Typically, you can’t get rid of tax debt in a Chapter 7 bankruptcy. But, if you can afford the payments, then a Chapter 13 bankruptcy is a great tool to help you with this type of debt. This is because you’re allowed to pay your tax debt through a Chapter 13 repayment plan, which lasts 3 or 5 years. Even if your tax debt is considerably large, filing a Chapter 13 may still make financial sense, since you’re not incurring interest and penalties during your bankruptcy. Plus, you’re not paying back your credit credits, unsecured loans, and medical bills, and those debts will go away once you’re finished with your Chapter 13 plan!
