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Can I Get Rid Of IRS Debt Through A Chapter 13 Bankruptcy?

July 23, 2009

The answer to that question is yes and no. Yes, the IRS is going to be more flexible regarding your past due tax debt when you file for Chapter 13. They will base their compromise on two factors, either doubtful liability (you don’t owe that much tax) or doubtful collection (you don’t have resources or assets to pay the tax you owe). 

As for the no part of the answer, this does not mean that you are completely off the hook if you file for a Chapter 13, but a Chapter13 will stop any liens by the IRS on your assets such as your home, bank account or your paycheck. When you file for bankruptcy in Dallas, the IRS becomes just another creditor in your Chapter 13 bankruptcy. Their objections to the repayment plan proposed in your Chapter 13 plan are limited to the same grounds as any other creditor. 

Most of the time the IRS welcomes a Chapter 13 filing since the priority taxes get paid in full with little expenditure of time and energy by the IRS. It all comes down to the fact that the IRS would rather get something than nothing.

If you are facing IRS debt issues, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or via e-mail at for a free bankruptcy consultation.



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