Bankruptcy

Chapter 13 is a payment plan with IRS

By Cathy Moran, California Bankruptcy Lawyer

Ever dream of dictating realistic repayment terms to the IRS for your back taxes?  Welcome to Chapter 13.  Even better, under bankruptcy law, you may have to pay far less to the taxing authorities than you owe.

Chapter 13 is a reorganization plan for an individual with regular income.  The Chapter 13 plan must provide for repayment of priority taxes in full over the three to five year life of the plan.  Taxes that are not priority, however,  may be paid little or nothing.

Better yet, you get to write the payment plan that, by bankruptcy law, must provide for your reasonable living expenses during the plan.  And the taxes, so long as they are unsecured, are interest free during the plan and penalties may be paid little or nothing.

The final advantage of Chapter 13 for dealing with  taxes is that it addresses all your other creditors and prevents them from trying to collect from you during the plan, and discharges their claims at the end of the plan.  So, really, what’s not to like?

Full post as published by Bankruptcy Law Network on February 15, 2010 (boomark / email).