Filing for Bankruptcy: Taxes and Student Loans
Most taxes are not dischargeable through bankruptcy, and student loans cannot be discharged except in cases of "extreme hardship," which usually includes a serious illness. But that doesn't mean we can't help. You can still file for bankruptcy, and you can still work out different plans for paying back your taxes and loans.
For a free initial consultation, call (704)512-0697 or contact The Cummings Law Firm, P.A. online. We've helped over 7,000 clients file for bankruptcy in the Charlotte, North Carolina area, and we can help you, too.
Filing Bankruptcy for Student Loans
Student loans are generally considered a "nondischargeable debt," meaning they can only be discharged in the most extreme circumstances. This was phased into law between 1985 and 1994, after it became a standard practice for some college students to file for bankruptcy directly after graduation. While it is still possible to get a "hardship discharge," the hardship must be extreme.
However, if you have other debts that make it difficult to keep up with student loan payments, they most likely can be discharged. Also, by filing for Chapter 13 bankruptcy, you can reorganize your loan payments to give you time to catch up on student loans or to put your student loans on hold while you get the other debts out of the way.
Bankruptcy and Income Tax
If you need to file for bankruptcy to pay off a tax bill, you face some complex options. Without bankruptcy, the IRS can force you to sell off property, can attach your wages and even require third parties who owe you money to pay the IRS.
If you file for Chapter 13 bankruptcy, you can pay the IRS an amount equal to the value of your nonexempt property over the next three to five years. In addition, you'll still have to pay the rest of the debt at a rate of one to two cents on the dollar. However, you get to keep all of your property, and within a few years of making one affordable monthly payment your tax debt will be entirely paid down.
For a free consultation to discuss your options, contact The Cummings Law Firm, P.A. today online or call (704)512-0697.
