I have had a number of people that have gotten behind on filing their taxes or paying their taxes, and they wait, and wait, until... eventually the I.R.S. seizes their paycheck. The I.R.S. calls it a "wage levy." And when it happens, you know it. Your payroll office calls you, or you get the notice in the mail.

If you fill out the form to claim the "exempt" or safe amount, it's not very much that you get to keep! As a practical matter, the I.R.S. doesn't expect you to live on what they leave you. They file a wage levy to "get your attention" because you have not been taking care of your tax obligations.

What do you do next? Well, that depends. If you don't owe too much, and you're otherwise in pretty good financial shape, you can file any delinquent tax returns, and get on a payment plan. The IRS calls it being "in compliance." They will not make a payment plan or Installment Agreement with you, until you are in compliance, that is, you have filed all of your delinquent tax returns. Only then will they consider releasing the levy.

Another option in dealing with the IRS wage levy, is to file Chapter 13 bankruptcy. Immediately upon filing, an "automatic stay" or federal court order prevents the IRS from levying your pay. They have to fax a Release of Levy to your payroll office right away. Of course you will still need to prepare and file all delinquent tax returns. But the delinquent taxes can be paid out over a long period of time, up to 60 months.

And in many cases, interest stops. Depending upon how old your taxes are, and whether or not you had filed your tax returns, some or all of the taxes can even be discharged or cancelled. For that matter, in the right case, you may want to file a Chapter 7 bankruptcy and just cancel or discharge the taxes, but the situation must be right. If you are considering filing a bankruptcy to deal with your IRS or other tax debts, this is not a "do it yourself" project.

You should hire someone like myself, that does this for a living and understands all the rules. If you live in the Houston, Texas metro area, call my office at 713-772-8037 and make an appointment. If you are not in Houston or surrounding counties, look for a referral through the National Association of Consumer Bankruptcy Attorneys (NACBA) at www.nacba.org.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization
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