Keep Paying Established IRS Installment Agreement to IRS & Not Trustee During CH 13?

[easymoney]

Hi everyone,

Is it possible to keep an already established installment agreement with the IRS separate from the monthly amount paid to the CH 13 trustee each month once a CH 13 case is filed?

Thanks,

Easymoney

[AngelinaCat]

I do not know how it works with a Chapter 13 case, but in our Asset Chapter 7, when the IRS got the 'Suggestion of Bankruptcy', they suspended our payments, until after we were discharged, then the IRS notified us that we needed to call and arrange to resume our payment plan.

[gld2pan]

Our 13 it's included and after attorney fee all monies went to IRS till paid. Nice paid them off in about 10 mos. Have kept past 2 years tax refunds as well.

[spidge]

Your tax debt will likely become priority debts within your ch13, and there should be no additional interest that you would pay outside the plan.

[justbroke]

Is it possible to keep an already established installment agreement with the IRS separate from the monthly amount paid to the CH 13 trustee each month once a CH 13 case is filed?

Absolutely, no.

As already mentioned, the IRS will file a governmental "priority unsecured" claim in your bankruptcy. You will have to pay the IRS through the Chapter 13. The nice thing is that the IRS must take the penalties out from the "priority" amount and treat the penalties and the interest on penalties as a regular "dischargeable" (non-priority) unsecured claim.

Also, as mentioned, there is no interest on the debt while being paid through the Chapter 13. (However, if your Chapter 13 fails, then the accumulated interest will be added back to your tax account!)

In fact, as soon as the IRS is notified of the bankruptcy filing, and they will, the Payment Agreement will be suspended. The IRS will then file a claim in the bankruptcy and the Trustee will make sure that you pay the priority portion of the claim in order to receive a discharge.

[AngelinaCat]

JB is correct.

I had forgotten to mention that in our Asset 7 case, once our payments were suspended, the IRS filed a claim and they were the major (and only real claimant) we had. A medical provider tried to petition the court to have their claim prioritized above that of anyone else including the IRS. They were dismissed summarily. So whatever we had to pay the trustee to purchase our non-exempt items back, ended up going to the IRS.

[switch625]

I third what JB said.

In my 13 the penalties and interest portion of my tax arrearage was considered unsecured debt. Also when I filed my petition, IRS suspended my payment plan and refunded to me directly any payments made to the plan since the petition filing (only one payment). On the first trustee disbursement after confirmation (August) my trustee paid all my tax arrearages in full to the taxing authorities, including the IRS.

[Quicke23]

I was told by two attorneys that I had consultations with that you must include the taxes in the chapter 13-I wanted to continue my installment agreement outside the chp 13 as my payment was less (72 month term instead of 60). Although through chp 13, interest is gone, there is the trustee fee (in my case 11%), which equates to about $49/month in my case. Still trying to see if the IRS will submit a proof of claim for the taxes owed older than 3 years (fingers crossed).

[justbroke]

I was told by two attorneys that I had consultations with that you must include the taxes in the chapter 13-I wanted to continue my installment agreement outside the chp 13 as my payment was less (72 month term instead of 60). Although through chp 13, interest is gone, there is the trustee fee (in my case 11%), which equates to about $49/month in my case. Still trying to see if the IRS will submit a proof of claim for the taxes owed older than 3 years (fingers crossed).

The IRS is very good about this. They will file one claim (and maybe amend it later), but it will show the "priority unsecured" and the "general unsecured". Any "old" dischargeable taxes would be in the general unsecured number.

[cz3ch]

I was in a quasi-similar situation in 2013. I owed 2k to the IRS for underpayment from 2012. My IRS payment plan was not included in my Chapter 13 payment ergo I paid outside the plan and got them all taken care of. So yes, it's possible to do but really it's best to include the IRS as a creditor in your Chapter 13 petition that way whatever you owe will be paid through the plan (and probably you'll pay much less in the long run depending on your DMI).

Is there a particular reason why you'd want to keep paying the IRS outside of the plan?