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Even the Internal Revenue Service complies with Chapter 13

Tax debt can be one of the most frightening types of debts to deal with because the collection of such debt is backed by the power of the Internal Revenue Service. The IRS can do things when collecting debt that other creditors sometimes can't, and although most people won't end up in jail just because they owe taxes, prison time isn't completely out of the realm of possibilities if the IRS believes you purposely tried to avoid tax burdens via fraud. You do have options for relief when facing back logged tax debt, though, and one of those in Chapter 13 bankruptcy.

When you file Chapter 13 bankruptcy, all of your creditors must file a claim to ensure they are paid through the bankruptcy process. That includes the IRS. Tax debt is considered a priority claim, which means you must pay all of it back through your Chapter 13 plan. That is different than with many of your other debts; credit card debt is usually paid back for pennies on the dollar, for example.

Filing Chapter 13 can buy you some time and help you pay your tax debts without losing your home or experiencing tax levies on your bank accounts. Once you file a Chapter 13 bankruptcy petition, the IRS cannot put levies on your property or continue collections actions against you. You do, however, have to follow through on your end with requirements.

One of the requirements of the Chapter 13 process is that all of your tax returns have been filed. If you failed to file your tax returns, the IRS can object to your bankruptcy and the trustee will also fail to confirm it. Working with a bankruptcy attorney, you can ensure all the details are handled prior to your confirmation hearing to better your chances at a successful Chapter 13 bankruptcy.

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Joshua Z. Goldblum, Attorney at Law
826 Bustleton Pike Suite 101B
Feasterville, PA 19053

Phone: 215-322-2745
Fax: 215-953-9973
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