There are so many factors to consider for an Escondido resident who is contemplating whether or not to file for bankruptcy that it is understandable if tax considerations are at the bottom of the list - or even forgotten altogether. No one likes to think about taxes, but with the end of the year fast approaching it is important to know that there can be significant tax implications both in the planning stages and in the aftermath of a personal bankruptcy filing.
Some Escondido residents may be thinking about filing for bankruptcy as a debt solution - and one of their debts might be unpaid taxes. If that is the case, there are very strict rules regarding the possible discharge of tax debt, so it is important to get the most accurate information about whether or not this is a possible avenue.
Filing for taxes can become complicated as well. Most people are used to filing their taxes before the April 15 deadline every year. An individual who files for bankruptcy will still do that, but, what most people don't know, especially with a Chapter 7 bankruptcy, is that the trustee in charge of the bankruptcy estate will also file taxes on behalf of the estate.
Lastly, the timing of the bankruptcy filing can be all-important. In essence, all debts accrued by the filer up to the day of the bankruptcy filing will likely come under the umbrella of the bankruptcy action. Filers are not to accrue any more debt after the filing. However, some people continue to deal with unpaid taxes after a bankruptcy filing is complete and their debts discharged. The filer would not benefit from the protection a bankruptcy filing offers when it comes to those new unpaid taxes. The tax implications of a bankruptcy filing can be confusing, but readers who want to know more about our firm's approach can visit our webpage.