The Statute of Limitations on a Bankruptcy Toll
Upon bankruptcy, a person's debtors have a chance to file for preference or any other related actions within the statute of limitations for bankruptcy. However, the rules for bankruptcy statutes of limitations vary with each individual case.
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Chapter 7
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In a Chapter 7 bankruptcy case, preference and other bankruptcy-related actions must be brought within two years after a trustee is named. If action is not taken within this time limit, the case is closed or dismissed, according to All Business.
Chapter 11
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In a Chapter 11 bankruptcy case, a "debtor-in-possession," rather than a trustee is appointed. Many courts hold that because of this, the time limit is tolled because the statutes of limitations never start running, according to All Business.
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Taxes Owed
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Many acts are automatically stayed upon a bankruptcy petition, according to Section 362 of Title 11 of the U.S. Code. However, this section does not stay the issuance of a Notice of Deficiency by the Internal Revenue Service for taxes owed, according to IRSTaxAttorney.com
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References
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