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Bankruptcy Law/Are Unsecured Property Taxes dischargeable in Chapter 7 Bankruptcy? (California)
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Question
I was a partner in a business that closed in 2006 In 2008, The other partner and I both filed for Chapter 7 bankruptcy (personal) due to personal guarantees on our SBA backed Business Loan. Also, due to those personal guarantees, we never set up an LLC or Incorporated to limit our liability otherwise (lesson learned).
When we closed our doors, I was unaware of of some unpaid Unsecured Property Taxes (or Business Personal Property Taxes), due to the bills for those taxes going to the business address after we had closed and my home addresses changing multiple times since the business closed.
I recently noticed that there was a lien showing on my credit report and I tracked it down to this tax debt. When our doors closed, the bank auctioned all equipment, fixtures, and inventory used for the business (during the same tax year).
My questions are as follows:
1. Can this Unsecured Property Tax debt be discharged in Bankruptcy? Is this common, or only done in special circumstances?
2. If the first question is a yes, can I go back and have this retroactively discharged, or do I have grounds to present my tax collector with my discharge letter to force them to waive the debt?
Thanks for your help!
It may be discharged if you have the right circumstances.
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I believe that unsecured property taxes are not dischargeable if assessed prior to the bankruptcy but last payable without penalty less than one year prior to the filing of the petition. In other words, if on the date of the bankruptcy filing the tax had not yet been assessed, or if it was assessed but still within a time period that would allow you to pay it without a penalty, then it was not dischargeable.
You, or better yet, a tax attorney should examine the relevant documentation to see if this works out in your favor.
If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/
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Answers by Expert:
Los Angeles Bankruptcy Lawyer Leon D. Bayer
Expertise
Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/
Experience
Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.
Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.
Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.
Education/Credentials
B.A., J.D.
Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000
MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.
Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.
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