When it is about California bankruptcy, there are two options for tax bankruptcy as per chapter 7 and chapter 13 respectively. As per chapter 7, the trustee appointed by the court liquidates all the assets of the taxpayers while as per chapter 13, the payers get a chance to continue with their business operations in order to manage their finances and get things back to normal along with repaying the debts due to the various creditors. Following are some of the important things that you should keep in mind regarding the tax bankruptcy in California.
Pre-Petition Eighth Priority Taxes
As per the California law, following types of unsecured federal taxes are considered as pre-petition eighth priority taxes.
- The first scenario is where the debtor has not paid income levy for the last few years, all the amount due till the year ending on or before the date of filing liquidation online will be considered as pre-petition eighth priority taxes.
- The second scenario is where the debtor is liable for any type of withholding dues. The entire amount due in this regard will also be considered as pre-petition eighth priority taxes.
- There is also a third scenario, as per which if there is any amount of income tax that has been assessed within two hundred and forty days before filing the impoverishment petition in the court, such amount will also be considered as Pre-petition Eighth Priority Taxes.
Payment Of The Eighth Priority Pre-petition Taxes As Per Various Chapters Of The Bankruptcy Code
As per the various chapters of the impoverishment code, there are different sets of rules that are followed regarding the payment of the Eighth Priority Pre-petition levy. For example, as per filing chapter 7 bankruptcy, the amount collected from liquidating all the assets are first used to pay off the secured creditors and then to other creditors with high priority status. If there is still some money left after making such payments, such amount is used for the payment of the Eighth Priority Pre-petition Taxes. Likewise, as per chapter 13 of California bankruptcy, the court gives more liberty to the debtor to pay off the Eighth Priority Pre-petition Taxes. As per chapter 13, the debtor gets a period of three to five years to pay off the amount due as Eighth Priority Pre-petition Taxes. Debtors declared as bankrupt under chapter 12 are given a specific period of time to pay off the Eighth Priority Pre-petition levy in deferred cash payments. However, as per the provisions of chapter 11 of California bankruptcy, the debtor is given only a period of six months to pay off the amount including all the outstanding interest.
The provisions for bankruptcy code is an important part of California bankruptcy. It is important for you to be aware of the types of Pre-Petition Eighth Priority Taxes and how you have to pay the amount due regarding the same as per the different chapters of the bankruptcy code. For more information visit filing bankruptcy.
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