Are you expecting a tax refund? As in life, timing is everything. If you're considering filing for bankruptcy in Chapter 7 to eliminate debts and you're expecting an income tax refund, you have some thinking to do.

If you file Chapter 7 before you receive the tax refund, that right to future income is an asset that becomes part of the bankruptcy estate under control of the bankruptcy trustee. In general, unless it qualifies as exempt under a "wildcard" type of exemption, the trustee can use it to pay off your creditors. That's probably not what you would want. So, it's often better to delay filing Chapter 7 until you receive your tax refund. That way you retain control over the refund and have an opportunity to use it in a way that benefits you. A few of those ways might be to spend it on normal living expenses and/or catch up on mortgage payments (of course before filing Chapter 7), or put it into an "exempt" place, like an ERISA-qualified plan within IRS limits. Note also that applying a refund amount to your future taxes still leaves that amount available as an asset to the bankruptcy trustee.

When do you acquire that right to the tax refund, the right that the bankruptcy trustee wants for the benefit of creditors? The general rule is that the right to receive a tax refund accrues every day taxes are withheld from your paycheck. That right doesn't wait to exist, for example, until you file a tax return. How might that play out in specific situations? Let's assume that you will get a refund for 2013 income taxes after the taxes are filed in 2014, and you want to file a Chapter 7 bankruptcy to discharge debts.

If the bankruptcy is filed in 2013, the portion of the tax refund that becomes part of the bankruptcy estate is pro rated based upon the amount of income earned before bankruptcy filing compared to the total year's income. Of course, if you're still working, you might be able to reduce your withholding for the remainder of 2009 so there would either be no refund for the bankruptcy estate to get or a refund so small it wouldn't be worth the trustee's time to go after it.

If the bankruptcy is filed in 2014 but before the tax refund is received, the entire amount of the refund would become part of the bankruptcy estate.

If the bankruptcy is filed in 2014 but after the tax refund is received, the refund received becomes just another asset and may be used for normal living expenses or as described above prior to filing bankruptcy. Of course, if you will get a refund for 2014 taxes then the trustee can get the pro rated part of that, but there should be only very few months in 2014 before you file bankruptcy so that part of the refund should be small.

Delaying your bankruptcy filing may have other consequences, possibly worse than losing a part or all of a tax refund, especially if the refund is small. Because of these and other issues beyond this discussion, you should really consult a qualified bankruptcy attorney to discuss these issues as a part of your bankruptcy process.

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149 thoughts on “Are you expecting a tax refund?

  • October 22, 2009 at 10:16 am
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    I understand the above. Will have just a small return coming next spring, so would like to file now as you said it takes about three months? Then I could file for 2009 nine after that time, but before the April deadline. Correct?

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  • October 23, 2009 at 4:43 pm
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    Lynn, you need to consider that by filing bankruptcy late in 2009, the trustee in bankruptcy may be able to take most of your 2009 tax refund and make it a part of the bankruptcy estate for the benefit of your creditors. Read the newly-expanded article above and I think the issue will be clear to you.

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  • March 21, 2010 at 1:04 pm
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    I have retained a bankruptcy attorney, and have made my final payment to him to retain his services, but I haven't finished all the necessary paperwork he has requested, so I assume he hasn't officially filed bankruptcy for me just yet. I am expecting to receive a $4500 federal tax return next week. Most of it comes from having purchased a home in January of 2009 and getting some of the interest back, as I understand it. Do you think this refund is safe from my creditors because I haven't officially filed for bankruptcy yet? I am depending on that money to help me pay my mortgage after I get laid off from my teaching job (which I got the notice for 2 weeks ago). Thank you for your time.

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  • March 21, 2010 at 5:33 pm
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    Krista, on the limited facts available, your tax refund itself seems safe if it arrives before filing. You would also need to use it in a "permissible" way, meaning a way that makes it not available to creditors (like paying your mortgage), before filing. BUT, this is something that you should ask your own bankruptcy attorney who knows your situation in much more detail than I do.

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  • May 5, 2010 at 11:10 am
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    I have read the above article but want to make sure i am correctly applying it. I had 0 income prior to filing my ch 7 in march 2009. I finally got a job in may 2009 and had the bk discharged in june 2009. I just recvd my tax return. Will it then be pro-rated for 3 mos or am I at a loss of the entire check? All income was received/earned after the filing. Also what happens if you do not send the check in to the trustee ? Thanks

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  • May 5, 2010 at 7:48 pm
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    Sharon, from the facts you stated, I don't see that you owe the trustee anything. When you filed your Chapter 7 in March 2009, it would have been the tax refund you were owed (if any) from your 2008 tax return that the trustee would have been interested in and that would have already been taken care of before your discharge. Anything you earned after filing the Chapter 7 is yours to keep. The only thing you were "on the hook" for after filing Chapter 7 was income received from the death of someone (inheritance or life insurance proceeds) for 180 days. You're in the clear!

