Q: My fiancé hired a bankruptcy attorney and filled chapter 13 2 years ago in Mar h 2020 he had to convert to a chapter 7
Due to losing his job and unable to find work Due to COVID. The chapter 13 included $15,000 in irs debt and we were told everything in the chapter 13 would be included in the chapter 7, we even have emails from the attorneys legal assistant indicating they were included and the judge signed off granting the chapter 7 in May 2020 however he received a notice from the irs indicating they were going to take action to garnish his wages over the total and when he contacted irs they indicated they received notice that he was no longer in chapter 13 and did not receive notice of chapter 7 and when he contacted the attorney his law clerk indicated the “kind” of chapter 7 they filled did not include the irs debt “sorry” and now he can not get a return call from the attorney. Is this legal, does it appear the attorney did not provide the services he was paid for, what should he do?
A:
There's only one "kind" of Ch. 7 bankruptcy cases, and the Bankruptcy Code is a federal law, so applies equally in every state.
When a bankruptcy case is filed and the sworn Schedules are completed and filed, EVERY claim/debt must be listed, with creditor's name and mailing address. The bankruptcy attorney must also prepare and file a mailing list of all creditors. The Bankruptcy Clerk then mails out the Notice of bankruptcy filing to all creditors. (You should check to make sure that the correct address for the IRS was used; if the IRS filed a Proof of Claim in the bankruptcy court, use the address shown on the Proof of Claim).
Income taxes, for which a tax return has been filed more than two years and 4 months (if memory serves) prior to the bankruptcy filing are dischargeable in both a Ch. 7 case and a Ch. 13, so long as the IRS is listed on the Schedules as a creditor.
The IRS has different divisions. The Collections division seems to be staffed with aggressive, often rude, collectors. When a bankruptcy is filed by a taxpayer, the file is usually transferred to the Special Procedures division of the IRS. The Special Procedures IRS people understand about the impact of a bankruptcy filing. In my experience, the IRS collectors do not.
Timothy Denison agrees with this answer
A: If you were in a chapter 13 it is likely you were paying non-dischargeable taxes. It is one reason people file 13 rather than 7. If you converted, the non-dischargeable taxes would remain non-dischargeable and you would still owe them. This is definitely a situation where you should contact your prior attorney and ask for assistance (although from the answer the attorney gave you it sounds like they don’t know what they are doing and you may wish to contact the bar). You should also look at the final accounting provided by the chapter 13 trustee. It will show what was paid through your chapter 13. If you weren’t paying secured debt, the taxes would usually have been paid before other unsecured debt (there are some uncommon exceptions to this). Your bankruptcy attorney should have explained all of this to you at the time.
Timothy Denison agrees with this answer
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