Question: I have substantial IRS debt that I’m currently working with a tax attorney to establish an IPA to repay. I have a well paying job. I also have large unsecured debts. I understand that the IRS disregards unsecured debt when determining my ability to make payments. I had anticipated that the unsecured creditors would go unpaid, and would eventually charge the debt off. I have no assets that I’d need to protect through bankruptcy — no mortgage, no non-exempt saving, no car loan, etc. I really don’t want to have a bankruptcy in my history — I work in the securities industry, and it could present difficulties, beyond any impact on my credit report / score. However, I have recently discovered that unsecured creditors are much more aggressive in the face of non-payment than they used to be, and may sue, gain a judgment, and garnish my wages. I suspect that I will be forced to file for bankruptcy. I’m wondering if I should finish negotiating the IPA, or just bite the bullet and declare bankruptcy. There are significant legal fees that I might avoid if I abandon the current IPA negotiations and move directly to bankruptcy. However, if I can successfully avoid bankruptcy, that would be a very good thing. Your thoughts?
You may want to look into a Chapter 13 bankruptcy to handle payment of the tax debts over a 3-5 year period.