Filing Chapter 13 with Back Taxes & Credit Debit

[STRESSED OUT]

Ha anyone filed chapter 13 because of back taxes and credit card debit? My husband and I are about to and he is a subcontractor which means his work is very up and down and we are very stressed out, what happens if we can't make the monthly payment to the trustee because his work has slowed down or because one of us gets sick, will they come and take our possessions? We are at our wits ends on what to do. We aren't spring chickens anymore. Please advise

[HHM]

If your income is inconsistent, you need to think long an hard about doing a chapter 13. If you miss a payment, the chapter 13 is dismissed and you are back to square one. But no, they do not come and take your possessions, but if your chapter 13 is dismissed, you are, once again, at the mercy of your creditors.

[STRESSED OUT]

So what other options would we have, I have tried to put our taxes on an installment plan but we owe too much and they say we don't qualify for a compromise, we are at our wits end.

[HHM]

Obviously, we don't have enough information about your circumstances...but the first thing you need to ask yourself (or educate yourself about) is "what is the worst that can happen. Do have any "at risk" assets? Even though the debt is for taxes, your asset exemptions still apply, and even if they lien your house, they cannot foreclose...all they do is wait for you to sell it.

You need to weigh the risks of doing nothing, against the risks of a chapter 13. The problem is, there is VERY little leeway in a chapter 13...you miss a payment, the case gets dismissed and you are literally back to square one.

[STRESSED OUT]

I guess I don't understand what you mean about weighing the risk of doing nothing? Very green on this stuff

[HHM]

What I mean is, you have already been living with this tax issue for some time...has anything bad happened yet?

What you need to figure out is, assuming you did nothing...what is the worst that can happen. For example, if your husband is a subcontractor, he is not an employee, thus, the taxing authority cannot garnish wages.

[MajorMike]

You really need to say in most cases not that it gets dismissed if you miss a payment!! It depends on your district, your trustee and how you handle your payments. To say it gets dismissed if you miss one payment is NOT CORRECT.

Obviously, we don't have enough information about your circumstances...but the first thing you need to ask yourself (or educate yourself about) is "what is the worst that can happen. Do have any "at risk" assets? Even though the debt is for taxes, your asset exemptions still apply, and even if they lien your house, they cannot foreclose...all they do is wait for you to sell it.

You need to weigh the risks of doing nothing, against the risks of a chapter 13. The problem is, there is VERY little leeway in a chapter 13...you miss a payment, the case gets dismissed and you are literally back to square one.

[HHM]

You really need to say in most cases not that it gets dismissed if you miss a payment!! It depends on your district, your trustee and how you handle your payments. To say it gets dismissed if you miss one payment is NOT CORRECT.

True, but they have to be able to make it up. The point is, if your income is inconsistent, and you are in a 5 year plan...you rarely get more than ONE freebie from the trustee. Freebie, meaning, the trustee will allow you to make-up the payment...but if it keeps happening, the case WILL ultimately get dismissed.

Keep in mind, one of the requirements for a chapter 13 is that the debtor have "regular" income for which to fund monthly payments.

Now, if the husband has been doing this a long time, and there is a predictable cycle (that can be documented) of the income dips and spikes, you can design a plan around that. But you will need to get a good attorney that is willing to go to the mat for you to push such a plan through.

[papa0881]

i have missed 5 payments and they just sent me a letter. i have been having alot of money problems lately.

[SCORPIO07]

Stressed...Who told you that you don't qualify for an Offer in Compromise? Have you contacted a Tax Attorney? I am currently working with a tax attorney if you are interested send me a PM and I will forward his information to you.