How Chapter 13 Bankruptcy Can Help Manage IRS and State Tax Debt in New York
Chapter 13 tax debt relief in New York
How Chapter 13 Bankruptcy Can Help Manage IRS and State Tax Debt in New York
Facing tax debt can be overwhelming, but Chapter 13 bankruptcy offers a structured way to resolve it while protecting your assets. The law firm has experience helping individuals and businesses in New York create manageable repayment plans for tax debt through Chapter 13 bankruptcy. If you are struggling with IRS or state tax debt, legal guidance can help you determine the best path forward.
Understanding Tax Debt in Chapter 13 Bankruptcy
Tax debt is classified into priority and non-priority obligations, which impacts how it is handled in a Chapter 13 repayment plan:
- Priority Tax Debt: This includes recent income taxes, payroll taxes, and certain penalties. These must be paid in full through the repayment plan over three to five years.
- Non-Priority Tax Debt: Older income tax debts that meet specific conditions may qualify for partial repayment, with any remaining balance discharged at the end of the plan.
- Interest & Penalties: Filing for Chapter 13 stops additional interest on priority tax debt, and some penalties may be discharged.
Benefits of Using Chapter 13 for Tax Debt Relief
- Stops IRS Collection Efforts: Chapter 13 puts an automatic stay on wage garnishments, bank levies, and other collection actions.
- Affordable Payment Plan: Payments are based on your disposable income, allowing for structured and predictable repayment.
- Potential Discharge of Non-Priority Tax Debt: If your tax debt qualifies as non-priority, some or all of it may be discharged after completing your repayment plan.
- Eliminates Additional Interest on Priority Tax Debt: Unlike other repayment options, Chapter 13 prevents the accrual of additional interest on priority tax debt.
- Protection from Liens and Seizures: Filing for Chapter 13 can prevent tax liens from turning into asset seizures.
What Happens If You Don’t Complete the Plan?
If a debtor fails to complete the Chapter 13 plan, the IRS or New York State Tax Department can resume collections on any remaining balance. Working with an experienced lawyer ensures that you stay on track and avoid complications.
Are You Eligible for Chapter 13 Tax Debt Relief?
Eligibility depends on factors such as income level, debt amounts, and prior bankruptcy filings. The law firm can assess your case and help determine the best course of action for your situation.
Get Legal Help for Chapter 13 Tax Debt Relief in New York
Tax debt can be complex, but you don’t have to navigate it alone. The law firm has experience in helping clients manage and reduce tax debt through Chapter 13 bankruptcy. Contact the firm today for a consultation to explore your options and regain financial control. Call now to schedule a consultation and take the first step toward resolving your tax debt through Chapter 13 bankruptcy.
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Chapter 13 tax debt relief in New York
