Using Chapter 13 Bankruptcy to Regain Control of Tax Debt

May 20th, 2013 by Reed Allmand

Chapter 13 Bankruptcy

If you’re seeking a solution to help manage tax debt then Chapter 13 bankruptcy may be something to consider.  It often depends on the type of debt in question, along with other financial obligations of the debtor.  You may even gain an advantage using Chapter 13 to handle the debt that you may not gain from filing Chapter 7 bankruptcy.  Important factors to help determine how Chapter 13 may help you pay down tax obligations includes understanding exactly how much you owe, can any of it be discharged, and whether they are non-priority or priority tax debts.

Tax debt that is considered a non-priority may be paid with other unsecured debts when your repayment plan is developed for review by the bankruptcy court.  The entire amount of this debt may not be eligible for discharge, you may only be required to pay a certain amount or less than what is owed.  There are qualifications the debt in question should meet:

  • The debt should be related to federal and state income taxes.
  • It is past due by three years including any extensions you have received.
  • The tax returns related to the debt has been filed within the last two years.
  • The Internal Revenue Service (IRS) has reviewed or accessed the tax within 240 days of filing for protection.
  • Fraud or tax evasion does not apply to your situation.

On the other hand, priority tax debts can be handled through a repayment plan based on your ability to repay.  Such debts include property taxes, tax liens, and taxes that should have been withheld from employment earnings.  Discuss your situation with an experienced bankruptcy attorney.





About Reed Allmand


Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

View all posts by Reed Allmand


Subscribe to our e-mail newsletter to receive updates.


Why do I need to submit a new wage order when I modify my plan

When we modify your bankruptcy plan we are changing your plan payments. This means that we have to get with your employer and change the terms and amount of your wage order. The only way we can do that is by filling out a new wage order form.  

Learn More
What happens if the stay terminates on my home?

If the bankruptcy stay terminates on your home that means that even though your in bankruptcy, your creditor can pursue all there legal remedies they can pursue if you were not in bankruptcy. This includes foreclosure, and having your house sold and evicting you from your house.

Learn More

Find Location

  • Dallas Bankruptcy

    5646 Milton Street, Ste. 120 Dallas, Texas 75206
  • Fort Worth Bankruptcy

    860 Airport Freeway, Suite 401, Hurst, Texas 76054
  • More Locations

Meet Our Clients