Have an idea of what type of bankruptcy might be best for you. Be sure to evaluate all your options before settling on anything. File Chapter 7 bankruptcy if you have completed mandatory credit counseling, if you are ready to sell nonexempt property and distribute the proceeds to your creditors, and have property left over so that when you are finished selling the property to pay off your debt, you will be able to start over again financially. Under certain circumstances, income taxes may be discharged in bankruptcy. Usually taxes must be at least 3 years, assessed at least 240 days prior to bankruptcy filing, and filed voluntarily at least 2 years ago. Contact a qualified tax professional to discuss your situation. Disadvantages to a Chapter 13 bankruptcy include having to use post bankruptcy income to pay off debts, incurring higher legal fees because filing Chapter 13 is more complex, not being able to file if you are a stock or commodity broker, and needing to be involved in the bankruptcy court process for as long as it takes you to pay off your debts. There are also other options available, like debt consolidation.
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