When to use Chapter 13 for income taxes?

To be clear, Chapter 7 CAN discharge (write off) income taxes that are old enough and meet a number of conditions. But especially if you owe taxes for more than one tax year and/or for recent tax years, Chapter 13 could well be your best option.

Can a chapter 13 bankruptcy wipe out a tax debt?

In most cases, you cannot discharge (wipe out) tax debts in Chapter 13 bankruptcy. Instead, you repay your tax debts through the life of your Chapter 13 repayment plan, which could last either three or five years. But there are exceptions.

How long does a chapter 13 bankruptcy last?

Instead, you repay your tax debts through the life of your Chapter 13 repayment plan, which could last either three or five years. But there are exceptions. Chapter 13 bankruptcy is an excellent tool to use when you fall behind on your taxes because it allows you to discharge (wipe out) old income tax debt.

When to file Chapter 13 instead of Chapter 7?

Consumers file a Chapter 13 case instead of a “straight bankruptcy” Chapter 7 one for many reasons. If you owe a lot of income taxes, the significant advantages that it gives you over Chapter 7 would likely be reason enough. To be clear, Chapter 7 CAN discharge (write off) income taxes that are old enough and meet a number of conditions.

Can you pay off your chapter 13 plan early?

In most Chapter 13 bankruptcy cases, you cannot finish your Chapter 13 plan early unless you pay creditors in full. Please answer a few questions to help us match you with attorneys in your area.

What happens when you file a chapter 13 bankruptcy?

When you file under Chapter 13, you propose a repayment plan for your debts. You pay your payment each month to a Chapter 13 trustee who pays your creditors according to the terms in the Chapter 13 plan. The amount of your Chapter 13 plan payment depends on several factors.

Which is better Chapter 7 or Chapter 13?

But especially if you owe taxes for more than one tax year and/or for recent tax years, Chapter 13 could well be your best option. Under Chapter 7 you are at the mercy of the IRS after the case is over in dealing with any income tax debts that are not discharged.