Acker Warren, P.C., represents individuals and sole proprietors who need to file Chapter 13 bankruptcy for tax debt relief in the Dallas Fort-Worth community. Chapter 13 is the second most popular type of bankruptcy for individuals. A Chapter 13 is a repayment plan for individuals which provides a monthly repayment plan to help manage the debt. Basically, this chapter is ideal for people whose income prohibits a Chapter 7 or people who are behind on a house, vehicle, or taxes.
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Taxes owed to the Internal Revenue Service (IRS) are usually not dischargeable in Bankruptcy. However, there are certain circumstances where they may be discharged. Some debtors choose tax debt relief programs instead; but if they meet the requirements, filing bankruptcy can offer tax debt relief as well.
Since most taxes are considered priority debts, you cannot get rid of them by filing for bankruptcy. With Chapter 13, debtors get an affordable and convenient plan to pay off their priority tax debts for over a period of 3 to 5 years.
Recover from overwhelming debt
If you successfully complete your bankruptcy plan you will receive a discharge of the debts included in the Chapter 13. A discharge releases you (the debtor) from personal liability for certain dischargeable debts. Some taxes may be dischargeable. Whether a federal tax debt may be discharged depends on the unique facts and circumstances of each case.
Why should you file for Chapter 13?
In Chapter 13 cases, taxes need to meet certain criteria to be treated as a general unsecured debt in a bankruptcy case. A general unsecured claim of the IRS receives the same percentage of repayment through a Chapter 13 as credit card debts and medical bills. If the tax debt does not meet the criteria to be treated as general unsecured claim it will be treated as a secured or priority claim and will need to be repaid in full over the life of the Chapter 13 Plan. The benefit of a Chapter 13 to deal with secured or priority tax debt is that it allows time, 3-5 years, to repay the amounts owed, and the IRS is required to cease all collection actions against a Debtor while the Chapter 13 is active.