Just got served

[car67]

Wife just brought me papers some young man served me for a claim filed by Citibank for nonpay on credit card and the docs state I have 30 days to respond ect.... We have a difficult financial situation as we have multiple streams of income and not a regular paycheck. So our attorney has been back and forth requesting various documents ect in preparation of filing this case....

So I would assume once I show my attorney this first filing this will accelerate his filing speed to put this creditor at bay?

Also I have been reading tons on this forum for months learning and know that the IRS is a first priority debt which I owe maybe $30k in taxes so I would assume I will be paying the majority of my money to pay these off... The the rest get in line...

My question on tax debt (both business and personal related) is this... If you pay over 5 years does the IRS freeze the penalties and interest in the 5 year window and my second question is that if my payment doesnt cover the tax bill over the 5 years does the balance left owing get discharged?

Thanks

[papa0881]

i believe the irs cannot put on any more intrest or penalties once you have filed bk 13 as long as the debt is included in your plan. i have state and irs, sounds like you and i have the same problems here with our bk, prob while you filed im sure. im in business to, and remember all the paperwork i had to accumulate for my lawyer, good luck

[woohoogirl]

Car67,
How long between last payment and you getting served? Citi is one of my biggest pains!
Thanks,
Woo

[helpless]

We filed IRS back taxes in our 13. The original amount that was owed was paid off 100%, the penalties and interest (which are unsecured) are paid at 23%, which is what all our creditors are getting. Good luck

[car67]

Awesome yes I hear its actually to your benefit to owe taxes going into Chapt 13 and that way credit cards and unsecured debt do not get paid until Uncle sam is paid first

My question still remains if you dont get to pay the full taxes over 5 years is the balance of the taxes discharged at month 60? The penalties and interest is frozen in bankruptcy too correct?

Yes I am a self employed business ower.....

Its been 14 months since I paid citibank and just got the first notice for court took it to our attorney he said no worries he just files an answer and this will be wrapped up in court to not stress a thing and enjoy the holidays.....

Thanks

[car67]

I see the penalties and interest are classifed unsecured and if any money is left over they get a percentage with the other unsecureds sweet!!!!

[biotechsolution]

the penalties and interest are only clasified as 'unsecured' if the tax is considered unsecured. which means the taxes have to pass all the test to be unsecured. 3 years since due, 2 years since filed (if filed late) and 240 days after asessment. The penalties and interst will stop once you file but the penalties and interest will only be considered unsecured if the tax is considered unsecured.

Now if you filed a tax year late, say 2001 and even if it hasn't been 2 years since the filing but it was 3 years since it was due. Some courts have considered the penalty unsecured and dischargable even if the tax wasn't. But other circuits have ruled the opposite.

But bottom line and priority tax has to be paid in full in a Chapter 13. A way the IRS has tried to get 13 dismissed is to put in a huge claim so that the debtor can't pay it all off in a 13, in that case the case can be dismissed.

Keep your attorney on top of it.

[car67]

Good advise I will post as I hear more. Its really neat that other people stop in to share. Thanks