Student Loans and Tax Debt

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Southern California Law Firm Experienced in Debt Relief

Are you unable to keep up with your student loans? Are you in trouble with the IRS for your tax debt? Have you built up more debt as you try and pay off your student loans and taxes? You have options; we can help you take the necessary steps to pay off your debt. The burden of taxes and federal student loans may seem like too much to bear, but we can help. For a free consultation with a lawyer at the Ercolani Law Group, call 805-338-6880.

Student Loans – Can Bankruptcy Eliminate Them?

The law of discharging student loans was changed in October of 1998. Student loans are now only dischargeable based on a showing of “undue hardship.” Generally, proving hardship often requires proving to the Court that you cannot maintain a minimal standard of living if you have to repay the loan, that your financial situation is likely to persist, and some courts require a showing of a good faith attempt at repayment. This requires a case-by-case analysis, and thus, an attorney can explain your options and the procedure for handling student loans during your consultation.

Consolidate Student Loans – A Plan to Pay Off Debt

Under Chapter 13 bankruptcy student loans can be consolidated along with your other bills. Unlike Chapter 7 bankruptcy, Chapter 13 student loan consolidation allows you to end harassing collection actions and garnishments. Under a Chapter 13 bankruptcy payment plan student loans can be paid off over three to five years as part of the loan consolidation plan.

Qualifying for Discharge of Tax Debt

In order to determine the dischargeability of your taxes, you should consult an experienced bankruptcy lawyer who will evaluate your tax debt. Generally, in order to be dischargeable, the income tax debt must meet the following criteria:

  • The tax debt is more than three years old
  • The tax return was filed before bankruptcy filing
  • Tax is not assessable
  • The taxpayer is not guilty of tax fraud and tax evasion

It is important to understand that tax debt from tax returns not filed cannot be discharged. As such, it is necessary to file all tax returns before filing for bankruptcy.

Understand What Filing for Bankruptcy Can Mean in Your Specific Case

The best way to find out how bankruptcy will affect you is to talk with a bankruptcy attorney. For a free consultation with a lawyer at the Ercolani Law Group, call 805-338-6880 or contact us online.

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