If you are already having a hard time paying your bills, the approach of tax time adds another layer of stress — especially if you not only owe money for this past year, but also for years past. Whether you are simply worried about paying this year’s tax debt, never paid your prior years’ taxes, are currently paying the IRS for previous tax years on a monthly payment plan, or any combination of these, you can file for a Chapter 13 bankruptcy plan and structure payment into your payment plan.

Filing for Chapter 13 bankruptcy offers several advantages when it comes to tax debt. First, if you are being inundated with calls from the IRS or your state’s tax agency seeking to collect back taxes, filing for Chapter 13 bankruptcy will initiate an automatic stay that stops all of the calls and collection efforts and gives you several years to pay off all of your debts, including your income taxes. The restructuring process will create a payment plan based on your ability to pay and will eliminate the problem of accruing interest and penalties on your tax debt. It also eliminates the fear of tax liens.

Even if you have already established a monthly payment plan with either the IRS or your state tax agency, Chapter 13 bankruptcy filing will reset the clock. This is a particular relief for those who face 2018 tax debt along with an existing payment plan, as failure to pay 2018 in time would violate the installment agreement. Chapter 13 bankruptcy effectively cancels the installment plan, relieving you of having to make any further payments until the restructured plan is put in place. It will also end up combining your prior taxes owed with your current and all of your other debts. A carefully thought out, well-structured payment plan will not only enable you to pay off your current and past tax debt but will do so in a way that allows you to move forward and pay your future tax withholding without incurring additional debt. It stops the cycle of tax debt and lets you start afresh.

If you would like to discuss the advantages of filing a Chapter 13 bankruptcy, contact our office today to set up a convenient time to meet.

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