Expert: Richard Stolp - 4/7/2009

Question
Last month I received chapter 7 bankruptcy. I just did my taxes and found out I owe 2,700 to the irs. I can't afford to pay it. What can I do? Can I discharge that in bankruptcy.

Answer
You'll have to ask the judge/your lawyer if you can include the taxes in your bankruptcy.  My experience is that it doesn't happen very often.  So, if it does, be sure to get copies of the court documents that detail that part of the bankruptcy.

While you are in bankruptcy you are protected from collections by the IRS.  You should call them and provide your bankruptcy details (800-829-7650).  Be sure your lawyer provides the info to the IRS by mail so you can be taken out of the collections process.  

If you wind up owing back taxes you can begin paying them off at any time. Be sure any payments have a note attached saying what years you are making payments on and your social security number.  When you are out of bankruptcy you can call the IRS and make arrangements for monthly payments on what is left.  Being out of collections while you are in bankruptcy doesn't stop the interest and penalties, so it's good to get started on payments as soon as you can afford them.