Chapter 13 and Income Taxes

Typically money owed to the government, such as child support, alimony, taxes or student loans, must be paid as agreed and is ineligible to roll into a Chapter 13 repayment plan.  However, some exceptions do apply.  If a Chapter 13 debtor meets certain criteria, he/she may be eligible to qualify for a repayment plan to the Internal Revenue Service.  As with any legal matter many factors are included and each case is determined on an individual basis.  Below is a general guideline of what courts consider to determine whether an income tax repayment schedule may be included in a Chapter 13 plan:

·         Debtor's ability to repay the IRS along with other creditors

·         Whether taxes for the previous four years were filed and/or paid

·         Debtor is seeking to discharge individual income taxes and not those of a business

·         Whether the debt is a result of income tax fraud

·         Full disclosure of all assets, liabilities and income

·         The debt cannot be a result of income tax fraud

Fears | Nachawati recognizes that Chapter 13 can be a difficult process.  Our attorneys are experienced and ready to help you navigate the bankruptcy courts and determine the best plan to suit your needs.