Expert: Timmy Chou - 7/24/2009

Question
is it possible to declare bankruptcy on just the interest and penalties accrued or find a way to eliminate them. i am losing approximately 500 dollars a month to wage garnishment i also ended up filing all my back taxes which amounted to about 17,000 dollars and they took all and i have not seen any reduction in my debt

Answer
Thank you for your question!

As I always note to questioners, mediators act as neutral third parties to disputes and never "get involved" in judging the merits of conflict, but merely use special techniques to help the parties decide how to negotiate their own settlement.

I am not a lawyer and cannot give you legal advice, however I can give you my opinion based on my experience.  

Bankruptcy is all-encompassing as far as I know.  It is not possible to separate out pieces of debts.  If you are seeing your wages garnished, it would be because there was a lawsuit successfully filed against you and the garnishment action is being enforced by the court.  It would be very difficult to set-aside the garnishment action at this point if you were unsuccessful during the trial.  Taxes are not dischargeable in bankruptcy as far as I know.  I have seen cases where there was some ability to reduce or eliminate penalties and interest, but this requires filing some forms and depends on the overall case presentation.  The IRS tends to be more lenient to voluntary filers or others showing good-faith efforts, as opposed to people they have had to chase around for years and take to court.  You will be best served by the services of a CPA for the tax abatement requests.  As a start you can search www.irs.gov for penalty and interest abatement.  

These are some ideas.  Feel free to follow up with additional questions.

GOOD LUCK!