can unpaid construction material bills be dismissed in a chapter 7 michigan bankruptcy? trust fund act?

Answer 1

If the materialmen and subcontractors have filed their materialmens liens, they will be treated as secured creditors and will be paid out of the proceeds of the sale of the property (or financing if it is not going to be sold). The trust fund taxes, meaning the employment taxes, sales taxes and federal withholding, are not dischargeable in bankruptcy and never go away. Try to get them paid first in the bankruptcy. The agencies can assess the trust fund taxes against anyone found to be a responsible officer of the debtor.