Priority Claims - In Divorce Situation

[Robert_dod]

I KNOW that sec. 1322 requires that the Chapter 13 PLAN must "[provide for the full payment of all claims entitled to priority under section 507 of this title, unless the holder of a particular claims agrees to a different treatment of such claim."

MY Plan provides for the full payment of all priority (tax) claims. However, it provides that the trustee pay 1/2 of all such claims, and that former spouse (subject to state court order) pay the remainder.

My plan has slightly less than one year to go, and is paid on time. The priority claimants have been paid all amounts due from me under the Plan. Wife has paid the state (not sure how much), but not the Fed.

Fed IRS now has a motion to retroactively deny the confirmation, because it does not fulfill requirements (1322).

Must the DEBTOR's plan pay (within the plan) for all of a debtor's joint obligation (leaving the spouse free to not pay), or may the Debtor put the spouse payments in as part of the PLAN.

Obviously, if the Spouse fails to pay, there can be no discharge, as the Plan (including spouse payments) was not complied with. But it seems incongruous that a debtor MUST include obligations of exspouse (who chooses not to go through BK) and PAY those obligations.

Advice?

[lrprn]

I'm assuming you filed under the old bk law before Oct 17, 2005. What does your divorce degree state about who was responsible for the payment of these owed taxes? And you mentioned something about your ex being compelled to pay half the taxes "subject to state court order". Is this action separate from your divorce?

[Robert_dod]

Ex Ordered in Divorce Decree

Yes. In divorce, each ordered to pay 1/2 of all outstanding taxes.

The question is a little different. If we assume that there is a valid court order requiring wife to pay 1/2 of outstanding taxes, this would have to be in cash. The Bankruptcy Code requires that all taxes be paid under the Plan. MY plan contemplates the DEBTOR paying 1/2 and the Ex-Wife paying for 1/2, payments made outside the trustee's office. IS this sufficient.
"
YES, old law (filed early early 2003)

[lrprn]

Did some online research - not the best news....

According to the Resources for Attorneys article on Divorce and Tax Returns at http://www.resourcesforattorneys.com...nsarticle.html -
" Even if the divorce (dissolution decree) states that one spouse will be liable for any amounts due on previously filed joint returns, the IRS may still hold both spouses jointly and severally liable and go after either spouse."

Here's another legal opinion from DivorceNet at http://www.divorcenet.com/states/mic..._client_credit -
"If that spouse files for bankruptcy after the Judgment of Divorce is entered and the parties were to split a joint debt (or even if the bankrupt spouse was to take the whole debt but the innocent spouse's name remained on the debt), the third party creditor will come after the non-bankrupt spouse for the entire debt."

Looks like even if you two agreed to split the taxes, if she doesn't hold up her end of the bargain, the IRS can and will come after you for the whole amount.

Call your lawyer immediately tomorrow morning to see what can be done to help you in this situation (if anything).