Where do I go for IRS & BK questions?

[topekajack]

Not one attorney that I have either met with or spoke with on the phone can answer my IRS/BK question.

I do not qualify for a chapter 13 because I am over the median and after a modified expense analysis I have roughly $250 of disposable income. I just compiled a rough estimate for 2009 taxes and I will owe the IRS a total of $44,000 for 07,08 and 09 taxes. So, I will owe the IRS $733 a month on a 5 year plan. How could this even work in a 13 repayment plan? How can I pay my priority debt (IRS) and the remaining unsecured debt (over $100k) with only $250? Does the IRS get all of the $250 and the cc's get nothing? Then I owe the IRS the remaining balance after the 5 years have expired? If this is the case why not a 7?

What I don't understand is that if I include the IRS payment in the Means test I easily qualify for a chapter 7. I know that the IRS cancels all payment plans once you file BK (I am paying about $700mo. right now). The last attorney that I spoke with said that it was an expense that could be listed because it was an active agreement at the time of filing. Then he told me that because of this I could file a 7. Then he changed his mind and said 13. He says that they would require me to "make room" for a larger trustee payment... perhaps letting go of my only car (no equity). I am just so confused! I have spent hours today trying to find an answer for myself and I can not find anything. Thanks in advance for any help

[HHM]

I think you mean to say "I do not qualify for a chapter "7" because I am over the median..." correct?

First question, what are you trying to accomplish?

Fact 1. A 2009 IRS debt is non-dischargeable in bankruptcy (you probably know that already) and a 2009 tax debt is also a priority tax debt. Thus, if you file chapter 13, that debt must be paid in the plan. You CAN claim the anticipated IRS payment as an expense in order to qualify for chapter 7 bankruptcy. Just realize, you will still have the IRS debt after the BK is discharged.

If you really don't have 733 per month in disposable income, then any chapter 13 you would file with less payment would be objected to as not feasible.

Keep looking for an attorney and realize you will need to throw price out the window when shopping for an attorney to find one that actually knows how to do this and is willing too. Sounds like you have been meeting with bargain basement attorneys who only know the "standard" strategies (priority tax debt = chapter 13 bankruptcy).

[topekajack]

Thanks HHM. Yes, I meant chapter 7.

What am I trying to accomplish? I am trying to get out of both IRS and consumer debt. I'm more than happy to go into a 13 and at least pay some of it back. But, it doesn't seem feasible to me. The IRS debt is just too much. If I go into a 7 it would still be very difficult to pay back the IRS over 5 years. But, it would be doable if I could find a 2nd job and minimize some expenses.

[Flamingo]

Thanks HHM. Yes, I meant chapter 7.

What am I trying to accomplish? I am trying to get out of both IRS and consumer debt. I'm more than happy to go into a 13 and at least pay some of it back. But, it doesn't seem feasible to me. The IRS debt is just too much. If I go into a 7 it would still be very difficult to pay back the IRS over 5 years. But, it would be doable if I could find a 2nd job and minimize some expenses.

None of your tax debt is dischargeable...it has to be over three years old so you will not be able to get out of your IRS debt. We included our 2001 taxes in our Chapter 13 filing (filed in 2002) and it was spread out over our Plan years and paid back as a priority debt. Also IRS interest and penalties stop when it is included in your Chapter 13 and do not accrue as would happen with an IRS payment plan or if you filed Chapter 7. However, if you incur more owed taxes over the years in your plan, they are not includable in your Plan and you are responsible for them as a new debt.

[BnkrptcyLwyr]

Not one attorney that I have either met with or spoke with on the phone can answer my IRS/BK question.

I do not qualify for a chapter 13 because I am over the median and after a modified expense analysis I have roughly $250 of disposable income. I just compiled a rough estimate for 2009 taxes and I will owe the IRS a total of $44,000 for 07,08 and 09 taxes. So, I will owe the IRS $733 a month on a 5 year plan. How could this even work in a 13 repayment plan? How can I pay my priority debt (IRS) and the remaining unsecured debt (over $100k) with only $250? Does the IRS get all of the $250 and the cc's get nothing? Then I owe the IRS the remaining balance after the 5 years have expired? If this is the case why not a 7?

What I don't understand is that if I include the IRS payment in the Means test I easily qualify for a chapter 7. I know that the IRS cancels all payment plans once you file BK (I am paying about $700mo. right now). The last attorney that I spoke with said that it was an expense that could be listed because it was an active agreement at the time of filing. Then he told me that because of this I could file a 7. Then he changed his mind and said 13. He says that they would require me to "make room" for a larger trustee payment... perhaps letting go of my only car (no equity). I am just so confused! I have spent hours today trying to find an answer for myself and I can not find anything. Thanks in advance for any help

Your attorney must ask the following questions:

Did you file all those tax returns, on time? Did you file any tax returns late? (there's a two year period that you have to wait for taxes where the returns were filed late).

What were the assessment dates for those taxes?

Can you afford to wait to allow the 2007 taxes to drop off after the 3 year period?

What are you willing to give up in order to pay for the taxes?

Do you have any assets that can be sold to pay for the taxes?

You must remember one thing ... when you have tax problems in bankruptcy ... it is NOT going to be about keeping your house, your car, etc. Everything must now be geared towards making sure that you handle the tax issues.