Imagine being invited to a loved one’s wedding abroad—only to find out you can’t leave the country, not because of legal trouble, but because of a tax debt. That’s exactly what happened to one bankruptcy client recently, and his experience sheds light on a lesser-known intersection between IRS enforcement and consumer bankruptcy law.
In a recent case, a client in the middle of an active bankruptcy needed to apply for a U.S. passport so he could attend a family wedding overseas. He wasn’t expecting any issues, especially since filing for bankruptcy typically halts collection efforts. But his application was denied—not because of the bankruptcy itself, but because he owed the IRS more than $50,000 in unpaid taxes.
“A new twist in consumer bankruptcy law I hadn’t encountered—until now.
A client in an active bankruptcy case wanted to attend a wedding abroad. When he applied for a U.S. Passport, his application was denied—not because of the bankruptcy filing itself, but due to a substantial tax debt owed to the IRS.
We reached out to the U.S. Department of State. (Sadly, Marco Rubio wasn’t available, but his staff was helpful and responsive.)
Here’s the key legal point: The refusal to issue a passport, based on IRS debt, effectively functioned as a debt collection action. Under 11 U.S.C. §362(a), the automatic stay prohibits such actions against someone in bankruptcy.
After pressing the issue, the Department of State agreed—and as of yesterday, my client has his passport.
Whether he should travel internationally while in bankruptcy? That’s a post for another day.”
This scenario highlights a critical point for those in or considering bankruptcy: the IRS can notify the U.S. State Department to restrict your passport if you owe more than $59,000 in back taxes (adjusted annually). But when someone files for bankruptcy, they are protected under the automatic stay provision of 11 U.S.C. §362(a), which prohibits creditors—including the federal government—from pursuing collection actions. In this case, refusing to issue a passport was effectively a form of collection.
Thanks to persistence and the protection of bankruptcy law, the client ultimately received his passport and is now able to travel. Whether international travel during bankruptcy is wise is another matter, but this case is a powerful reminder that bankruptcy provides strong legal safeguards—even in ways you might not expect.
If you’re struggling with IRS debt or denied a passport due to unpaid taxes, and you’re considering bankruptcy, consult a qualified bankruptcy attorney to explore your options. Your rights might be stronger than you realize.