What happens with income tax debt in a Chapter 13? What about fluctuating income?

[GoneBust]

Well, I think we are going to be pushed into a Chapter 13 instead of a Chapter 7 bankruptcy because our income averages above the median income for a family of four in Illinois ($81,097/year) over the past six months. I am wondering what can be done with the $30,000.00 balance in income tax that we have from 2007, 2008, 2009, and 2010 can be rolled into a Chapter 13 plan - if any?

Also, if my income fluctuates due to the fact that I don't have a regular paycheck - will that have any bearing on whether I qualify for a Chapter 7 or a Chapter 13? For example, I do web development work for clients. Over the past six months I have made just above the median income. But at any time I could run into a month where I don't get any new clients, and that month could cause us to struggle with Chapter 13 payments.

Thanks for any advice or tips!

[lrprn]

Well, I think we are going to be pushed into a Chapter 13 instead of a Chapter 7 bankruptcy because our income averages above the median income for a family of four in Illinois ($81,097/year) over the past six months.

It isn't just income that determines whether you have to file a 13 or not. What matters is whether your Means Test and Schedules show sufficient disposable income to support a Ch 13 plan.

I am wondering what can be done with the $30,000.00 balance in income tax that we have from 2007, 2008, 2009, and 2010 can be rolled into a Chapter 13 plan - if any?

Are you saying you owe $30K in income taxes from the last four years?

Also, if my income fluctuates due to the fact that I don't have a regular paycheck - will that have any bearing on whether I qualify for a Chapter 7 or a Chapter 13?

Working on commission or as a consultant with irregular paychecks can make Ch 13 harder. The key is to take the months that bring in extra income and save that income for the months that have less.

[GoneBust]

"It isn't just income that determines whether you have to file a 13 or not. What matters is whether your Means Test and Schedules show sufficient disposable income to support a Ch 13 plan."

So, if my income flucuates around the maximum but is not stable (i.e. I am self-employed), I could still qualify?

"Are you saying you owe $30K in income taxes from the last four years?"

Yes, that is correct.

[mtngirl47]

Your IRS debt will be part of your chapter 13. It's nice when they stop calling!

Make several appointments with lawyers--they'll usually give you a free evaluation. Find someone who will work for you. Good luck!