By Christopher C. Carr, Esq. Chester County bankruptcy attorney.
Tel: 610-380-7969 Email: firstname.lastname@example.org Web: westchesterbankruptcyattorney.org
This article deals with situations where debt repayment extends beyond the 3-5 year period allowed in a Chapter 13 and the end of the automatic stay in bankruptcy and some things that can be done about it.
The typical scenario would be where a homeowner uses a Chapter 13 to repay the arrears on their mortgage. The law states that while the arrears must be paid 100% over the course of the plan, payments on the mortgage may extend beyond that time. How could it be otherwise because almost all mortgages have a life of 30, 40 even 50 years, far longer than the maximum bankruptcy plan?
But what about a homeowner who also has non dischargeable taxes? They too can be “scheduled” and payments made over the course of the plan…but when the plan ends so does the “automatic stay” and the tax creditors will STILL be there waiting to get their money. And the IRS has an array of weapons at its disposal. For example, unlike common creditors, it can slap a lien on your home without even having to file suit to do so. And such liens can be more than just a nuisance, especially when it comes time to sell because then the title company will not issue a policy of title insurance until the lien has been paid thus in effect giving the IRS a second bite at the apple. You can try negotiating a lower tax with the Service by submitting what is called an Offer in Compromise after the bankruptcy is discharged but not everyone can qualify and a 20% nonrefundable down payment must be submitted with your offer on IRS form 656. If the IRS accepts the offer, it will want the remainder in 5 or fewer monthly installments.
But luckily there are other alternatives. The law allows a tax debtor to file under more than one chapter in bankruptcy in sequence. Many people wrongly believe that there is a waiting period after a discharge before another bankruptcy can be filed whereas the law actually reads only that you cannot receive a discharge in the second bankruptcy. However, as to non dischargeable debt, it really does not matter.
There are 2 scenarios where this strategy can be used with good effect. Suppose you file Chapter 7 to wipe out all your qualifying dischargeable debts and taxes. When the Chapter 7 is completed, some non-dischargeable taxes remain, but you could file under Chapter 13 for a repayment plan to deal with the balance. This strategy is called: “Chapter 20” (7 + 13). This stops interest and penalties.
Likewise, a “Chapter 26” (13+13) may be a way to spread paying a tax debt over a longer period– up to ten years (i.e. 2 5 year plans). This means filing one Chapter 13 and completing it, and then filing a second Chapter 13 for remaining debts. This also stops interest and penalties and most importantly liens will not attach to your property because of the automatic stay. If done quickly enough, this can be accomplished before the IRS starts up collection activity again.
As always, it is best to seek the advice of a competent bankruptcy attorney as this is a complex timing sensitive legal area.
©Christopher C. Carr, Attorney at Law 2009, All Rights Reserved. Photo by Chrisinplymouth.
Law Offices of Christopher C. Carr, MBA, P.C., is a quality bankruptcy and debt relief practice, located in Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester, Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at email@example.com today!
I also provide Mortgage Modification Services.
Others who have actually reached the letter L in the Bankruptcy Alphabet include:
St. Clair Shores MI attorney, Kurt OKeefe, who speaks the truth when he says that L is for Lie, the Big Mortgage Industry
Cleveland Attorney ( oh how I miss beautiful Cleveland on the shores of lake Erie where once I lived), Bill Balena ensures us that L is for Life Insurance
New York & California Bankruptcy Lawyer, Jay S. Fleischman who attaches great relevance to L is for Lien
Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell who lays it all bare for us in L is for Lien Stripping
Honolulu Bankruptcy Attorney Stuart T. Ing also peels back the layers in L is for Lien Stripping
Marin County Attorney, Catherine Eranthe enlightens us in L is for Lift the Stay
Colorado Springs Attorney Bob Doig has gems of wisdom on why L is for Luxuries
Metro Richmond Consumer Attorney, Mitchell Goldstein who is solidly behind L is for Liquidated
Allen Park, Michigan Bankruptcy Lawyer, Christopher McAvoy enumerates how L is for List It Or Lose It