Filing Chapter 13 bankruptcy in Kentucky can give you a chance to get your finances back on track. Chapter 13 is a repayment plan that the court creates for you to repay all or part of your debts. At the end of the set time for your plan, anything left unpaid is considered satisfied and discharged with the exception of some secured assets. This type of bankruptcy is great because it allows you to keep many assets, unlike Chapter 7.
One thing to note about Chapter 13 is the rules. For example, you have to keep paying the full payments on secured debts unless you are able to work out a different agreement with your lender. Otherwise, you will lose the asset. Chapter 13 also has rules in regards to taxes and tax debt, according to the IRS. Here are three things to understand about taxes and bankruptcy.
- You must file your returns and pay taxes
During your bankruptcy, you must file all tax returns due and pay any tax liabilities. It is important that you keep your tax debts on track or the bankruptcy court could dismiss your case.
- Get an extension if needed
If for some reason you cannot file your taxes, then you need to get an extension. Follow the normal procedures for doing this. Do not let it go. Again, the court could dismiss your bankruptcy case.
- Look back four years
You need to make sure you have filed your taxes for the four years before you file your bankruptcy. If you have not, you need to take care of this.
Make sure you follow all the instructions of the court and any the IRS may give you. You want to avoid doing anything that could cause the court to throw your case out because you cannot file bankruptcy again for many years.