{"id":6186,"date":"2018-07-05T07:00:59","date_gmt":"2018-07-05T12:00:59","guid":{"rendered":"https:\/\/nybankruptcy.net\/main\/?p=4835"},"modified":"2019-05-09T07:35:04","modified_gmt":"2019-05-09T07:35:04","slug":"chapter-13-treat-tax-debts","status":"publish","type":"post","link":"https:\/\/nybankruptcy.net\/main\/chapter-13-treat-tax-debts\/","title":{"rendered":"How Does Chapter 13 Treat Tax Debts?"},"content":{"rendered":"

Nothing secures most tax debts, which is why if they’re able to discharge them in chapter 7, New York bankruptcy debtors choose to do so. I’ve discussed how that works in a post about how bankruptcy courts were becoming less forgiving of late tax returns<\/a>, so I won’t repeat it now. However, there are times where debtors are better served by filing in chapter 13, even if they still owe tax debts. How does this work?<\/p>\n

First of all, to clarify, I’m not discussing taxes after<\/i> filing in chapter 13<\/a>, which would focus on how to file tax returns and deal with post-petition tax debts. Instead, I’m interested in prepetition<\/i> tax debts, which debtors bring into bankruptcy.<\/p>\n

In chapter 13, priority claims must be paid in full. However, the chapter splits taxes between priority and nonpriority status if they meet certain rules. If a tax is nonpriority, then it does not need to be paid in full, but in New York bankruptcy debtors must dedicate some portion of their repayment plans to nonpriority, unsecured creditors. The rules for whether a tax debt is nonpriority are the same that make them dischargeable at all in chapter 7:<\/p>\n