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California Bankruptcy - Tax Bankruptcy Options

California Bankruptcy - Tax Bankruptcy Options
"""When it comes to bankruptcy in California, there are two options for tax bankruptcy: chapter 7 and chapter 13, respectively. Under chapter 7, the court-appointed trustee liquidates all of the taxpayers' assets, whereas under chapter 13, the taxpayers are permitted to continue their business operations in order to manage their finances, return to normal, and repay their debts to creditors. Listed below are some of the most essential considerations regarding tax bankruptcy in California.Pre-Secession Taxes of Eighth PriorityThe following types of unsecured federal taxes are deemed pre-petition eighth priority taxes under California law.
In the first scenario, if the debtor has not paid income levy for the past few years, the entire amount owed up to the year ending on or before the date of submitting the online petition will be considered eighth priority taxes.
The second situation is when the debtor is responsible for any withholding fees. The total amount owed in this regard will also be considered as eighth priority pre-petition taxes.
In a third scenario, any income tax assessed within two hundred and forty days prior to the filing of the court petition for impoverishment will also be deemed Pre-petition Eighth Priority Taxes.
Payment Of The Eighth Priority Pre-petition Taxes According To Various Bankruptcy Code ChaptersAccording to the various chapters of the impoverishment code, the payment of the Eighth Priority Pre-petition levy is governed by various sets of regulations. For instance, under chapter 7 bankruptcy, the proceeds from the liquidation of all assets are first used to pay secured creditors, followed by other creditors with a high priority status. If there is still money remaining after these payments are made, it is used to pay the Eighth Priority Pre-petition Taxes. Similarly, under Chapter 13 of the California Bankruptcy Code, the court grants the debtor more freedom to repay the Eighth Priority Pre-petition Taxes. Chapter 13 allows the debtor three to five years to repay the amount owed for Eighth Priority Pre-petition Taxes. The Eighth Priority Pre-petition levy is payable in deferred cash payments over a predetermined period of time for chapter 12 insolvent debtors. However, under the terms of Chapter 11 of the California Bankruptcy Code, the debtor has only six months to repay the debt, including all accrued interest.

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"California Bankruptcy - Tax Bankruptcy Options" was written by Mary under the Finance / Wealth category. It has been read 183 times and generated 1 comments. The article was created on and updated on 03 June 2023.
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