If you are faced with an overwhelming tax debt, consult with experienced bankruptcy lawyers such as the Frutkin Law Firm, PLC, of Phoenix and Scottsdale, AZ. The Frutkin bankruptcy attorneys can help you navigate the tricky path of back taxes, interest and penalties that must be covered when filing for Chapter 13 bankruptcy in Arizona.
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