Many of our Chapter 13 clients are struggling with tax debt. Tax debt can be tricky in Chapter 13 bankruptcy, but here are a few advantages and disadvantages you'll want to know about if you have significant tax debt.

• Get your tax transcripts. To diagnose and fix your tax problems, you'll need to get account transcripts from the IRS for each year you owe a balance. These documents are a history of when your tax was due, when the return was filed, and when each charge was added to your account. You'll can get account transcripts on the IRS web site. If you have trouble getting these before you make your appointment, we can get transcripts for you if you give us power of attorney and pay a transcript fee.

• Priority claims must be paid in full. A priority tax claim is an income tax debt that is recent (generally speaking, less than three years old, but the actual calculation is complex and you should speak to an attorney). For the most part, these are the same tax debts that can't be discharged in bankruptcy (with some exceptions), and so you'll want them to be paid off by your bankruptcy. In Chapter 13, a priority tax debt must be paid in full over the life of your Chapter 13 plan (three to five years). So if you owe $10,000 in priority tax debt, you can generally pay that debt in Chapter 13 in roughly $200 a month payments.

• The benefit of priority tax claims in bankruptcy is that they must be paid before non-priority debt, like credit cards or medical bills. So if your disposable income is $250 a month and you owe $10,000 in priority tax debt, the first $200 of each payment will go to taxes, which need to be paid anyway, and only $50 will go to credit cards. The higher your priority debt, the less you'll pay in non-priority debt and the more you can discharge at the end of your bankruptcy case. One thing to remember is that even if you pay priority tax debt in your Chapter 13, you may have to pay some accrued interest (currently four percent) after your plan is over.

• Tax liens must be paid off, but can be modified. If you have a tax lien filed against you, this can present some new problems. Tax debts with liens on them are classified as "secured debts" in bankruptcy. This means that, like priority debts, they need to be paid in full over the life of your plan. What makes secured debts tricky is that the IRS can classify a tax debt as secured even when that debt would otherwise be dischargeable in bankruptcy. This means that by getting a lien, the IRS is preventing you from discharging certain debts in a Chapter 13 case. The good news about tax liens is that they can be "crammed down" in bankruptcy. To determine the secured claim created by a tax lien, you count up all the assets you have. Your secured claim is the lesser of the dollar amount of the lien, or the value of all your property put together. Contact a bankruptcy attorney if you have tax liens, because there are sometimes other creative things we can do to save you money.

• Some tax debts are neither priority nor secured, and these can be discharged in Chapter 13. Some older tax debts can be discharged in Chapter 13. This means that sometimes, when you come to see an attorney about your tax debts, we may advise that you wait to file, in order to age out certain debts and make them dischargeable. If they're dischargeable, this means they get thrown into the pot with all your credit cards, medical debts and personal loans, and they're paid out of your disposable income. Whatever can't be paid out of disposable income after all the other higher-priority debts are paid, are wiped out at the end of a successful Chapter 13.