What Happens to My IRS Tax Debt if I File Bankruptcy?

When you file for bankruptcy, the court will assign a trustee to your case who will oversee the process. The trustee's job is to collect and sell your assets in order to pay off your creditors. Creditors are given priority in terms of getting paid, and the IRS is usually at the top of the list.

That means that if you have any outstanding tax debt, the trustee will likely try to collect on that debt first. However, there are some limitations on what the trustee can do. For example, they can't seize your primary residence or your retirement savings.

Once all of your assets have been liquidated and your creditors have been paid off, you will be discharged from bankruptcy and free from most of your debts. However, it's important to note that tax debt is not erased by bankruptcy. You will still be responsible for paying any outstanding tax bills.

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