Chapter 13 Perfectly Repairs Tax Debt
Chapter 13 can be used perfectly to repair a tax debt situation. When you file your Chapter 13, the IRS and your state revenue office will get their files in order. You can sort out and pay back tax debt quickly and easily through Chapter 13. You and your assets will also be fully protected through the process.
Chapter 13 Puts Your Tax Debt Amounts in Order
Chapter 13 will awaken the IRS and State Revenue office to start repairing your tax debt. This can be helpful because dealing with them a lot of times can be like dealing with a brick wall. They will be forced to review all your previous tax returns. The IRS will let you know if any tax years are missing in their files. This allows all of your tax records to get back up to date with the contact of a local agent. You can even send your signed tax returns to the local agent many times and they will submit them much more quickly. This will ensure that all your tax returns are will make sure they are submitted and all information gets in full order.
After the information is in order, you will have an accurate claim as to how much tax debt you actually owe. From there, you will be forced to pay some of the debt back at only 10% which is a large discount. This 10% debt is called non-priority tax debt. Sometimes you may need to pay a larger amount of this debt if you have a high income.
For tax amounts that are less than 3-4 years old, you will be required to pay all of the tax debt back. These tax debts are called priority tax debts. They must be paid 100% in your plan regardless of your income level. Your tax debt can also be labeled “priority” due to new audits and filing your returns late or during your bankruptcy case. This is why it is important to always file your tax returns either on time or as promptly as possible.
Your Assets Are Protected
Your assets will be fully protected as Chapter 13 repairs your tax debt. The IRS will not put liens on your house during the case. Your state revenue offices will be unable to put liens on your vehicles. The IRS will also not be able to garnish you during the case. In fact, if the IRS is already garnishing you, the garnishment will promptly stop.
This can give you some time just to get all of your tax situations in order. You can see exactly what your IRS and State Tax debt totals are. If the Chapter 13 required payment is too much to pay, you could even elect to switch to Chapter 7 or let your case dismiss. Your tax amounts would then be in order. A planned Chapter 7 could instantly eliminate non-priority tax debt. Or, alternatively, an offer in compromise could address any priority tax debt outside of bankruptcy.
Chapter 13 is a perfect and affordable way to repair your tax debt and get everything in good order. Contact us if you are interested in filing a tax-focused Chapter 13 case.
Find out more about filing Chapter 13 Bankruptcy here.
