You may consider filing for bankruptcy when you cannot pay your tax debt. When you file for bankruptcy:
- Typically, all collection action will stop
- It may relieve you from some (but not all) of your tax debt
To get tax account information to prepare for bankruptcy, call us at (916) 845-4750.
Types of bankruptcy
The type of bankruptcy you file is based upon your individual circumstance.
The most common are:
- Liquidation (Chapter 7): If you have assets that have value, those assets are sold and the proceeds are distributed to creditors (including us).
- Payment plan (Chapter 13): You are able to keep your assets and pay your debt over time (usually 3 – 5 years).
- Reorganization plan (Chapter 11): Usually involves businesses that want to keep the business alive and pay debt over time.
Visit Bankruptcy Basics from the United States Courts for more information on types of bankruptcy.