Tax levies can be a nightmare for individuals already grappling with financial difficulties. If you’re facing this predicament in Southern California, you may wonder if there’s any way to break free from the burden of tax levies. Fortunately, filing bankruptcy with Winterbotham Parham Teeple, a PC can offer a lifeline, providing a pathway to regain financial control and find relief from these overwhelming obligations.
First, let’s clarify what a tax levy is. A tax levy is a government’s legal seizure of your property to cover unpaid taxes. This can include seizing your bank accounts, wages, or even real estate. Tax levies are a formidable tool in the IRS’s arsenal to collect what you owe.
If you’re facing tax levies and other unmanageable debts, Chapter 7 bankruptcy may be a viable solution. Often referred to as “liquidation bankruptcy,” Chapter 7 allows individuals to discharge most unsecured debts, including credit card debt, medical bills, and certain tax debts.
In Southern California, a bankruptcy attorney can help assess your eligibility for Chapter 7 bankruptcy based on factors like your income, assets, and debt load. If you qualify, filing for Chapter 7 can result in an automatic stay, which halts collection efforts, including tax levies.
However, not all tax debts are dischargeable in Chapter 7. Income tax debts can be discharged if they meet specific criteria:
- The tax debt is income-based and not related to payroll taxes or fraud.
- You filed a tax return for the debt at least two years before filing for bankruptcy.
- The tax return was filed at least three years ago.
- The IRS assessed the tax debt at least 240 days before filing for bankruptcy.
Meeting these criteria is essential for discharging tax debts in Chapter 7. If your tax debts are dischargeable, you can find relief from the burden of levies and work towards a fresh financial start.
In some cases, Chapter 13 bankruptcy may be a more suitable option for dealing with tax levies in Southern California. Unlike Chapter 7, Chapter 13 involves creating a repayment plan to manage your debts, including tax obligations.
Under a Chapter 13 plan, you can consolidate your tax debts into manageable payments over three to five years. The advantage of Chapter 13 is that it prevents further tax levies and provides a structured way to pay off your debts, including taxes.
Remember that while Chapter 13 can stop tax levies, it requires a stable income to meet the repayment plan’s obligations. Working closely with a bankruptcy attorney in Southern California is crucial to crafting a plan that suits your financial situation.
Navigating the complexities of tax levies and bankruptcy in Southern California can be daunting. Seeking the guidance of an experienced bankruptcy attorney at Winterbotham Parham Teeple, a PC is essential to understand your options fully. We can assess your unique circumstances, determine which chapter of bankruptcy is most suitable, and guide you through the process.
Contact a bankruptcy attorney in Southern California by calling 800.400.9000 to explore your options and find relief from the burden of tax levies.