Taxes can be a huge headache but there is no way to avoid them entirely—just like rain and death, taxes is one of those things that every person has to deal with in the United States.
If you owe a lot of money to the government, this can be even worse. Owing money to anyone is unpleasant as it is, but when you are owing money to the United States government, things can become complicated because of what the government can do to you and your assets if you do not pay.
Bankruptcy considerations
Filing for bankruptcy is not a decision to take lightly. It is a big step that has long-term consequences and even though it can provide short-term relief, it affects your credit, your credibility with creditors and investors, as well as limits your ability to borrow money.
Things to consider before filing:
If you are considering filing for bankruptcy because of tax debt, think of the following before you decide. It is also important for you to speak with an attorney who is familiar with both bankruptcy and tax law, because if you decide to go through with it, you want to know for sure that you made the right decision.
- Type of tax debt
Not all tax debt is the same. If you owe income taxes, for example, you might have a better chance of the government wiping them away in bankruptcy compared to other types of tax debt.
- Other debt
If you have a lot of other debts besides the tax debit like credit card or medical bills, filing for bankruptcy might help you wipe out all those debts at once.
- Financial situation
If you are struggling to make ends meet because of your debt, filing for bankruptcy may be a good idea for you. It can give you relief and, in some cases, it can also serve as a lesson.
Some people who file for bankruptcy do so because they did not have a choice in getting into debt. For example, hospital bills they could not afford. Others, however, spent money they did not have for more frivolous reasons and for this second camp, bankruptcy serves as an unfortunate wake-up call and lesson.
Downsides to filing for bankruptcy:
Remember to speak with your tax/bankruptcy attorney before filing for bankruptcy and consider these downsides:
- Credit score impact if you care.
- It is a matter of public record, again, if you care.
- It may not help if you expect future tax debt.
In conclusion, filing for bankruptcy in Florida because of tax debt is a good idea in certain situations, but not all. You should speak with your attorney, go over every single one of your bills and make the most informed decision possible, so your future self can thank you for being responsible and thorough in thinking about tomorrow.
