Situation keeps going from bad to worse

[pdxgrrrl]

I've posted in this forum a few times before about my financial difficulties and my sort-of decision to pursue bankruptcy. I have about $16k worth of CC and other unsecured debt (plus $5k on a car loan and $20k in student loans), and was recently sued for one of these debts. When I was threatened with the lawsuit, I started coming to this forum and consulting with BK lawyers. I saw a total of 3 lawyers and two of them recommended a Chapter 13 because I have tax debt. Unfortunately, I saw the last lawyer the day after I lost my full-time job, and he told me I couldn't do a 13 while unemployed, for obvious reasons. He recommended that I just focus on my job search and the rest would fall into place later.

Well, my situation seems to be getting worse. Part of my tax problem, as I've mentioned before, is that I hadn't filed in a couple of years because dealing with the tax issue just seemed like too much of a headache and I didn't know how to handle it. But last week, I finally received a notice from the IRS about a missing tax return, so obviously, I need to start tackling this issue. I'm losing sleep over this because dealing with the IRS scares the crap out of me and I'm afraid they'll treat me like Leona Helmsley or Redd Foxx and throw me in the pokey for not filing and not being able to pay them anything. I am seriously freaked out about this, plus the lawsuit which is making its way through the courts. I filed an answer to the suit (filing fee: $128 -- OUCH) to prevent a default judgment. I know I'll probably lose the suit, but I had to protect my severance pay.

Speaking of which, I still haven't received my one month's worth of severance pay from my employer, although I should hopefully receive some of it this week. I'm struggling to keep my bills paid (rent, car payment, etc.) and am running out of cash fast. I did manage to secure a part-time job that pays me a little over $200 per week, which is obviously not enough to live on. Right now, I have no leads on any full-time positions, although I am trying to get one.

It's getting to the point where I'm feeling dangerously overwhelmed (jumping in front of a speeding bus has occurred to me) and don't even know how to begin tackling any of this. I'm scared and feel paralyzed much of the time. I've thought of using some of my severance pay to retain a BK lawyer, but I need that money to pay my rent and car payment since the money I make at the part-time job doesn't cover it all my expenses. Plus, I need to find a new place to live next month as my lease is running out and I've been having trouble affording the $900 (rent + utilities), even when I was working full-time. However, I have no money for deposits at another place. I really don't know what I'm going to do.

If someone could give me some direction, that would be great. Do I start with the IRS? Finding a job? Finding a reason to get out of bed every day? (I'm running out of reasons on that one.) I was stressed out before when I learned I might be getting sued, but the situation is getting more and more unbearable. Help!

[StartingOver08]

Go for the job first. But you have to respond to the IRS letter. Because you do not have a job, go to the IRS and tell them you need some time to get a job. They can give you a couple of months, up to a max of 4 mths while you find a job. Then work out a payment plan with them after you get the job.

You then can file Ch 13 and put them in the plan for the taxes. This will help you with everything but the student loans.

[TonyNV]

As far as dealing with the IRS goes, they generally only resort to criminal prosecutions - such as Leona Helmsley, Wesley Snipes, etc. - when there is a lengthy pattern of willful refusal to pay taxes, which typically includes purposeful attempts to hide assets and/or provide deceptive or incomplete information in filings. The people that get targeted for this treatment can obviously afford to pay their tax debt, but for whatever reason, choose to evade their responsibility. The IRS is cognizant that such cases serve as a high-profile example for the rest of us.

As long as you keep communicating with the IRS in good faith and providing then accurate information about your status - e.g. you're broke, unemployed, scared, etc. - you really don't need to worry about a criminal case or jail time.

I'm not trivializing your situation - you have a full serving of misery to work through - and I empathize with you. But at least the prospect of doing "hard time" need not be a significant concern to you.

[JRScott]

First reply to the IRS letter, tell them you lost your full time job on XXXX date, that you have secured a part time job on XXXX date, however the income from part time job is not enough to meet your expenses. Include a list of what you make a month and then approx for your montly expenses, ask if they can defer payment until you can get on your feet. Should buy you some time.

Your probably right about the judgment, ultimately you'll lose, but you gained a little time. In essence with no job they can't garnish your wages. What will happen is they'll get the judgment (don't worry about this) however they'll then sit on it until they feel they can get something out of you. After the initial judgment there will be a disposition on your finances. Here you will reveal your part time job income and related living expenses. In essence pushing you into bankruptcy would I suspect yield them nothing so they'll sit on it a few months then probably disposition you again. Don't worry about it.

With a part time job now there is no need to do a Ch 13, while I agree that you should look for full time employment until such time as the economy improves it might not be possible. You might need to look into a chapter 7 though keep in mind the taxes and student loans cannot be discharged. You would however if you go this path include the case number for the judgment above and then ultimately it will be discharged (so long as it is not unpaid alimony or child support).

At the same time look where you can trim expenses best you can so you can make it on what you are making.