Bankruptcy is often seen as a last resort—but for some taxpayers, it can be a powerful tool to finally break free from overwhelming tax debt.
While not all tax debts qualify for discharge in bankruptcy, there are situations where filing can either eliminate or restructure what you owe. If you or someone you know is buried under tax debt and other financial obligations, understanding how bankruptcy works—and how a tax resolution professional can help—is critical.
Can You Discharge Tax Debt in Bankruptcy?
The short answer: It depends.
Certain tax debts may be wiped out (discharged) through bankruptcy if they meet specific criteria. Others may still need to be paid but can often be managed through a structured payment plan as part of the bankruptcy process.
Which Tax Debts May Qualify for Discharge?
There may be a possibility of discharging income tax debt under Chapter 7 or Chapter 13, the debt must meet all of the following conditions:
- The tax return was due at least 3 years ago
- You filed the return at least 2 years ago
- The IRS assessed the tax at least 240 days ago
- The debt is related to income taxes (not payroll, restitution or certain civil penalties)
- You didn’t commit fraud or willful evasion
If these conditions are met, your income tax debt may be legally erased in bankruptcy.
Other Benefits of Bankruptcy When Dealing with the IRS
Even if your tax debt doesn’t qualify for discharge, filing for bankruptcy can still provide valuable protections, including:
- Automatic stay: Immediately stops most collection actions, including levies, garnishments, and seizures.
- Time to catch up: Gives you structured time to repay taxes through a Chapter 13 plan.
- Possible penalty & interest relief: Penalties and some interest may be reduced or frozen.
- A fresh start: Once your bankruptcy is complete, you can move forward without the constant pressure of collection activity.
How We Can Help
Bankruptcy and taxes are both complicated—and combining the two requires experience and strategy. At Jablonsky Tax Relief, we:
- Review your tax debt to determine if it qualifies for discharge
- Coordinate with a bankruptcy attorney to structure your case
- Represent you before the IRS to halt enforcement actions
- Help you explore all your options before making any decisions
Bankruptcy isn’t right for everyone—but in the right situation, it can be a life-changing solution.
Let’s See if Bankruptcy Is the Right Tool for You
If you or someone you know is overwhelmed by tax debt and struggling to keep up with other bills, bankruptcy might offer a path forward. But it’s critical to get the facts first.
Contact Jablonsky Tax Relief today for a free consultation. You can reach us at (972) 821-1991 or by setting up an appointment directly on our calendar at https://meetme.so/bobjablonsky/. We’ll review your situation, explain whether bankruptcy might help your tax problem, and guide you toward the best resolution strategy for your needs.
