Q: I owe the IRS about $50,000. I also am in arrears for child support payments. I have about $40,000 in bills, car loan and credit card debt. I’m receiving unemployment insurance weekly. I can’t afford a bankruptcy lawyer or one to handle my IRS problems. Any suggestions? I am in dire need of help.
A: I’m going to recommend you go to two places.
Let’s deal with the $40,000 in bills first.
You need help from a credit counselor. Go to the National Foundation
for Credit Counseling Web site and make an appointment to talk to a
counselor. If you’re receiving unemployment, that obviously means you
don’t have enough income to service much, if any, of your debts. But
filing for bankruptcy won’t solve your income issue. It may give you
some relief from your consumer debts, but you can’t keep your car if you
don’t pay on the loan. Even if you feel you have to file for
bankruptcy, the law requires you to first seek counseling from a
court-approved agency anyway. It’s true you may have to save up to
afford a bankruptcy attorney, but with the complexity of your case, you
As for the tax debt, you may not need an attorney. You can and should be talking to the IRS.
Call the contact on the letter or letters you have received. Find out
what are your options. It’s possible you can get on an installment plan,
although, again, that would be tough given that you are jobless.
It might help you to know that the IRS has
created a special page on its Web site with numerous resources. The “Tax
Center to Assist Unemployed Taxpayers” page includes links to
information on tax assistance for people struggling financially,
particularly the unemployed. Even if you aren’t unemployed, the
resources are helpful if you are having trouble paying your taxes.
A lot of people in your situation, who owe a lot in back taxes, are afraid to contact the IRS. Don’t be.