Bankruptcy

Overview

You may consider filing for bankruptcy when you cannot pay your tax debt. When you file for bankruptcy:

• Typically, all collection action will stop
• It may relieve you from some (but not all) of your tax debt

Types of bankruptcy

The type of bankruptcy you file is based upon your individual circumstance.

The most common are:

• Liquidation (Chapter 7): If you have assets that have value, those assets are sold and the proceeds are distributed to creditors (including us).
• Payment plan (Chapter 13): You are able to keep your assets and pay your debt over time (usually 3 – 5 years).
• Reorganization plan (Chapter 11): Usually involves businesses that want to keep the business alive and pay debt over time.

Visit Bankruptcy Basics from the United States Courts for more information on types of bankruptcy