Taxation & Estate Planning

Chapter 13 Bankruptcy - A Possible Solution to your IRS Problem?

By Darrin Mish

A Chapter 13 bankruptcy is a process only for individuals, not businesses or corporations, who need to reorganize their debts in a structure that will better enable them to survive tough times. You will need IRS help with this IRS problem. Our professional staff is here to offer you IRS help.

With a Chapter 13 bankruptcy process, you will retain all your assets. You will need to designate a portion of your future income to repay creditors. Time allowances for repayment generally range from 36 to 60 months. Most debtors utilize the 60-month time frame.

A bankruptcy court will appoint a trustee to oversee the management of the Chapter 13 procedure. This trustee will obviously be an important point of contact and communication for you through this process. You will need IRS help to assist you in finding and filing all the necessary documentation and paperwork. Our staff can help guide you through this IRS problem.

Four mandatory criteria required for eligibility for a Chapter 13 filing are:

1. You must be an individual, or an individual with a spouse can who file jointly. (Exceptions to this: you cannot be a stockbroker or a commodities broker.)

2. You must have a regular income. Self-employment income is included.

3. Your secured debts must not be higher than $922,975.

4. Your unsecured debts must not be higher than $307,675.

And these figures for debts are not just relative to tax debts, but must include all your debts.

IRS problems can arise in the preliminary issues of a Chapter 13 bankruptcy process. Pre-Bankruptcy Collection Actions, Levy Issues, and Adequate Protection are issues that sometimes arise during a Chapter 13 hearing.

FILING A PLAN FOR REPAYMENT

With a Chapter 13 bankruptcy filing, you MUST file a PLAN for restructuring and repayment. If you don?t file the petition and the plan at the same time, you MUST file your plan within 15 days after the petition is filed. Typically, payments must begin within 30 days after you have filed your plan.

PLAN REQUIREMENTS

Typically, your payment plan should detail what each creditor is owed and what that creditor will be paid through the bankruptcy term. The plan should also state what the interest rate will be for any interest that is accrued and paid. Any other stipulations that affect a particular creditor should also be noted. If all plan specifications are met, the court will grant you a discharge at the end of the Chapter 13 bankruptcy proceeding.

Filing a Chapter 13 bankruptcy petition can be a monumental challenge and rather than let it be an IRS problem for you, contact our office so that we may provide you with the necessary IRS help to see you successfully through this transition period.

Full post as published by IRS Problem Solver Blog on February 12, 2008 (boomark / email).