When it comes to taxes and chapter 13 bankruptcy, there are a few things you need to know. First, if you are considering filing for bankruptcy, you should be aware that taxes can play a role in your case. In some cases, taxes can help discharge some of your debt. However, in other cases, taxes may make your bankruptcy case more difficult.
If you are considering filing for chapter 13 bankruptcy, it is important to understand how your taxes will be affected. In chapter 13 bankruptcy, the court will develop a repayment plan for your debts. This repayment plan will last for three to five years. During this time, you will be required to make payments to your creditors each month.
Your monthly payment will include an amount for your taxes. The amount of your taxes that you will be required to pay will depend on the type of taxes you owe and the amount of your debt. For example, if you have a large amount of credit card debt, you may be required to pay a higher percentage of your taxes than someone who has a smaller amount of debt.
If you are unable to make your monthly payments, you may be able to adjust your repayment plan. In some cases, the court may even discharge some of your tax debt. However, it is important to keep in mind that this is not always an option. If you do not make your payments as agreed, you could end up losing your home or other assets.
It is also important to note that taxes can also have an impact on your ability to get a loan modification. If you are behind on your taxes, your lender may be less likely to approve your loan modification. This is because the lender will view you as a higher risk of defaulting on your loan.
If you are considering filing for bankruptcy, it is important to speak with an experienced bankruptcy attorney. An attorney can help you understand how your taxes will be affected by bankruptcy and can help you determine if this is the best option for your situation.
Let’s take a closer look at each of these factors to see how they can affect your ability to discharge taxes in bankruptcy.
Type of Tax Debt: The first thing you need to consider is the type of tax debt you have. Generally speaking, only certain types of taxes are dischargeable in bankruptcy. These include income taxes, property taxes, and sales taxes. Other types of taxes, like payroll taxes or excise taxes, are not dischargeable.
When the Taxes Were Incurred: The timing of your tax debts is also important. In order to be discharged, your taxes must have been incurred at least three years prior to filing for bankruptcy. This means that if you filed your taxes late, you might still be able to discharge them in bankruptcy, as long as they were originally due at least three years ago.
Whether You Filed Your Taxes on Time: Finally, you need to consider whether or not you filed your taxes on time. If you did not file your taxes on time, then you will not be able to discharge them in bankruptcy. This is because the IRS considers late-filed taxes to be a sign of fraud, and therefore they are not dischargeable.
If you have any questions about whether or not your taxes are dischargeable in bankruptcy, we encourage you to contact our office to speak with an experienced bankruptcy attorney. We can help you understand your options and make the best decision for your unique situation.
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