Legal Question in Bankruptcy in Wisconsin

While you can certainly include IRS debt as a chapter 128 creditor, there is no guarantee that they will honor any stay of proceedings under state law, since federal agencies do not necessarily have to follow state law. There is the added drawback that 128 proceedings do not discharge or reduce the total amount of debt, unlike chapter 7 bankruptcy, which actually discharges ordinary income tax debt which is more that three years past due, so long as you have filed timely tax returns for that year. Chapter 7 bankruptcy also discharges most general unsecured debt, unlike chapter 128 which requires you to pay it all back. There is probably not too much harm in attempting to include tax debt in a 128, but even without one, the IRS often will accept reasonable installment payments which will retire your tax debt within a reasonably short period of time. In chapter 13, which will give you a stay of IRS collection proceedings for old taxes, you must pay tax debt in full over a maximum five year repayment plan, which is longer than most chapter 128 plans give you. I would therefore recommend that you consult with an experienced bankruptcy attorney before you attempt a chapter 128 proceeding for tax debt, since bankruptcy provides many advantages over chapter 128. .Please do not assume that I am your attorney because of my response here, but feel free to call my office in Racine (262-633-3090 or email [email protected]) for clarifications regarding my answer. Otherwise, under the rules of this website, I would not be taking any further action on your case. See me on the web at www.jayknixonlaw.com. View my past answers at http://www.avvo.com/attorneys/53401-wi-jay-nixon-1529181/answers.html?sort=recency , or see an even larger collection of responses at http://www.lawguru.com/answers/search/attorney/jknixon, . Answers may contain attorney advertising materials.