Couple wins dispute over bankruptcy relief due to tax payments

A bankruptcy court in Michigan wrongfully denied debt discharge to a couple who had paid state and federal taxes ahead of debts owed to higher-priority creditors, the Sixth Circuit ruled.

Jason and Leah Wylie should be entitled to discharge their debts in bankruptcy because their preferential payments to the tax authorities were not made with the intent to hinder their creditors or a Chapter 7 trustee, the U.S. Court of Appeals for the Sixth Circuit said Wednesday.

The Wylies, who filed for Chapter 7 relief in the U.S. Bankruptcy Court for the Eastern District of Michigan in 2020,…