Taxes preferential pre-file???

[secondtimer]

If I pay a large tax debt (12k)with gift money (have not accepted yet) and then file a 13 could/would the trustee get that money back to distribute. I can't imagine the IRS giving $$ back to anyone. I know this is a question for my attorney but wanted to throw it out here first. Am I trying to be tactical or just stupid

[MSbklawyer]

If I pay a large tax debt (12k)with gift money (have not accepted yet) and then file a 13 could/would the trustee get that money back to distribute. I can't imagine the IRS giving $$ back to anyone. I know this is a question for my attorney but wanted to throw it out here first. Am I trying to be tactical or just stupid

Yes, the trustee can claw it back. Even from the IRS. And here's the thing: The trustee doesn't give this money back to you. He divides it up pro rata among your unsecured creditors -- unsecured creditors whose debts would have otherwise been discharged. Now, once the IRS has had to cough this money up to the trustee, guess who is back on the hook for the tax debt? (Assuming the tax debt is non-dischargeable). So you'll end up paying it twice. Bad move. Don't do it.

[StartingOver08]

However, your tax debt in a BK 13 is a priority debt so when you file, depending upon your schedules, you may end up paying the attorney fees, the Trustee and the tax debt and actually have very little going (or none) to unsecured creditors!

Priority: The Bankruptcy Code establishes the order in which claims are paid from the bankruptcy estate. All claims in a higher priority must be paid in full before claims with a lower priority receive anything. All claims with the same priority share pro rata. Claims are paid in this order: 1) costs of administration 2) priority claims and 3) general unsecured claims. Secured claims are paid from the proceeds of liquidating the collateral which secured the claim http://www.moranlaw.net/glossary.htm

[secondtimer]

Thanks guys. I'm trying to hold off filing until either a creditor takes legal action or the taxman comes knocking. My family has offered to help out but I don't want to waste their resources on my past. We want to try and improve the future. After reading your responses and some other threads its sounds more prudent to wait until after the pain to accept any gifts and then start to rebuild.

[StartingOver08]

File at a time that is good for you. If you plan your BK properly, then you are more likely to have a successful result AND a much less stressful BK experience. You don't have to "wait" until you are pushed by a creditor. In fact, I would argue that the waiting and watching for the creditor is more stressful then just planning your BK and getting it completed. You will not believe the relief you feel once you file and the greater relief you have upon discharge.

BTW, there are times it is beneficial to wait in order to plan properly: income issues, or preferential payment issues, or insider payments etc. That is a normal part of the planning process. But to wait to be pushed into BK is really a separate issue. JMO.

[keptdigging]

What about current year taxes being paid when due? Is that preferential? Specifically I'm thinking of a property tax bill -- on my primary residence -- coming up next month.

[secondtimer]

Paying your living expenses with your income is OK.

Using money that was a gift or a "windfall" is where the trustee might have objections.

At least that's my understanding.

[dscurlock]

The op gets a small windfall and the first thing he/she is thinking about is paying
off a huge tax bill, and then considering filing BK...that money can put a lot
of food on the table...will the IRS take care of you, after you pay them?
I am sure they would love that lump some so they can determine in which
dept of our gov't to misuse the funds...it sounds strange that anyone would
want to pay off a large bill, then file BK...use the money for your needs, then
file BK some time down the road, in the future....

[secondtimer]

My tax debt is not dischargeable. It's too recent.
My DMI is not sufficient to pay tax debt and mortgage arrears to come current in 13.
I'm think I'm gonna have a to continue with taxman after the discharge(if I get there). Either a payment plan or OIC.