Credit Cards, Student Loans and Other Debts in an IRS Hardship Analysis

People in financial trouble usually owe more than one creditor. When the IRS analyzes your budget, it has to decide whose bills count. The short answer is that the IRS counts its own claim, your necessary living expenses, and very little else. Credit cards and personal loans mostly do not make the cut.

That can feel unfair. It is also predictable, and knowing the rules lets you plan around them.

Credit cards are a method of payment

IRM 5.15.1.11 sets the framing: "Credit cards are generally considered a method of payment, rather than a specific expense." If you buy groceries and gas with a card, those purchases are already covered by the National Standards and the transportation standard. Allowing the card payment on top would count the same groceries twice.

The IRM continues: "payments for the portion of the credit card debt reflecting necessary living expenses are provided for as allowable expenses under the national and local standards."

The miscellaneous allowance is your credit card line

This is the part employees are supposed to explain and often do not. IRM 5.15.1.11 says taxpayers should be informed "that the IRS National Standards for Food, Clothing and Other Items provides an amount for miscellaneous expenses that can be applied to credit card debt." The National Standards description in IRM 5.15.1.9 lists "credit card payments" as an example of a miscellaneous expense.

So when the IRS disallows your $150 minimum payment as a separate expense, it is not saying you cannot pay the card. It is saying the money for it is already inside the National Standard you were given. Under the June 29, 2026 standards, a single person receives $867 for food, clothing and other items whether or not they spend it all. If your actual spending in those categories is lower, the difference is how you pay the card.

When credit card payments can be allowed

The IRM gives two openings:

• "Generally, minimum payments on credit cards are allowed under the six-year rule." The six-year rule is an installment agreement concept: when the tax can be paid within six years and within the collection statute, reasonable expenses may be allowed. In a true hardship case, where you cannot pay at all, it rarely applies.
• "If a taxpayer is paying for necessary expenses that exceed the standards, and those expenses are justified, a deviation under the expense item on Form 433-A... should be allowed." If the card is how you are paying a documented medical cost above the standard, argue the medical deviation, not the card.

Other unsecured debts

Personal loans, medical payment plans, and loans from family fall under "Other Unsecured Debts" in IRM 5.15.1.11. The rule: "If the taxpayer substantiates and justifies the expense, the minimum payment may be allowed. The necessary expense test of health and welfare and/or production of income must be met."

There is a hard stop: "Except for payments required for the production of income, payments on unsecured debts will not be allowed if the tax liability, including projected accruals, can be paid in full within 90 days."

The IRM gives examples of unsecured debts that may be necessary: "payments required for the production of income such as payments to suppliers and payments on lines of credit needed for business, and payment of debts incurred in order to pay a federal tax liability."

The Form 433-A (Rev. 6-2026) instructions list "payments on unsecured debts" among expenses not generally allowed unless "proven that they are necessary for the health and welfare of the individual or family or the production of income."

Borrowing to pay the IRS

One unsecured debt gets favored treatment. IRM 5.15.1.11 allows "Repayment of loans made for payment of Federal Taxes" if "the IRS has received the proceeds of the loan and the taxpayer can document the loan." If a relative lends you money and you send it to the IRS, document the loan with a note and proof of the transfer. The repayment may be allowed.

Student loans

Student loans have their own row in the IRM 5.15.1.11 table. They are allowed "if it is guaranteed by the federal government and only for the taxpayer's post-high school education," and "Taxpayers must substantiate that the payments are being made." Private student loans, and loans for a child's education, do not meet that description.

The hardship angle is important. The IRM says taxpayers who cannot make student loan payments "because they are suffering an economic hardship or have medical problems, should be advised to request a deferment or forbearance of the student loan payments," and the installment agreement amount is then set "without allowing for a student loan payment." If you later arrange to pay the student loan, you can ask for a revision.

For taxpayers who have not yet set up a student loan repayment plan, the IRM allows 10 days to set one up and provide verification so the payment can be allowed, with more time for extenuating circumstances.

On Form 433-F, student loans appear in Section H, box 5, as "Student Loans (minimum payment)." The instructions say minimum payments on federally guaranteed loans for the taxpayer's post-secondary education "may be allowed."

Available credit as an asset

Credit cuts the other way, too. Form 433-A asks on lines 16a through 16e for every line of credit and bank-issued credit card, with the credit limit, amount owed, and available credit. IRM 5.15.1.3 tells employees to consider "lines of credit from which money may be borrowed to make payment" and the "taxpayer's ability to get an unsecured loan."

In a genuine hardship case, borrowing to pay the IRS usually makes no sense, because you cannot service the new debt. Say so. If an employee suggests you charge the tax to a card, point out that the payment on that card would itself not be an allowable expense, which would leave you less able to cover basic living costs.

Secured debts are different

A debt secured by collateral, such as a car loan or a mortgage, is treated as an ownership or housing cost or as a secured debt on Form 433-A line 47. IRM 5.15.1.11 allows secured or legally perfected debts "if it meets the necessary expense test," with proof the payments are being made. Converting an unsecured card balance into a secured loan does not change whether it is necessary.

Buy now, pay later and payday loans

Newer forms of consumer credit get the same treatment. A buy now, pay later plan for a necessary purchase, such as a replacement refrigerator, is a method of paying for something. A payday loan is an unsecured debt. Neither is a separate allowable expense unless you show it meets the necessary expense test. If you financed something truly necessary, argue the necessity of the item, with proof, rather than the payment plan.

What this means for your strategy

If you are close to the hardship line and carrying credit card debt, the IRS analysis will not give you room to pay the cards. That is a signal to look at the whole picture. Some people in this situation are better served by a bankruptcy analysis, a debt negotiation with the card companies, or both, alongside the IRS case. CNC status can provide stability while the rest of the debts are worked out.

What you should not do is keep paying the cards with money the IRS analysis says is available and then tell the IRS you cannot pay anything. The numbers will show it.

The IRS does not forbid you to pay your other creditors. It just does not count those payments when it decides what you owe it. Plan accordingly.