Bankruptcy is a legal process that allows individuals and entities to get rid of their debts. Bankruptcy is usually imposed by a court order or initiated by the debtor. This article explores the different aspects of bankruptcy law, including tax issues. Taxes are not discharged in bankruptcy, though debtors generally are. This can be a confusing issue for many. This article will explain how bankruptcy can work for you and what to expect if you file for bankruptcy.
Chapter 12 bankruptcy
There are several things to know about chapter twelve bankruptcy law. Firstly, debtors must file a repayment plan within 90 days of filing for bankruptcy. It must outline how the debtor plans to repay all claims over three to five years. The plan must also provide for priority claims, which are those given special status by the Bankruptcy Code. Priority claims include most taxes and costs of bankruptcy. These claims must be paid in full if the plan is approved by the court.
In order to confirm the plan, a chapter 12 trustee will be appointed by the court. In some districts, the U.S. trustee will appoint a “standing trustee” to oversee chapter 12 cases. This individual will evaluate the debtor’s case and make recommendations to the bankruptcy court. The judge will then decide whether the plan is viable. The bankruptcy trustee can also assist a debtor during the process of implementing a payment plan.
In order to qualify for Chapter 12 bankruptcy, a debtor must be a farmer, fisherman, or other type of family business. For a family business to qualify, over 50% of the company’s gross income must come from farming or fishing. Moreover, a corporation cannot file under chapter 12 unless its owners hold more than 50 percent of stock or equity interests. Ultimately, Chapter 12 bankruptcy is a voluntary process that is best for individuals.
However, certain types of debts are not dischargeable in a chapter 12 proceeding. In particular, alimony and child support debts are not discharged in a chapter 12 proceeding. In addition, money obtained by fraudulent financial statements will not be discharged. Likewise, larceny, embezzlement, or any other crime not covered by the bankruptcy court’s definition of consumer debt will not be discharged.
Using Chapter 12 bankruptcy law may help your family business avoid the risk of filing for bankruptcy. This type of bankruptcy law requires creditors to stop most collection activity, including wage garnishment, lawsuits, and phone calls. Because of this, most creditors will refrain from contacting you or your family for payment until your case is finalized. This can provide you with a bit of breathing room to get your business back on track. The attorneys at Gillespie & Murphy, P.A. have helped many fishermen and farmers stay in business.
As far as mortgage payments are concerned, there is a big difference between chapter 13 and chapter 12. The former allows debtors to bypass the trustee in order to make payments directly to their creditors. Although this may seem like a disadvantage, several bankruptcy courts have addressed this issue through their local rules. For example, in the Southern District of Texas, a debtor is required to make mortgage payments through a trustee, while the Central District of California requires that debtors make all pre-confirmation payments directly to creditors.
Chapter 15 bankruptcy
The Bankruptcy Code’s Chapter 15 requires debtors to protect the interests of creditors and other parties. The Model Law provides effective mechanisms for dealing with international insolvency cases. Despite some differences between different countries, Chapter 15 has remained the most popular option for those who want to avoid filing for bankruptcy. The following are some facts to keep in mind when preparing for your chapter 15 case. The benefits of Chapter 15 bankruptcy law are well worth the risks.
Under the U.S. bankruptcy code, Chapter 15 acts as the principal entry into U.S. courts for foreign entities. These representatives may seek additional relief in U.S. state and federal courts. Those appointed to represent a foreign party in bankruptcy proceedings may also bring the case. They may also intervene in any U.S. insolvency case. Generally, this option is used for international bankruptcy cases. In addition, Chapter 15 bankruptcy law embodies the mandatory recognition rule. If a foreign entity or person has assets in the United States, the bankruptcy court must recognize the foreign proceeding.
Under section 1513, foreign creditors are provided the same rights as domestic creditors. The law also stipulates that foreign creditors must receive the same notice as domestic creditors. However, there are exceptions to the rule. In some cases, a foreign company or individual can file for bankruptcy in the United States with the intention of avoiding the U.S. bankruptcy courts. These exceptions to the automatic stay protect assets held by the foreign debtor in the United States.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 added chapter 15, allowing foreign nationals to file for bankruptcy in U.S. courts. This act also adopted the Model Law on Cross-Border Insolvency promulgated by the United Nations Commission on International Trade Law in 1997. Since then, chapter 15 filings have increased in every year except one, almost 25 percent in 2016.
The bankruptcy court refused to dismiss the foreign representative’s motion for discovery. The bankruptcy court explained that the foreign representative cannot be replaced in a Chapter 15 case and that its role is to recognize foreign representations, not appoint them. Moreover, it noted that the Barton doctrine was too broad to apply to the case in this way without precedent. It must be interpreted strictly, or it may lead to inappropriate outcomes. It is crucial to understand the intricacies of Chapter 15 bankruptcy law and its application.
The bankruptcy court has several mechanisms to deal with bad actors, but one of the most significant is recognition. Although Chapter 15 bankruptcy law does not explicitly prohibit foreign debtors from filing, foreign debtors still need to meet additional requirements to qualify for the bankruptcy process. Bankruptcy Rule 1007(a)(4) outlines additional documents that must accompany the petition for recognition. These documents must be translated into English. In many cases, the bankruptcy court will recognize a foreign representative’s foreign proceedings.
Taxes are not discharged even though the debtor is generally discharged from debt
Bankruptcy law governs whether taxes can be discharged in bankruptcy. Tax debt is classified under various categories, including trust fund tax, administrative tax claim, priority tax claim, general unsecured claim, and penalty claim. Under the Bankruptcy Code, taxes are not dischargeable even if the debtor is generally discharged from other debt. There are exceptions, however.
Although federal tax liens are dischargeable if the debtor is generally released from other debt, they are not discharged when the underlying taxes are. This means that if the debtor files bankruptcy while still owing taxes, a federal tax lien on that property will remain on the property. A bankruptcy petition filed before the tax debt is discharged may be a form of malpractice.
In order to be discharged from income taxes, the tax must have become due more than three years before the petition was filed. If the debtor filed a fraudulent return, or acted willfully to avoid a tax obligation, taxes are not discharged in bankruptcy. In addition, debtors cannot discharge taxes if they fail to notify the IRS in a timely manner.