My history:
In 2006 I was doing pretty well, my online ventures were doing around $30k profit a month however I am a programmer and did not run the business side of it well at all. (taxes, forming a legit business, etc). My credit score was in the high 700s at that time.

Jump forward to today: I have been pretty much un-employed and not making any decent money in the past 5 years. I have lost every asset I had (house, vehicles, toys, everything). I am now 30 years old, live at home with my parents and owe a lot in debt as well as the IRS.

My credit score is now in the low 600s, might be 5xx even. I owe many credit cards and other old loans, etc. I lost my house to foreclosure owing around 200k on it. My main vehicle was repossessed.

Now I also have the IRS mailing me stuff weekly saying I owe them like $70,000 for 1 year.

  • I live at home with parent
  • No income
  • No vehicle
  • Owe numerous Credit cards and other debts
  • Owe court fines ($3,000) for various things like driving without a licence

Based on all this, I am basically a bum now. However i'm not as dumb as it sounds, at least not in some areas. I am a software developer and I am now trying to start a small business so that I can at least start bringing in an income to attempt to get out of my hole, or at least put food on the table.

Due to everything listed above, getting a credit card is out of the question. I am also in fear that if I have a bank account which will be required to receive any payments, that the IRS will freeze it.

Does anyone have any advice for my situation? How can I proceed? What would you do in such a situation?

2 Answers 2


You proceed with a proper legal advice. You should not ignore IRS letters. You should have taken your chances in trying to reach a compromise with them, but that ship has likely sailed already. You might want to consider bankruptcy. Ask your parents for a couple of hundreds of dollars to pay for a legal consultation with a lawyer and a CPA and proceed from there.

  • 4
    I concur that bankruptcy is the option you should be looking at. Whether or not it makes sense will depend on the specifics. Had you declared bankruptcy sooner, you may have been able to keep some of your repossessed assets. Commented May 21, 2013 at 19:30
  • Trying to make a settlement with the IRS while you have no income or assets is probably futile; but as soon as you do get a source of steady income again it should become a high priority because the penalties won't stop stacking and you've got something for them to seize/garnish again. Commented May 21, 2013 at 20:14
  • 4
    @Dan actually, while you have no income or assets you can reduce your debt based on insolvency. They cannot collect what you don't have. But you have to talk to them and negotiate. Ignoring them will harm you as they will be less willing to compromise later (especially once you're back on track with income and assets).
    – littleadv
    Commented May 21, 2013 at 20:15
  • +1 to @littleadv on that. Everyone you owe would rather get something than nothing and should be willing to negotiate with you to a great extent. Get the IRS off your back pronto.
    – JAGAnalyst
    Commented May 23, 2013 at 7:30
  • This also reads like a case could be made for the bank having seized the IRS's money.
    – Joshua
    Commented Jan 20, 2017 at 16:20

I am in a very similar situation. My wife and I made decent money in the early to mid-2000's but handled the tax end of the business VERY poorly. However for the last 5 years we've been close to poverty and owing the IRS close to 60K because of the accumulated penalty and interest. On top of that, they started garnishing my wife's paycheck putting ourselves further in the whole. Finally got the courage to call them and explain the situation and was classified as a 'CNC' or Can Not Collect. Basically, there is nothing they can take from us and removed the garnish from my wife's check almost immediately. Now they will review our returns yearly and if we do start making real money again, we'll have to set up a payment agreement at that time. Also there is a 10 year limitation on them being able to collect from you so every year that passes removes another year of the past due taxes. Call them, explain your situation and see what happens. I was floored at how understanding they were and completed the paperwork over the phone that determined us to be CNC.

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