If we pay our tax debt in full, can we file for bankruptcy?
If we pay our tax debt in full, can we file for bankruptcy? Tim Cella used to work at several law firms It depends. You aren’t typically penalized in bankruptcy court for having paid your taxes in full. But if your tax debt was your only debt, you won’t need to file bankruptcy anymore. There are different categories of debt in a bankruptcy case. There are secured, unsecured, priority and non-dischargeable debts. Taxes are a priority debt in a bankruptcy case, meaning they are treated differently from secured and unsecured debts. In fact, sometimes taxes are non-dischargeable in a case. There are a few additional facts that a bankruptcy attorney would need to review with you to see if you are in a position to file bankruptcy or not (besides the means test etc.) — First, what kind of taxes did you pay in full, were they business taxes (like payroll) or were they personal taxes. Also, how old were the taxes and then, can this payment be considered a preferential tr...