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  • May 15, 2010 at 8:55 pm
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    If a person filed a Chapter 7 in 2009 and received a discharge in 2010 before filing the 2009 tax returns – then received a federal refund that was only for Earned Income Tax Credit – no income tax was paid in during 2009 from employment and there was no income tax due for 2009 due to the standard deduction and exemptions – would that refund of the Earned Income Tax Credit be available to the Trustee or can the debtor keep it?

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  • May 15, 2010 at 9:39 pm
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    Rob, I'm going to give you an "it depends" answer but it's really because there is no definitive answer. The answer is it depends on the particular court and trustee. Different courts have held both ways and the trustee may or may not claim that it's part of the estate. If the trustee does claim that credit, then you and your attorney would have to litigate the issue with the judge if you want to keep it away from the trustee and, as I said earlier, judges in different courts have held both ways.

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  • January 24, 2011 at 4:31 pm
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    I filed for chapter 7 bankrupcy but haven't been discharge yet. Will my tax refund go to the trustee or will i keep it. I am planning to file my taxes in the coming weeks.

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  • January 24, 2011 at 6:30 pm
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    Tobey, the answer to your question is "it depends". Did you include the tax refund in your filing as an asset and also exempt it? If so, you can keep the refund. If not, the trustee may be able to take it for your creditors. You should ask the bankruptcy attorney you used to prepare and file your case; he/she would know the required details of your filing.

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  • January 28, 2011 at 4:16 pm
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    Hi Malcolm, I went to court with the trustee on 1-7-11 went well no issues. Suppose to discharge on 2-11-11. But I want to file my 2010 taxes today I need the money ASAP will I be ok or will the trustee take my tax refund. Please advise I would greatly appreciate it.

    Sincerley,
    Julio

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  • January 28, 2011 at 4:57 pm
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    Julio, I'm not your bankruptcy attorney and don't know what is in your filing. If you listed the refund as an asset and also exempted it, there should be no problem. If you didn't do that, then the trustee could take your refund. If the latter is the case, you should tell your bankruptcy attorney about your refund and see if there's time to file amended schedules to list and exempt it.

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  • February 6, 2011 at 5:26 pm
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    already filed chapter 13. Filed 8/20/2010 and discharged 9/24/2010 with a payment plan of 780.00. I keep reading about all the tax refunds and whether they will keep them or not. I am expecting about $7000 refunds from federal and state for the 2010 tax year. Will the trustee get this? How do know if my attorney listed my previous 09 refund as an asset and also exempted it? I really hate to call him as he was not the most patient attorney someone could have …just kind of rude and nasty actually. So I thought I would ask you…thanks for any info

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  • February 6, 2011 at 6:21 pm
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    Teresa, I'm going to assume that you meant "the payment plan was confirmed 9/24/2010" instead of "discharged 9/24/2010". Most importantly, the handling of tax refunds in Chapter 13 cases varies greatly with the particular federal court district and trustee. My article "Are you expecting a tax refund?" specifically refers to Chapter 7 cases because of that. In Chapter 13 cases, it's common for the plan to contain language specifying the treatment of tax refunds. I'm sorry you hate to communicate with your own attorney, but that really is the only good course for you. He would know the language of the plan and also the practice of your court and trustee.

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  • February 9, 2011 at 12:01 pm
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    My husband and I just filed for Chapter 13 protection to keep our home due to a failed loan modification with BOA. Most of our tax return is from the Earned Income Tax Credit not due to overage from not enough money being taken out for taxes. Is the trustee entitled to take this for debts owed or can our attorney write language in the bankruptcy to allow us this earned income credit, after all, this refund is not income earned

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  • February 9, 2011 at 2:03 pm
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    Yolanda, please see my reply-comment above (May 15th, 2010 at 9:39 pm) which mainly says that it depends on where you are because different courts have held both ways about the Earned Income Tax Credit.

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  • February 19, 2011 at 5:59 pm
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    My husband and myself had our bankruptcy discharged on dec 7 2010. Our attorney never mentioned our tax refund in our paperwork. We have filed our taxes already, is there anything I should worry about. We have that money slated for dental work we need done.

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  • February 19, 2011 at 10:50 pm
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    Cindy, I wish I could give you a definitive answer but I can't since I know nothing about your filing schedules or the practices of bankruptcy trustees in your particular court. You need to ask your bankruptcy attorney about that.

