Good news - bad news. Need some of the "pros" to help

[daylate]

Good news-no asset/no distribution.

bad news-potential adversarial proceeding-UGH!

Long story short we charged our property taxes about 7 months before we filed-cc company now wants either 75% in cash or whole thing over 3 yrs. if i had started this process a few months earlier, I would have known not to pay-oh,well, live and learn

if they file adversarial proceeding I won't fight it because it doesn't seem like we would win (based on a thread not too long ago). So given that fact what will happen? Will my discharge be dragged out? Will they have to sue to get the money? Can they go after the whole balance on the card which is a lot more than the contested charge?

My attorney is semi-useless and has already said that it would cost 2k at a minimum to fight this.

any help from the "guns" would be most appreciative. thanks.

[tobee43]

i am absolutely NO pro on this....just experienced an ap...but we won...however, if it were even questionable, i would have attempted a settlement to avoid additional atty's fees.

depending on your position, our atty's fees were reimbursed since the creditor lost. however, if you feel they may win, it may be in your best interest just to settle the situation.

best of luck to you, and i'm hoping someone may have had a different and closer experience to yours....that we did, or one of the resident atty's may be
more helpful.

best news would be IF they didn't file....i'm hoping for you.

[daylate]

hey tobee you're a pro in my book (which doesn't buy you much-LOL)

[tobee43]

hey tobee you're a pro in my book (which doesn't buy you much-LOL)

LOL!!!!!!!!...and just being in your book is the best reward...

i'm just hoping they will go away for you.

[keepmine]

How much did you charge and, how soon did you default after you made the charge?

[JJCA]

Along with keepmine's question..I am wondering "why" this charge could be an issue. Maybe that is why keepmine asked that info, but if there is any other reason that makes it possibly 'adversarial' I would be interested in knowing.

[panda]

Normally ANY tax that is charged to a credit card is non dischargeable unless it has hit the statue of limitations for the tax. I ran into this issue with owning a business that I had paid the general excise tax with credit cards, I asked my attorney and she said to just see if the credit card people were going to file an AP. If they did I was just going to pay it, but she was going to make them file an AP before we did anything. Fortunately they did not, and we are discharged now. Now in the scheme of things what I charged for the taxes was about $1800.00 with 500.00 being paid within 6 months of filing, and this was nothing compared to the 55k I owed the credit card company, between two of its cards.

[tobee43]

Normally ANY tax that is charged to a credit card is non dischargeable unless it has hit the statue of limitations for the tax. I ran into this issue with owning a business that I had paid the general excise tax with credit cards, I asked my attorney and she said to just see if the credit card people were going to file an AP. If they did I was just going to pay it, but she was going to make them file an AP before we did anything. Fortunately they did not, and we are discharged now. Now in the scheme of things what I charged for the taxes was about $1800.00 with 500.00 being paid within 6 months of filing, and this was nothing compared to the 55k I owed the credit card company, between two of its cards.

panda...extremely interesting point!!

i knew many people that would use their credit cards to pay their taxes. i NEVER thought about it myself, however, what you are saying makes perfect sense. i can absolutely understand how that "charge" would or could be question. but then here's my question?? whom would be the adversary....the IRS or the lender....i mean, if the taxes were paid months prior, and the IRS was paid...and it was over 90 days prior, why would that charge be questionable???

it's a rhetorical question actually, however, interesting if a cc can go after one for a tax payment made withing the alloted time frame of chargeable time table. ( i know in florida at the time of our filing it was absolutely 90 days, no questions asked, yet, now i hear some courts are being a bit heavy handed).

[justbroke]

The tax is non-dischargeable since it was so recent. The plaintiff (creditor) will easily win this adversary proceeding. You should think about settling and save yourself some money by not letting it go to judgment and paying an attorney to represent you. Review your thoughts with the attorney. The settlement of 75% sounds nice, but try countering with 50%. You never know!

This will not drag out your "general" discharge and is only related to that specific debt. Just make sure that they are suing for "just" the taxes paid, and not for other charges on the card.

[tobee43]

The tax is non-dischargeable since it was so recent. The plaintiff (creditor) will easily win this adversary proceeding. You should think about settling and save yourself some money by not letting it go to judgment and paying an attorney to represent you. Review your thoughts with the attorney. The settlement of 75% sounds nice, but try countering with 50%. You never know!

This will not drag out your "general" discharge and is only related to that specific debt. Just make sure that they are suing for "just" the taxes paid, and not for other charges on the card.

jb....if the tax was not so "recent" could or would it then be able to be dischargable?

[catleg]

But it's a property tax (local), not income tax.
Are you keeping the underlying property?
Did you make any payments after charging the tax?

[justbroke]

jb....if the tax was not so "recent" could or would it then be able to be dischargable?

Yes, it would be dischargeable if it had fallen under the exceptions in 11 USC 523. The argument of the creditor, that ended up holding the bag because you charged the tax or used an "access check" to pay the tax, is always that the tax, itself, is non-dischargeble.

To be able to claim that the tax is not dischargeable the tax would actually need to not be "recent" (due within last 3 years, assessed within 240 days of filing, and for which a return -- if required -- was filed within the last 2 years before filing).

justbroke's discussion topic: Please be aware that not all creditors catch this! I'm starting to wonder what a creditor's recourse would be had they discovered this after the discharge was entered. Or, on a different angle, what would happen if the creditor had known that there was a non-dischargeable charge before the discharge was entered, but they failed to file a complaint to determine dischargeability before the bar date.

justbroke's reading suggestion: An awesome case on the issue where it related to a tax due the IRS. The debtor charged it to their credit card, but later, the IRS found an error and then sent a check for $2,700(+) to the debtor since no tax was due. Plaintiff (creditor) wanted the debt charged to the credit card to be non-dischargeable since it was used to "pay a tax". The argument used was that they "paid a tax", but since no tax was due, the debtors didn't "pay a tax". In Re. Rollings, 7-07-11657 SL, Bankr. N. Mexico 2009.

[panda]

I am no expert in this area by any means, but I had come upon this by reading up on the tax implications as justbroke cited above, and had paid with a credit card. Interesting enough my attorney, who is a retired assistant US Trustee, had to do further reading on this subject, and for us, she said to not say anything, it was the duty of the credit card people to file the AP if they wanted to challenge this, and at that time we would deal with it. It was my understanding we owed the credit card people, they did not do a charge back to the tax people we had owed and paid with the credit card, or it would have been back in the tax peoples lap. We were to far out for a chargeback anyway, which was fine with me as I certainly did not want to deal with the tax people over this.

[daylate]

Actually Des wrote a lot about this on another thread-basically said the same thing justbroke has stated. I'm screwed. The only argument i can think of is it isn't a tax due anymore. Its been paid. Although I'm sure some attorney has argued that.

Thanks justbroke for chiming in. Your input is always some of the best on here.

[panda]

Daylate, I think in the end you will end up having to pay this, but my understanding is to make them file the AP first, just to make sure they are actually going to go through with this instead of just a threat. I know my attorney would not even think about settling before they filed the AP. She said she would talk with them if they tried contacting her, but according to her she would not settle before an AP was filed, as that was the legal and proper way to take care of these issues?

How much are we talking about?

Anyone else with other thoughts on waiting for the AP?