While bankruptcy will not erase Internal Revenue Service (IRS) or student loan debts, you can still achieve a certain level of debt relief through reorganization. At Brent W. Davis, L.L.C. in Birmingham, Alabama, we have the knowledge and experience to help you continue to pay those obligations, but within a payment plan you can afford.
Student Loan Debt
Generally, student loan debt is not dischargeable under any chapter of the Bankruptcy Code unless the borrower can show “substantial hardship. This means that your obligation to pay off your student loans will not be removed even if you file for bankruptcy and are able to get rid of other debts under Chapter 7. However, a Chapter 13 bankruptcy can eliminate other debts that are competing for your money and give you some relief.
IRS debt from the previous three years is considered current debt, and it cannot be discharged in bankruptcy. The financial obligation to pay the IRS will not go away even if you pass the Chapter 7 means test and erase all your other debt. Chapter 13 bankruptcy is the best option if you cannot pay your IRS debts. Your relief comes in the form of a payment plan and having the courts freeze or eliminate interest rates and any financial penalties incurred. If you have IRS debt that is older than three years, you may be able to have it discharged, and it will be treated differently depending on whether you file for Chapter 7 or Chapter 13.
Your bankruptcy attorney at Brent W. Davis, L.L.C. will be your advocate and the courts can be your ally in protecting you from the IRS. Essentially, we use the federal government against the federal government. While the IRS may employ aggressive tactics in collecting and an unwillingness to be flexible, a Chapter 13 bankruptcy may change the situation.