The Plan will need to provide for the full payment of any delinquent claim filed. If, however, a payment arrangement more favorable is already in-place, the trustee and the court in some jurisdictions may prefer that those more favorable terms continue undisturbed and the amount of that arrangement would be more appropriately allowed as an expense in the budget and paid by the debtor directly to the creditor outside of the trustees’ administration.
Most Federal or State income tax obligations are likely to be entitled to a “Priority” status. Tax obligations can be; “Secured”, “Secured and Priority”, “Unsecured Priority” and some can be wholly “Unsecured”. What determines which classification the tax creditor falls, depends on a number of different factors. Has the tax creditor filed a lien? Is the lien actually secured by equity? If so, up to what amount? Does the ‘Plan’ include a “Motion to Value the Collateral” regarding the tax lien? If the tax obligation does not have a lien, is it entitled to a Priority status? What type of tax obligation is owed? Learn more about Chapter 13 bankruptcy by visiting http://ghentwebvalley.com/?p=87.
For what years are they owed? How much time has expired since the tax obligation first came due? When was the information regarding the tax obligation submitted to the taxing entity? How much time has transpired since the tax obligation became known to the taxing entity?
All of these factors come into play when determining if a ‘tax’ obligation should be listed in the Chapter 13 Plan as partially or wholly; “Secured”, “Priority” or “Unsecured”. Generally tax obligations which are wholly or partially secured will be entitled to earn 5% interest on the secured portion of their claim. Consult your attorney regarding any details and documentation that relates to tax obligations. There is a great deal of difference in what financial effect the Chapter 13 Plan will have on tax obligations depending on the actual status and classification the taxing agency is entitled.
The Chapter 13 Trustee and the Court have no objections to a ‘Plan’ which does not propose to pay any future interest or penalties to the unsecured tax creditors even when they’re entitled to a priority status according to http://julesjacobs49.edublogs.org/2014/10/24/primary-advantages-to-chapter-13-in-utah/.
Just because most unsecured creditors are dischargeable debts doesn’t mean they have no rights or deserve no consideration. That’s why there are so many thresholds in place when determining how much the Chapter 13 Plan payments should/could or must be. These threshold covered in “Plan Payments” are there primarily to insure the petitioner pays in as much as reasonably possible based on the circumstances at the time the cases in filed, at the time of the §341 Meeting of Creditors and (DUJUR) even after the Plan is confirmed. Learn more about Chapter 13 bankruptcy at http://mikesthoughts.drupalgardens.com/content/were-going-talk-about-chapter-13-bankruptcy-utah.
STUDENT LOANS IN CHAPTER 13
Student loans are unique in Chapter 13. They’re also mentioned in Section L37B Non-Dischargeable “Student Loans” in Chapter 13. Student loans are not secured, not priority and not likely to be allow any special treatment like some co-signed debts can be treated. They’re ‘unsecured’, they’re non-dischargeable and they’re not likely to receive any distributions from the Chapter 13 trustee during the life of the ‘Plan’ unless the Plan provides for some payment to Unsecured Creditors and they timely file an allowed Proof of Claim.
Unfortunately Congress didn’t provide debtors the means to obtain any relief from Student Loans when re-drafting Chapter 13 in 2005. The Bankruptcy Code doesn’t provide for Student Loans in any special manner; as such they’re listed amongst the general unsecured creditors. As a general unsecured creditor, many jurisdictions may not allow your Schedule ‘J’ of Expenses to provide for the payments to Student Loans to be paid directly by you as a budgetary expense.