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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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Customer Question

I'm going to file for Chapter 7 bankruptcy. The date I considered bankruptcy was August 20 and the decision was made August 31 after consulting with a bankruptcy lawyer, in regards XXXXX XXXXX credit card debts . I paid using my credit cards in June 2011 (which at the transaction carried balances due) California 2011 resale tax, recently filed 2008/2009 state and federal taxes totaling about $10,000. I have continually made payments to these credit cards since these tax transaction dates. I believe these tax transactions on my are NOT dischargeable.(Yes they are dischargeable-No they are not dischargeable) if indeed these taxes are not dischargeable, can I have the amount of money I paid after the transaction dates to the credit card companies to to reduce my general balance applied to these nondischargeable transactions to reduce these particular balances. I did not know nor did I contemplate bankruptcy when I made these tax payments with my credit cards, of which I normally have done for years. if I had known this I would've paid what I could have directly to the government and made payment arrangements for the balance.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 5 years ago.
Hi JACustomer,
Unfortunately, if the taxes are non-dischargeable, the credit card debt you incurred to pay those taxes would also be non-dischargeable. Bankruptcy Stat. (a)(14) & (14A).


I think this is what you wanted to know. If not, please let me know.
Thank you.
Customer: replied 5 years ago.
if indeed these taxes are not dischargeable, can I have the amount of money I paid after the transaction dates to the credit card companies applied to reduce these nondischargeable transactions to reduce these particular balances. I did not know nor did I contemplate bankruptcy when I made these tax payments with my credit cards, of which I normally have done for years. if I had known this I would've paid what I could have directly to the government and made payment arrangements for the balance.
Expert:  cfortunato replied 5 years ago.

Are you asking if your payments can be returned to you if you file a Bankruptcy or if you do not file a Bankruptcy, or both?

Customer: replied 5 years ago.

i will file for bankruptcy.

can I have the monthly payment monies I sent to the credit card companies after the tax payment transaction dates applied specifically to these non-dischargeable transactions to reduce these specific balances that I still will owe to these credit cards after all the dischargeable transactions become null and void.

.

I did not know nor did I contemplate bankruptcy when I made these tax payments with my credit cards, of which I normally have done for years if I had known this I would've paid what I could have directly to the government and made payment arrangements for the balance.

 

 

Expert:  cfortunato replied 5 years ago.

The Bankruptcy trustee does have the ability to "avoid" payments to creditors that are made less than 90 days before a Bankruptcy is filed. Bankruptcy Stat. 546. ("Avoid" means take back the money already paid.)

If the trustee takes back the money paid to the credit card company(ies) made less than 90 days before the Bankruptcy is filed, that money will be used to pay creditors listed in your Bankruptcy is the order of their priority (you cannot ask that the money be used for a particular creditor).

However, taxes have a priority of 8. This means if you have no debts in the first 7 priority classes, that money would be used to pay the taxes. (The 7 categories with higher priorities are things like domestic support obligations and wages.)

If you are interested, here is the complete list:

http://www.law.cornell.edu/uscode/html/uscode11/usc_sec_11_00000507----000-.html.