If you owe taxes to the IRS you may be considering arranging some kind of installment payments. The problem with this “solution” to your tax debt is that the IRS charges large penalties and interest. The interest and penalties can accrue to such an extent that it doubles your tax debt every five years. This is not a very expedient way of trying to pay off your debt. As I mentioned in my last blog the one way to avoid IRS penalties and interest is through a Chapter 13 repayment plan.

The benefits from choosing the Chapter 13 bankruptcy repayment plan are significant.  Not only will the Chapter 13 prevent the IRS from charging you interest on a new plan, it can also decrease the interest you already have assigned to a previous tax debt. The same is true of the IRS penalties: they may be avoided with a new plan or already accrued penalties may be decreased. Also, your tax debt may be reduced to as little as one percent of your original debt. Since with a Chapter 13 bankruptcy you only have to pay back what you can afford on past income tax debts. Another benefit is the fact that once you begin a Chapter 13 bankruptcy case the IRS cannot levy any of your property. One more advantage with a Chapter 13 tax bankruptcy is that you pay the IRS what your budget allows under bankruptcy law standards. Thus you avoid using the IRS “living expense standards.” The bottom line is that usually with Chapter 13 bankruptcy you will pay back much less than what you would with an IRS installment agreement.

If you and live in Denver, Aurora, Arvada, Brighton, Broomfield, Commerce City, Englewood, Highlands Ranch, Lakewood, Lafayette, Littleton, Northglenn, Westminster, Wheat Ridge, Golden, Colorado, or any of the surrounding areas, and have any questions please feel free to contact me.

Kevin D. Heupel, Colorado bankruptcy attorney, 303-955-7570, COBankruptcyHelpEmail, or free-consultation form.