In Ch. 13 bankruptcy, certain tax debts, like trust fund recovery penalties and taxes where no return was filed, cannot be discharged. This means you still have to pay them even after bankruptcy. Other debts, like student loans and debts from fraud or embezzlement, also can’t be wiped out by Ch. 13 bankruptcy. So, bankruptcy might not clear all of your debts. After changes to bankruptcy law, certain types of debts like taxes and student loans cannot be erased even in a Chapter 13 bankruptcy. This means you still have to pay them even after bankruptcy. And if you owe interest on these debts, that interest also cannot be erased. So, it’s important to understand that certain debts will still be your responsibility even after filing for bankruptcy. In Chapter 13 bankruptcy cases, attorneysâ fees are usually paid from the bankruptcy plan as an administrative expense. This means the fees are paid early in the case and are considered a cost of running the bankruptcy process. However, these fees are only allowed if they benefit the bankruptcy case as a whole, not just the individual person filing for bankruptcy. This means legal fees for actions that only benefit the person filing for bankruptcy, like fighting to have specific debts forgiven, may not be paid from the bankruptcy plan. This can create a problem for people filing for bankruptcy, as they may have to pay these legal fees themselves. This issue can come up when dealing with claims in court. It may be hard to argue that the legal work done to figure out how much money the estate owes isn’t something that should be paid for. But if the legal work is to help one of the debtors get out of paying a joint debt, then that work shouldn’t be paid for by the estate. Creditors’ lawyers should think about objecting if the legal work is more for the debtors than for the estate. Bankruptcy attorneys advise clients to get transcripts of their tax records from the IRS to check for any fraud penalties or other issues that could affect their bankruptcy case. The IRS website has the addresses for their offices. It’s important to file a complaint about dischargeability within 60 days of meeting with creditors. Interest on certain nondischargeable tax debts can survive a bankruptcy discharge, so it’s important to be aware of this. Bankruptcy trustees and debtors can both take part in managing a bankruptcy case.
Source: https://www.floridabar.org/the-florida-bar-journal/two-new-issues-in-post-bapca-13-cases/
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