Many people think that “bankruptcy” is a dirty word. Somehow even though the Bankruptcy Code allows individuals a fresh start if you have fallen on financial hard times, it does not feel right to some people. Instead, the debt settlement option seems more attractive. It isn’t and here is why. There are tax consequences when you settle debt. You do not want to exchange unsecured debt or under secured mortgage debt for tax debt. The simple reason is that you cannot discharge tax debt in bankruptcy if circumstances lead you to file later, and the I.R.S. has much broader collection
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