Ask Me Help Desk - Cannot declare Bankruptcy

My husband and I have about $170k in debts - we cannot afford all the payments (credit cards, auto loans, student loans, overdue taxes). We contacted a bankruptcy attorney who researched our financials and told us that based on the new regulations we are not candidates for Chapter 7 bankruptcy. My main reason for bankrutpcy is a tax debt of about $95k that my husband incurred b/4 we got married. He was audited in 2002 and the IRS went back 3 yrs, we had moved several times and lost all receipts for 1999, 2000 and 2001. I was told the tax debt could be erased in bankruptcy but he needed to meet several conditions (which he does) . But now it seems we make too much together to warrant bankruptcy (we make a combined income of $98k BUT we live in NYC so we only take home $65k). We will NEVER be able to pay back $95k at this rate. After ALL household expenses we only have about $250 left a month. What are our options?? I'm afraid the IRS will come and just take him away one day! I've been making payments of about $100 a month but that does not reduce the balance at all. HELP!

First NO, IRS taxes are seldom allowed to be discharged in bankruptcy, it will be listed but they will protest and it is normally not allowed.

There is chapter 13 where a payment plan is set up. But I would hire an CPA or attorney that does nothing but work with the IRS to set up a settlement, often on 95K debt they can settle for 20 K or so.
The main issues is to be sure there is no fraud, or no non failure to file, those can be criminal,

IRS can be very tuff and will FEE you with interest charges to intentionally make it very very difficult for you to ever pay them off. I would check with another attorney and seek cht 13 as well, worst case scenario is that you get a payment plan but within 5 years you'll be done. Do nothing and the IRS will ad so many fees that your end up owing 10X the initial money

Quote:

Originally Posted by JulesDP

My husband and I have about $170k in debts - we cannot afford all the payments (credit cards, auto loans, student loans, overdue taxes). We contacted a bankruptcy attorney who researched our financials and told us that based on the new regulations we are not candidates for Chapter 7 bankruptcy. My main reason for bankrutpcy is a tax debt of about $95k that my husband incurred b/4 we got married. He was audited in 2002 and the IRS went back 3 yrs, we had moved several times and lost all receipts for 1999, 2000 and 2001. I was told the tax debt could be erased in bankruptcy but he needed to meet several conditions (which he does) . But now it seems we make too much together to warrant bankruptcy (we make a combined income of $98k BUT we live in NYC so we only take home $65k). We will NEVER be able to pay back $95k at this rate. After ALL household expenses we only have about $250 left a month. What are our options??? I'm afraid the IRS will come and just take him away one day! I've been making payments of about $100 a month but that does not reduce the balance at all. HELP!!

You need to drop your income - they leave no option, someone needs to quit their job.

Welcome to social engineering. It's a stupid law. Similar to situations where family's who want to send family members to school don't qualify for student grants and assistance until someone quits working, often with combined income of 50K, which isn't crap. Yet if you an immigrant or on a green card you can go for free. Go figure.