Describe your experience with a court hearing

[lgeiger99]

I filed a "Debtor's Motion to Value Property and to Avoid Wholly Unsecured
Lien".

The creditor is the IRS. The debt is 42k+. There is a general lien for 50K.
I paid all but 13,400 and the balance of 42k includes penalties and interest.

The proof of claim is 42+ unsecured general claim.

Here is what I think happens best scenario:

The debt is crammed down to the amount of my exemptions (because the IRS can collect on exemptions(?) and the balance above that is unsecured.
Is that correct?

Also, I'm curious about a hearing - the notice says that I have to submit further pleadings in writing at least one week prior to hearing.

If you are tempted to reply once again, that I should get an attorney, I'll remind you once again, I know that, the advice is redundant and I can't afford it. Thanks for any advice or for describing your court experience in advance.

[HHM]

Maybe we crossed this bridge, but is the underlying tax dischargeable?

What you should do is see if you can find the contact information for the local IRS bankruptcy division (insolvency division) and talk to them. They might just write off the lien without the need to go to a hearing.

What I don't get is this statement..."I paid all but 13,400 and the balance of $42K includes penalties and interest"....well, how much do you actually owe the IRS?

Also, let's get your terminology straight.
The "security interest" (or secured claim) gets crammed down, not the debt. The debt is simply the amount you owe. You are correct, that exemptions do not apply to the IRS. So if you listed $1,500 in household items, then the IRS has a secured interest in that $1,500.

As for the hearing, once the IRS responds, you (we) will have a better sense of what you need to do. But largely, the hearing itself is fairly straightforward unless you have some larger assets that need to be valued by 3rd parties (homes, cars, etc).

[lgeiger99]

Yes, the underlying tax is dischargeable.

The original tax debt was 33k+. What I mean is that I have repaid almost 20k of the tax and now the tax debt itself is 13,400. However, I still owe 42K - the balance is comprised of penalties and interest.

Thanks for supplying the correct terminology - yes, you are right. No larger claims - I own a car that is worth more and I am attempting a cram down.
I objected to the lender Proof of Claim and filed a response to their Objection to Confirmation of Chapter 13 plan. I haven't heard from them yet.

Thanks for replying.

[HHM]

A couple potential issues, just because the IRS is left with a partial secured claim does not mean it is a priority claim. If you show DMI on the Chapter 13 means test (B-22C), your class 4 creditors (general unsecured) must at least get that amount. So, can you really afford to pay the cram down plus the minimum required to go to unsecured creditors? The penalties and interest are ALWAYS non-priority, so the only issue is how much of the tax is secured. In this case, if the underlying tax is discharegable, the principal tax, penalties, and interest distinction is meaningless. The entire lot is dischargeable (granted, based on your analysis), so the only meaningful part is how much is secured. In this case, you are probably better off simply contacting the IRS bankruptcy division and talking with them directly. The may simply stipulate to a secured value.

Has the IRS filed it's proof of claim. Often times, it is procedurally easier to wait for the IRS POC and simply file an objection to the POC.

[justbroke]

Well, good luck on this. I hope all your terminology and strategy is accurate enough to challenge the U.S. Attorney assigned to the case. The fact that they objected to your confirmation means that they may be preparing to fight.

The question will be whether they are entitled to priority status in your Chapter 13. Go back and read the objection, and I'm gonna go out on a limb and say that they are complaining about priority status. Since they have a lien, I'm thinking that only the "penalty" and the "interest on the penalty" is dischargeable, and not the "interest" on the principal due.

I remember out discussion before and you claimed that the entire IRS debt was listed as "general unsecured" on the claim. This would mean you would have been able to treat it as a "general unsecured" (class) and discharge any part not paid for.

Sounds like there's something wrong with your plan or their claim... or both.

[lgeiger99]

Sorry Justbroke, I mentioned the car cramdown - they are the ones objecting to my confirmation. I filed a response and objected to their POC. Only pertinent to this conversation in the context that HHM mentioned - larger assets that need to be valued.

The separate issue - the IRS lien is driven by my need to remove their lien. The court responded to my motion (first post)and set a hearing. I suppose the possibility exists that they will not even attend the hearing? The IRS hasn't done anything more than file their POC - YET.

Thanks for the response HHM and Justbroke. I want to aborb what you've said, HHM.

[justbroke]

Sorry Justbroke, I mentioned the car cramdown

Oops. Sounds better though!

The IRS hasn't done anything more than file their POC - YET.

They are slow and governmental units are slow anyhow -- 'tis why they get more time to even file a claim.

They'll have 30 days to respond to Summons and Notice of Hearing once you serve those on them and file it with the Court. Oh, wait... you did this as a contested matter, by motion, rather than by complaint (Adversary Proceeding).

Let us know how your number crunching goes.