Taxes and Bankruptcy
Learn how bankruptcy can help relieve your tax debt and how your tax refund is treated in bankruptcy.
Learn what to look out for if you have tax debts and how to eliminate old tax debts by filing bankruptcy. Plus, learn how to protect your tax refund.
This page is your home base for learning about all things taxes.
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Filing Bankruptcy on Tax Debt? What You Need to Know
Written by Ben Jackson. Legally reviewed by Jonathan Petts
Updated August 12, 2025
Bankruptcy can eliminate some IRS tax debt, but it depends on the type of tax debt and how long you’ve owed it. Chapter 7 bankruptcy can wipe out older income tax debt if it meets strict IRS rules. If your tax debt doesn’t qualify for discharge, Chapter 13 bankruptcy may still help by stopping IRS collection efforts and setting up a structured repayment plan that can help you get back on track. Even if bankruptcy can’t erase your tax debt, it can give you breathing room by pausing IRS actions like wage garnishment and bank levies. If you’re struggling with tax debt, understanding your options can help you find the best path forward.
Read More →What Happens to Your Tax Refund in Bankruptcy?
Written by Attorney Paige Hooper. Legally reviewed by Jonathan Petts
Updated July 30, 2025
In Chapter 7 bankruptcy, tax refunds for income earned before your bankruptcy filing date usually become part of your bankruptcy estate. If the funds aren’t protected by exemptions and you hold on to them, the trustee can use them to pay creditors. However, if you receive your refund and spend it on necessary expenses before filing, it won’t be included in your bankruptcy estate. In Chapter 13 bankruptcy, tax refunds distributed during your repayment plan are typically part of the estate and may go toward paying creditors. Protecting your refund depends on timing, exemptions, and how the funds are used.
Read More →How To Deal With an IRS Wage Garnishment and Protect Your Paycheck
Written by Mae Koppes. Legally reviewed by Jonathan Petts
Updated March 25, 2025
If you have unpaid federal tax debt, the IRS will send multiple warning letters. If you don’t respond or arrange a payment plan, the IRS can take action to collect, including a tax levy that may garnish your wages. This means your employer will withhold a portion of your wages and send it to the IRS. In this article, we’ll explain how IRS wage garnishment works, how much they can take from your paycheck, and what options taxpayers have to stop or prevent it.
Read More →Can the IRS Take Your Home if You Owe Back Taxes?
Written by Mae Koppes. Legally reviewed by Attorney Andrea Wimmer
Updated August 7, 2025
The IRS can legally take your home if you owe back taxes. But this is rare and typically a last resort. Before taking your home, the IRS will try to collect through tax liens, wage garnishments, bank levies, and tax offsets. If the IRS does move to seize your home, they must follow strict legal procedures, including court approval and giving you notice with a chance to appeal. You can stop home seizure by requesting a hearing, setting up a payment plan, filing Form 911 with the Taxpayer Advocate Service, or considering bankruptcy.
Read More →How (and Why) To File Back Taxes if You Haven’t Filed in Years
Written by Lawyer John Coble. Legally reviewed by Jonathan Petts
Updated June 30, 2025
If you haven't filed a tax return in years, you may be wondering how to get back on track. The best way to make up for missed filings is to go back and file your old/missed returns with the Internal Revenue Service (IRS). Late or missing tax return filings can lead to penalties and possible legal trouble. If you have missed any tax filings in previous years, gather your old tax forms and file as soon as possible. You can file old tax returns online, in person at a local IRS office, or by mail.
Read More →4 Ways To Get "Currently Not Collectible" Status From The IRS
Written by Lawyer John Coble. Legally reviewed by Jonathan Petts
Updated January 30, 2025
If you're granted IRS currently not collectible status, the IRS will no longer try to collect taxes from you via bank account levies, wage garnishments, or seizures of your other property. If you can't afford to pay anything toward your IRS tax debt, you'll need to request CNC status. Otherwise, you could see your paycheck garnished or have funds in your bank account taken from you due to a bank account levy.
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