If you're contemplating filing for bankruptcy, one thing that you need to keep in mind is that you're not supposed to accrue any new debt while under the bankruptcy court's supervision.

Taxes can be considered new debt if the bankruptcy filer is unable to pay them. New tax debt can force the court to dismiss or convert the bankruptcy case. If a debtor acquires new debt while they're already in bankruptcy, that new debt is not protected from collection activities by the court because the debt wasn't disclosed in the initial bankruptcy filing.

Failing to Pay Taxes in a Chapter 11 or 13

If a debtor is in a Chapter 11 or Chapter 13, and they fail to file their taxes or keep current on their tax payments, the bankruptcy can be converted to a Chapter 7, unless the case is dismissed by the court.

Chapter 7 bankruptcies are notably more restrictive than 11s and 13s because they require that non-exempt assets are liquidated to pay off creditors.

With a Chapter 7 case, the failure to pay any post-filing taxes won't affect the bankruptcy or the tax debt. Further, post-petition tax debt cannot be discharged in the bankruptcy case, and under the Bankruptcy Code, a debtor can't file a Chapter 7 bankruptcy more than once every eight years.

While past debt may have been discharged in the bankruptcy, be aware that any new debt that wasn't included in the initial filing is not protected.

If you are considering filing for bankruptcy, always see an experienced bankruptcy lawyer. Inform your lawyer as to whether you have filed a tax return for the last three years. If you haven't filed your taxes for that year, it's wise to file before filing bankruptcy, unless you're expecting a substantial refund.

If you expect a refund, talk to a bankruptcy attorney before paying any bills with that money because it can slow down the processing of your bankruptcy case.