Can I Pay My Tax Debt Before I Pay Any Other Debt In Chapter 13?
That is such a good question. Thats another reason that I suggest filing a Chapter 13.
Now say for example, my husband and I were in a small business. And we got behind in our taxes. We own a substantial amount of taxes. We need to catch up on our house payments. Maybe weve gotten behind in our car payments. And we just have a lot of debt. Its been really a bad year for us.
Now we know that the house is worth close to what the first mortgage is but definitely not nearworth anywhere near the second.
We have this tax debt. The IRS is after us. Theyve been sending us a lot of letters.
Now you could file a Chapter 13, reorganize all that debt, go ahead and catch up on the house payments and then pay a small monthly amount to all of your creditors. However, the IRS is going to be the first creditor that gets paid.
So you could pay down all that tax debt and simply not pay anything else. And within three to five years, again, be out of bankruptcy, be completely debt free, and have paid off your tax debt because, in bankruptcy the IRS is a priority creditor. Theyre treated basically better than anybody else. Theyve got first claim to anything.
And so thats a great formula. That way instead of dramatically, you know, trying to hold onto the house, not lose the car, and throw a bunch of money at your credit cards, you would simple focus on your tax debt for a couple of years. Get out from underneath it and be debt free at the same time.
Its a really good solution for people paying on taxes right now.
by: Christy Thompson
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