tax liability (i.e. taxes you owe after the bankruptcy was originally filed) normally cannot
be added to a Chapter 13
Plan. Also, tax refunds during a Chapter 13 are
normally given to the debtor, even if that debtor owes old taxes, since those old taxes are dealt with in the Plan and the Bankruptcy Code
prohibits the IRS/State from seizing refunds of people in Chapter 13.
So, it is likely that you will receive the $1,000 state refund even though you have old state tax liability in the Chapter 13 Plan.
Chapter 13 debtors in that situation normally use the state refund to pay toward the federal liability, and then contact the IRS to set up payments on the remainder of the federal liability.
However, some Plans are drafted where the debtor has to pay all or a portion of tax refund(s) to the Trustee to help fund the Plan. So, you would need to see if your Chapter 13 Plan has any provision requiring you to pay all or a portion of the refund to the Trustee, and if not, then you could pay a good chunk of the federal liability off with the state refund and then try to set up reasonable payments with the IRS on the rest.
Obviously we can't give legal advice on this website, only provide information, so for advice you should consult your attorney.
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