Can I Keep An IRS Installment Plan In Chapter 13?
If you worked out an installment plan with the IRS but now have to file Chapter 13 you may be wondering whether you can keep up with that installment plan in your Chapter 13 case? Fortunately or unfortunately depending upon your situation, the answer to that question is no.
The IRS and the bankruptcy court will not allow you to honor and continue living with that installment plan after you file Chapter 13. Instead you must pay all of your priority tax debt in full through the plan which will be between 36 and 60 months depending upon your income.
Sometimes this is to your advantage because you will then be able to prefer the IRS over your general unsecured creditors if you need to make a significant payment in your Chapter 13 plan anyway. This gives you a relatively painless way to rid yourself of nondischargeable priority tax debt.
On the other hand, you may have agreed to pay the IRS for taxes that are actually dischargeable in Chapter 13. Your Chapter 13 discharge (received after completing all of your payments) may relieve you of that burdensome installment agreement.