How does filing for Chapter 7 Bankruptcy affect my taxes?

Filing for Chapter 7 Bankruptcy in Illinois could potentially affect your taxes. Generally, filing for Chapter 7 Bankruptcy in Illinois can help discharge most of your outstanding debt. However, you may still owe taxes. The Internal Revenue Service (IRS) and the state of Illinois both consider certain types of debt to be non-dischargeable. This means that even if you file for bankruptcy, you could still be responsible for any unpaid taxes. When filing for Chapter 7 Bankruptcy, you will need to file a "Statement of Intention" with the court. This statement outlines how you intend to handle your secured debts, such as taxes. In this statement, you must let the court know whether you intend to keep the liability and continue to pay your taxes, or if you would like the tax debt to be discharged. If the court discharges your tax debt, the IRS and the state of Illinois are not able to collect the debt from you. However, you may still be required to pay any taxes that you owe for the current year. Additionally, the IRS or the state of Illinois can still place liens on your property or take any refunds you are due. Finally, filing for Chapter 7 Bankruptcy in Illinois could potentially affect your credit score. This is because when you file for bankruptcy, a notice is sent to the credit bureaus that could remain on your report for up to 10 years. It is important to be mindful of this when considering whether or not to file for bankruptcy.

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