Post filing taxes can torpedo Chapter 13 case
By Cathy Moran, California bankruptcy lawyer on Feb 5, 2008 in California, Chapter 13 Bankruptcy, Tax Issues
The IRS has become more aggressive in the Northern District of California in bringing motions to dismiss otherwise performing Chapter 13 cases where the debtor has failed to pay taxes that came due after filing.
The premise of Chapter 13 is that the debtor gets protection from his pre filing creditors, and pays them from his future income. Something is wrong, then, if new debt to the taxing authorities is accumulating at the same time as old debt is being discharged. That’s not progress.
If you are in a Chapter 13 plan and have taxes you can’t pay, adjust your withholding so that enough is being withheld to satisfy this year’s taxes, then talk with your attorney about how to catch up on the taxes before the IRS catches up to you.
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