Chapter 13 being dismissed, what about the IRS taxes in the payback of the 13?

[freeme0215]

Hello,

It is complex to say the least....I am going to allow dismissal my Chapter 13 as I have an assest that I wish to protect, that came after I filed for the Chapter 13...the assest is my Social security lump sum. I have been told that the lump sum is "usually" protected from any bankruptcy, but it is not 100%.

Once it is dismissed, I will have to wait 6 months to refile. Has anyone done a dismissal and what happened?

I am giving up the home. I am paying on a car loan. Otherwise I dont have "assests" except the SSD lump sum that I just received.

Will IRS take the money I owe out of the lump sum?? Who would I contact in the IRS to give me a new reduced tax being owed?

I have filed for 2008 and 2009 and I owe on both, total of 6000, I am now on SSD as of May 2011.

I am confused as to the way to protect the lump sum as I need extensive dental work(10,000-12000) or I will lose teeth. This needs to be done soon.

sorry if I am rambling, but I have been on a finanical roller coaster, want this to be over

Thanks

[BigJohn]

Did you seek out advice from your current lawyer?

[bling32]

I am not an expert but I googled ... Can Social Security checks be garnished and this is what I found.........

Can creditors garnish my Social Security retirement check ?

Commercial creditors cannot garnish your Social Security retirement check. However, the Federal government may garnish your benefits to recover student loans, back taxes, or any other monies owed to the Federal government. Additionally, your Social Security retirement check may be garnished for current or back child support.

[frogger]

Once it is dismissed, I will have to wait 6 months to refile. Has anyone done a dismissal and what happened?

Dismissals happen all the time in chapter 13 bk cases. Lots of them have been done, and what happens is the case is dismissed either with or without prejudice. If it is dismissed without prejudice, you can refile tomorrow, if it is dismissed with prejudice, then you wait 6 months in order to file again.

[freeme0215]

Is there a way to know which dismissal of the Ch 13 is common? with prejudice or without?

Thanks

[frogger]

Is there a way to know which dismissal of the Ch 13 is common? with prejudice or without?

Thanks

Neither are uncommon. The majority of them I see are without prejudice.

[ValleYum]

I wonder why the OP doesn't convert to a Chapter 7 if they aren't trying to keep their house and in the great likelihood that the IRS will take their $$ from their SSD (either lump sum or payment)?

[BKAttyMI]

These lump sums are protected in Chapter 7s, in Chapter 13s it would probably vary by district. You should seek the advice of your attorney, dismissing a Chapter 13 is a drastic measure.

[frogger]

These lump sums are protected in Chapter 7s, in Chapter 13s it would probably vary by district. You should seek the advice of your attorney, dismissing a Chapter 13 is a drastic measure.

Drastic? Thousands upon thousands of Chapter 13's get dismissed because of non-payment and then a new Chapter 13 gets filed.

Many people use the Chapter 13 in this manner as an emergency financial planning tool.

Why do you consider it to be "drastic"?

[BKAttyMI]

Well, depending on how long the OP has been in the plan, starting it over again may not be desireable. It would also be rash to dismiss the case if the asset is fully protected anyways. Thus I suggest discussing with the attorney about the common practices in their district, my initial reaction is that I would assume it's exempt from the 13 as income and I would argue as such if the Trustee asked for the funds. A lump sum in a 7 would be safe, a 13 would probably depend on the Trustee.

[frogger]

Many people use the Chapter 13 in this manner as an emergency financial planning tool.

You like it when I quote myself?

I would agree that someone in the plan long term would be considered drastic without extraordinary circumstances, however, so many people file and never make another payment.

As stated, an emergency financial planning tool that is used and abused by the confused. The majority of what I see dismissed is for non-payment and normally within the first year.

All of the 13 filers that are here will be in the small minority of those that actually get a discharge.

[shark66]

Is there a way to know which dismissal of the Ch 13 is common? with prejudice or without?

Thanks

In general, if it gets dismissed for non-payment (the most common case in my modest experience) it is without prejudice.

Good luck.

[freeme0215]

Just received my papers from the BK trustee.... if I do not modify or convert, I will be dismissed WITH prejudice and have to wait 180 days to file a chapter 7....

Do the creditors go for judgements in the time between the dismissal and the filing of a chapter 7?

Before I filed for chapter 13 only one creditor went for a judgement.

What can I expect with the dismissal of the 13??

Thanks

[ValleYum]

Just received my papers from the BK trustee.... if I do not modify or convert, I will be dismissed WITH prejudice and have to wait 180 days to file a chapter 7....

Do the creditors go for judgements in the time between the dismissal and the filing of a chapter 7?

Before I filed for chapter 13 only one creditor went for a judgement.

What can I expect with the dismissal of the 13??

Thanks

Why wouldn't the OP just convert to a Chapter 7 now?

[freeme0215]

I had wanted to continue the 13 with a modification of giving up the condo I have. I wanted to stay in the 13 as I felt it would be a better way to go....I have heard that a 13 is "looked" upon a bit more favorablely.

Thanks