Will Filing Bankruptcy remove Tax Debt and Wage Garnishments in Florida?

Under the federal bankruptcy statutes, by operation of law the filing of a Chapter 7 or Chapter 13 bankruptcy petition automatically stays collection actions – with some exceptions, including but not limited to recent luxury purchases, student loans, child and spousal support and debts incurred through fraud.  As long as the stay is in effect, creditors generally may not continue or initiate wage garnishments, lawsuits or demand calls/letters.  You will need to make sure that you provide your bankruptcy attorney information about all of your debts and creditors so that s/he can both negotiate debt repayments and have the clerk of the bankruptcy court notify all creditors that you have filed for bankruptcy.

However, your past tax liability is a different matter.  It would be best for you to select a bankruptcy attorney who is also a tax specialist.  Tax debts that arise from unfiled tax returns are not dischargeable.  Even if they may ultimately dischargeable, you must first file all unfiled returns.  Under the new bankruptcy laws, tax debts are treated the same way in both Chapter 7 and Chapter 13 petitions. Not all tax debts are capable of being discharged in bankruptcy. The bankruptcy petitioner must have tax debts that meet all five criteria for discharge: the due date for filing a tax return is at least three years ago; the tax return was filed at least two years ago; the tax assessment is at least 240 days old; the tax return was not fraudulent; and the taxpayer is not guilty of tax evasion.