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About voluntary bankruptcy

Ohio residents who have substantial debts that they are unable to pay off may consider voluntary bankruptcy. Voluntary bankruptcies are those that are started by debtors rather than instigated by a creditor to whom a debtor owes.

Declaring bankruptcy requires significant consideration. Debtors should be aware that a bankruptcy will not erase all of their debts. The debts that are eliminated are dependent on the type of bankruptcy a debtor may file and the types of debts in question.

Chapter 7 and Chapter 13 bankruptcies are the type of bankruptcies that are most frequently filed by individuals. Under Chapter 7, individuals may have all of their allowable debts eliminated. Under Chapter 13, some debts may be eliminated and others will be repaid through a payment plan.

Regardless of what type of bankruptcy an individual may file, not all tax liabilities may qualify for being discharged. In order to be dischargeable, the tax liabilities must be balances owed on a return that was due a minimum of three years or filed at least two years before the filing of bankruptcy. The tax liabilities also need to have been assessed a minimum of 240 days before the bankruptcy filing and cannot be a result of fraud of the willful intent to circumvent tax laws.

Tax debts that usually cannot be discharged include any withholding taxes owed by the individual and tax assessments for which not returns were filed. The taxes are also typically ineligible for being discharged through bankruptcy if the return was filed within the two-year period before the bankruptcy filing. Chapter 13 bankruptcy lawyers may assist clients who have a steady stream of income with obtaining debt relief. A lawyer may advise their client regarding the type of debts that may be discharged and assist with creating a repayment plan.

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