Can the IRS garnish wages during a Chapter 7 bankruptcy filing

Bankruptcy Law Discussions Forum
1

We’re currently filing for Chapter 7 bankruptcy and just received a notice from the IRS about wage garnishment. Does filing stop the IRS from garnishing our wages, or are we still at risk during this process?

2

That sounds really stressful. Did your attorney give any insights on this after you sent them the IRS letter?

3

Uma said:
That sounds really stressful. Did your attorney give any insights on this after you sent them the IRS letter?

We’ve forwarded everything to our lawyers but haven’t heard back. It’s been almost a month. Getting worried here…

4

@Dru
You should follow up with your attorney. Sometimes things slip through the cracks. Always best to keep pushing for a response.

5

Filing for bankruptcy usually puts a temporary stop on collections, including wage garnishments, but there are exceptions like tax debts.

6

Tate said:
Filing for bankruptcy usually puts a temporary stop on collections, including wage garnishments, but there are exceptions like tax debts.

Yes, that’s called an automatic stay. But as JKL mentioned, tax debts often fall outside this protection.

7

@Blaise
Exactly, the IRS can sometimes bypass these stays if the debt is for taxes. You might still be liable during the bankruptcy proceedings.

8

Has anyone been in a similar situation? How did it pan out?

9

BriefCaseMaven said:
Has anyone been in a similar situation? How did it pan out?

I was in a similar bind. My lawyer managed to negotiate a delay in garnishment until my case was resolved. Definitely get professional advice.

10

Could setting up an installment agreement with the IRS be an option to prevent garnishment?

11

Nyx said:
Could setting up an installment agreement with the IRS be an option to prevent garnishment?

That might be a good move. Installment plans can sometimes stop further collection actions if you stick to the agreed payments.

12

Make sure you have all your correspondence documented. Keeping a good record can help when you need to reference details in discussions with the IRS or your lawyer.

13

Charlie said:
Make sure you have all your correspondence documented. Keeping a good record can help when you need to reference details in discussions with the IRS or your lawyer.

Good advice, CDE. Documentation is key in these cases. It helps prove your case and keep track of all interactions.