Since the U.S. Bankruptcy Code was last updated in 2005, and most of the changed laws have been defined. In 2004, banks requested that Congress pass a new bankruptcy law making it more difficult for lower-income individuals to qualify for Chapter 7 bankruptcy. Congress at the time was dominated by Republicans and George W. Bush was the President.

Because Republicans have historically received political funding from financial institutions, they asked the banks to draft any desired changes into a bill. Without even reviewing the proposed bill, Congress passed the new Bankruptcy bill into law and President Bush signed the bill. It took effect in January 2005. After many years of litigation and appeals, we now have a good understanding of what most of the Bankruptcy Code means and how it operates.

The latest rulings concern the IRS in Chapter 13 cases. The rulings are not favorable for debtors with IRS debt that must be repaid. Recently, Federal Courts ruled that after a bankruptcy repayment plan finishes and the debtor receives a discharge, the IRS can still charge the debtor post-discharge interest for the time the debtor was in bankruptcy. Also, the debtor is not required to be notified that they remain liable for accrued interest while in bankruptcy.

Our firm will file a motion when the bankruptcy is finished, compelling the IRS to notify the debtor of any remaining balance so the debtor knows the interest accrued on that debt. The debtor will know if they can pay the debt immediately, if the IRS will issue any anticipated refund, or if they will receive a refund at all. It's very important that everyone knows exactly how much they owe to every creditor.

Surprise debts like this new IRS issue recently resolved by the Federal Courts are very unfair. You can only know if you still owe the IRS money by asking. That's what we will do for every client when the IRS is a creditor.