But at least Uncle Sam will ease their tax worries awhile by greatly expanding the size of the Katrina disaster area in which taxpayers qualify for tax relief.

The Internal Revenue Service will give affected taxpayers until Jan. 3, 2006, to file tax returns and make payments due on or after Aug. 29, 2995, in 64 Louisiana parishes, 52 Mississippi counties, six Alabama counties and three Florida counties.

The IRS will abate any interest and late-payment and deposit penalties and has suspended enforcement activities in affected areas including liens, forfeitures and seizures. Anyone in the affected areas who receives an IRS notice should call the IRS toll-free disaster hotline (1-866-562-5227).

Uncle may not be so flexible to Katrina victims if they file for bankruptcy in coming months. So consumer advocates and bankruptcy attorneys want Congress to excuse storm victims from demands of a tough new bankruptcy law that kicks in Oct. 17.

The new law makes it difficult to shed your debts and get a fresh start by filing Chapter 7 bankruptcy. People who make more than their state median income in the previous six months must file Chapter 13 and repay some or all of their debts.

Debtors also must prove their inability to pay with tax returns, paycheck stubs and the like upfront _ documents that may be destroyed or irrelevant for many Katrina victims. Otherwise, the "means test" will put them on a court-supervised budget that banks on $1.60-a-gallon gasoline and no extended hotel stays.

Creditor groups say low-income hurricane victims will still be able to shed their debts under Chapter 7 and others can seek exemption for "special circumstances."

But Consumer Federation of America legislative director Travis Plunkett says: "Credit-card companies say: 'Don't worry, be happy' because bankruptcy judges can make 'special circumstance' exceptions, but that's done case-by-case, which can add to bankruptcy attorney fees and other costs."

"These are 'gotcha' provisions that are difficult for the most organized person to meet, let alone the victim of a natural disaster," adds Gulfport, Miss., bankruptcy lawyer Brad Botes, whose firm has offices in Alabama, Florida, Mississippi and Tennessee.

Michigan Rep. John Conyers, ranking Democrat on the House Judiciary Committee, and other Democratic lawmakers who fought the bankruptcy-law change want Congress to let current law apply to Katrina victims, but so far there's no majority Republican support.

Current law lets people choose to shed their debts by giving up most assets under Chapter 7 or keeping what they have while they repay creditors in full under Chapter 13.

It's painstaking for hurricane victims to piece together property losses for insurance and tax purposes when homes, offices, courthouses and the records they hold have been destroyed.

Families and business owners who suffer losses not covered by insurance from Katrina and other presidentially declared disasters can deduct uninsured losses on their tax return the year the loss occurred or the previous year, says tax analyst Steve Brylski of tax publisher RIA.

"This may be of little comfort now," he says, but the tax code can help Katrina victims salvage their finances. Brylski advises:

-- Save every receipt, and keep a record of all work done on your property.

-- Assemble documentation, including newspapers and photos you take of the damage. Check with friends and family for holiday snapshots of your house in happier times.

-- Disaster relief payments from government, charity and employers aren't taxable income, but reasonable and necessary expenses incurred as a result of a declared disaster.

-- You can claim extra tax breaks if your principal residence was "involuntarily converted" by a declared disaster.

The IRS and volunteer CPAs from the American Institute of Certified Public Accountants will offer free tax advice at Katrina disaster-recovery centers set up by the Federal Emergency Management Agency. IRS Commissioner Mark Everson says, "CPA volunteers should help reduce some of the tax issues victims will face."

Federal regulators have asked the financial industry to cut Katrina victims some slack, prompting some banks, credit-card companies and the Big Three automakers' finance divisions to provide various credit relief to Katrina victims.

But don't take it for granted, advises the Consumer Federation's Plunkett.

"Lenders provide relief case-by-case when they hear from customers; don't assume your mortgage, car loan or credit-card penalties and interest aren't adding up just because your bills get returned to your creditors as undeliverable mail," he says.

Notify all creditors as soon as possible that Katrina displaced you and provide an address where you can be reached. Ask them to spell out what forbearance policies apply to delayed foreclosures and delinquency notices to credit bureaus.

Don't get left high and dry trying to donate to relief efforts if you're not a Katrina victim already: Charity scam-buster JJ MacNab of Bethesda, Md., advises giving only to established charities and taking special care of Internet and e-mail solicitations that proliferate in disaster times, raising money for fake charities or "phishing" for Social Security, bank and credit-card numbers to steal your identity.

GuideStar.org, the online nonprofit that links donors to charity information, warns donors about copycat charities, such as solicitors who say they represent the "National Red Cross" or "Red Cross Association" instead of the American Red Cross.

And don't give personal financial information to telemarketers who call you; tell them to mail you literature that requires your response.

Check out charities at GuideStar.org and the Better Business Bureau's Wise Giving Alliance (www.give.org). Is a charity tax-exempt? Check www.irs.gov and click on "Helping Hurricane Katrina Victims."

-- Mary Deibel