One of the federal requirements for Chapter 13 bankruptcy filers is that you have filed all of your tax returns within the last four years of your filing. You must also file all tax return that are due following the initiation of your bankruptcy proceedings.
This rule affects many Chapter 13 bankruptcy filers for the obvious reason that -- when people are suffering from financial turmoil -- they often skip filing their taxes to save as much money as they can. Although the initial hurdle of getting your taxes up-to-date for the last four years could seem daunting, the benefits of Chapter 13 may be well worth the effort.
When you file for Chapter 13 bankruptcy, as a small business owner or individual, the bankruptcy court will assist you in the creation of an affordable and realistic repayment plan that resolves the debts you owe to creditors. You may not end up paying back your creditors in full by the end of your repayment plan, but if you make your payments regularly and on-time, then any remaining debts covered by your Chapter 13 proceedings will be resolved.
When it comes to the completion of their last four years of tax filings, Chapter 13 applicants will have a little bit of wiggle room. The final deadline for the completion of your returns is prior to your first meeting of creditors. You can also request a 120-day extension if needed. If you fail to file your tax returns within the given period of time, you might not gain confirmation for your Chapter 13 proceedings.
Do you need help determining the steps you must take to prepare for your Chapter 13 bankruptcy filing? A Surprise Arizona bankruptcy lawyer can help you complete the necessary steps before your bankruptcy. Your lawyer can also assist you during the bankruptcy process itself.
Source: IRS, "What You Should Know About Chapter 13 Bankruptcy and Delinquent Tax Returns," accessed July 14, 2017