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Keeping Current on Post Petition Taxes in Chapter 13 Bankruptcy
Understanding the intricacies of bankruptcy law can be a daunting task. One common question that emerges when discussing Chapter 13 bankruptcy, in particular, is the importance of staying up-to-date on post-petition income taxes. At Liviakis Law Firm, we believe it’s crucial to shed light on this matter and give our clients the most accurate and comprehensive information possible.
Chapter 13 bankruptcy, also known as a wage earner’s plan, enables individuals with regular income to develop a plan to repay all or part of their debts. The debtors propose a repayment plan to make installments to creditors over three to five years. However, during this period, a debtor’s financial obligations don’t just disappear. Among these obligations, staying current with post-petition income taxes is of utmost importance.
Why is it important to keep current on post-petition income taxes during Chapter 13 bankruptcy? The answer lies in the process of Chapter 13 bankruptcy itself. Post-petition debts are those incurred after the bankruptcy filing and before the case is closed, dismissed, or converted. Income taxes are considered post-petition debts if the tax year ends after the bankruptcy filing date.
Not staying current on your post-petition income taxes can have serious consequences. If you fail to file or pay your taxes during this time, the court could dismiss your bankruptcy case. This would leave you vulnerable to collection action by creditors and wage garnishments. For this reason, it’s essential to keep up with your taxes during this period.
Furthermore, the bankruptcy court requires a debtor to maintain post-petition income taxes in order to earn eligibility to receive a discharge. In other words, to successfully emerge from Chapter 13 bankruptcy, you must stay current on your post-petition income taxes.
To navigate the complexities of Chapter 13 bankruptcy, it’s advisable to seek legal guidance. At Liviakis Law Firm, we are committed to providing our clients with the necessary tools and information to make informed decisions about their financial future. For more information, please contact us at 916 459 2364.