What Are the Tax Implications of Filing Bankruptcy?
There are many different forms of debt relief, from debt consolidation, to bankruptcy, to short sales, to simply walking away from debt. However, only bankruptcy provides debt relief that is free from tax implications.
I am Cherry Hill, New Jersey bankruptcy attorney Joel R. Spivack. I dedicate my entire practice to helping people seek debt relief through Chapter 7 and Chapter 13 filings. With more than 30 years of experience practicing exclusively in the area of bankruptcy law, I am in a strong position to help you find a debt solution that will not result in you owing a lot of money to the Internal Revenue Service (IRS).
What Are the Tax Implications of Canceled Debt?
When a creditor cancels or forgives a debt as a result of a foreclosure, an auto repossession, or credit card debt consolidation, the creditor is required to report the canceled debt to the IRS if the amount is more than $600.
The IRS views canceled debt as income, which means that you will owe taxes on it. If you fail to report income from canceled debt to the IRS, you may end up owing more than the debt itself. You may also be charged interest and penalties from the date the tax was due.
What Happens When Debt Is Discharged in Bankruptcy?
When debt is discharged by filing bankruptcy, you will not owe any taxes on the discharged debt. Bankruptcy not only wipes out the debt, it also protects you from tax liabilities.
Schedule a Free Initial Consultation with a Cherry Hill Tax Attorney
To discuss the tax advantages of filing bankruptcy, call me, lawyer Joel Spivack. You can reach me by phone at 856-488-1200, toll free at via e-mail. My Cherry Hill NJ office is open 8 a.m. to 5 p.m., Monday through Friday, and free parking is available.
To read more about bankruptcy frequently asked questions, click here.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.