IRS debt payments and Ch7 and Sched I

[Moneypenny]

Hi,

i understand that for chapter 7 you cant have more than $150 a month left over or it means you can do a 13 (or its some such figure near 150, i forget).

What if you have scheduled debt payments to the IRS for say 200 or 250 a month, that will last a year?

If you are able to pay that (well, able in the sense that you legally have to do it), does that mean you are able to pay the CC's 200 a month after that?

(The problem with the IRS and incorrect withholding is from a time period that does not figure in the six months look back or forward.)

Another way of putting it is, if you have IRS debt payments does that influence the ch7 case in any way? or do the debt payments count as Sched I expenses even if they only last for a year?

thanks,

MP

[justbroke]

You can't schedule debt payments to the IRS in a Chapter 7, as those are both non-dischargeable, and go into suspense status during an active bankruptcy.

That $150 number you use is not accurate. The real number is that you should be below $109.58. However, if you are, then you can go up to $182.50 if you can overcome the presumption of abuse. Anything over $182.50 and you really need special circumstances.

[mtbc]

I don't know how unusual or safe it is, but I listed $700 monthly of past tax debt payments (on a total balance of $16,700) on my Schedule J and nobody complained. Maybe they just didn't look carefully though.

[justbroke]

I don't know how unusual or safe it is, but I listed $700 monthly of past tax debt payments (on a total balance of $16,700) on my Schedule J and nobody complained. Maybe they just didn't look carefully though.

If it's secured debt (IRS has a lien)... then you can.

[Moneypenny]

So, if you cant list the tax payments in Sched J, then does the fact that you are paying these payments at over 200 a month "prove" that you can afford to pay back your creditors in a 13?

[mtbc]

They don't demand you live in awful poverty, so long as you stay within local standards and spend reasonably for your situation, then one possibility would be to stop paying creditors for a while to establish an agreeable track record of receipts. Just because you are paying them, doesn't mean you can afford to. We filed partly because I found we were deferring medical checkups for our kids, eating unhealthy foods, my son's winter boots had cracks that let the water in, etc., all because of cost -- we were repaying debt that we couldn't really afford to. I am not a lawyer and I am not suggesting that you should do this, I'm just pointing out that the possibility may exist.

[Moneypenny]

I have already stopped paying creditors, so there is no way to save money on that. I need to save for a lawyer while paying tax debts, AND need, I think, to be able to show I have living expenses. The tax debt (no lien) and the lawyer are going to require a lot of money. If i can come up with the money, doesnt that prove I can come up with the payments to my creditors?

I wonder if anyone has any specific knowledge about whether ongoing tax debt repayments "prove" you can pay back your unsecured debt.

[OhioFiler]

I have already stopped paying creditors, so there is no way to save money on that. I need to save for a lawyer while paying tax debts, AND need, I think, to be able to show I have living expenses. The tax debt (no lien) and the lawyer are going to require a lot of money. If i can come up with the money, doesnt that prove I can come up with the payments to my creditors?

I wonder if anyone has any specific knowledge about whether ongoing tax debt repayments "prove" you can pay back your unsecured debt.

Nope. It doesn't prove you can pay your unsecured creditors.

You need to look at your Means Test and complete schedules I and J to understand what the trustee is looking at in your situation.

[Moneypenny]

thanks!

i do know my way around my means test and sched I and J. but, i wont have reciepts to back up my regular, not unusual sched j expenses because I will have to scrape to pay the irs and my bk lawyer.

[OhioFiler]

thanks!

i do know my way around my means test and sched I and J. but, i wont have reciepts to back up my regular, not unusual sched j expenses because I will have to scrape to pay the irs and my bk lawyer.

So long as your claimed expenses are reasonable and current you'll have no problem. The trustee would certainly understand that you didn't buy clothes for a few months because you were saving to pay an attorney.