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  • February 24, 2011 at 10:49 am
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    I filed for Chapter 7 on 2/11/11, but have not yet filed by 2010 tax return. Trustee (under the Rules want a copy of my tax return for the tax year immediately prior to the year of my BK filing. Am i required to file my return (even if I don't have all my documentation yet) just so I can give him a copy of my 2010 return. I have filed for all prior tax years. Also, my 2009 tax return was very late due to some significant short sale issues that delayed my accountant in completing the return. I am getting a refund for 2009. Is a 2009 tax refund something that must be included for a 2011 BK filing? Thanks,

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  • February 24, 2011 at 11:27 am
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    Russell, here's how I see it with the information I have.

    – Where I practice, the trustee must be sent a copy of your last-filed IRS tax return, which for you would be the 2009 return.

    – Since it's now 2011 and tax refunds for 2010 taxes are coming in, the trustee may require that you file your 2010 tax return so he/she can see if you're getting any refund for 2010 taxes. Is that true in your case?

    – What documents must be given to the trustee varies a lot in different courts and trustees.

    – All amounts currently owed you, including a 2009 tax refund, are assets of yours and must be included in your bankruptcy filing. To protect assets from the trustee and your creditors, you must "exempt" them under your state exemption laws.

    I hoped that helped.

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  • February 24, 2011 at 11:31 am
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    So under my circumstances, and assuming we will receive a 2010 tax refund, the trustee could get his hands on two years of tax refunds, since they did not come in prior to this time?

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  • February 24, 2011 at 11:34 am
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    And I read somewhere that the trustee can make a determination whether or not to collect and use the tax refunds based upon the amount of the refunds and how much of a percentage they are of the otherall dischargeable debts. If he feels that the refunds would not make a significant impact, and they could be used to get us back on our feet, he could just waive collecting them. In my case the total may only be around 9K total, but I have over 225,000 in dischargeable debt, so it is not going to make a significant impact.

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  • February 24, 2011 at 11:43 am
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    Russell, what you say is true in general, but it's still up to the trustee to determine for each particular item if he'll take a non-exempted asset. We can only take a calculated guess ahead of time.

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  • February 24, 2011 at 1:51 pm
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    >the trustee could get his hands on two years of tax refunds Reply

  • April 6, 2011 at 12:10 pm
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    My wife and I filed Chapter 7 on 5/29/2010 in order to save our house from Wells Fargo Home Mortgage, who approved our home loan modification, then filed a notice of sale. Our Chapter 7 was Discharged 10/09/2010. Th bankruptcy forced Wells Fargo Home Mortgage to negotiate with us and we got our home loan modification done and we saved our home.

    Now I am filing our 2010 tax return and we expect approx $7,000 refund. I received a letter from our bankruptcy trustee stating that we must send her any 2010 tax refund check or she will "unwind" our discharge.

    Do we have to send her our 2010 tax refund? Can the trustee undo our entire Chapter 7 if we don't send her our 2010 tax refund check?

    Thanks in advance for your response. In 2011, my wife and I have now both lost our jobs and need the refund to eat!

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  • April 6, 2011 at 12:58 pm
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    David, if you didn't list that tax refund (which was partly created by tax deductions prior to your filing) as an asset on your schedules and also exempt it, the trustee may be able to take it or, more exactly, take the amount of the refund that was caused by your earnings and deductions prior to your filing. If you had a bankruptcy attorney handle your case, you should contact him or her immediately. If you prepared your own filing, I urge you to quickly retain an experienced bankruptcy attorney in your local area. It may be too late because your case is already closed, but do get the opinion of an experienced bankruptcy attorney in your local area.

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  • April 21, 2011 at 4:48 pm
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    Malcom, I had filed Chapter 13 in November 2010 and the plan was finally confirmed in March 2011. The Chapter 13 requires the tax refunds to be turned over to them if I get a tax refund. Although they are asking for the Federal Tax Return to be submitted once they are filed, does this mean I only have to give them my federal tax refunds if I am getting a refund? What about the state tax refund? It was never mentioned in the plan confirmation. From your experience, do you know how do they obtain the refunds? Do I send them the check or it is automatically taken from the IRS to the Chapter 13 Trustee? I recently e-filed my tax returns and state already direct deposited the refunds to my account. I can't seem to get a clear answer on this. Thank you!

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  • April 21, 2011 at 5:31 pm
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    Kyle, I'm going to have to give you an unsatisfactory reply because it really depends on the practice in your jurisdiction. You should ask your own bankruptcy attorney that question or, if you filed your own case and don't have a bankruptcy attorney, I recommend that you retain an experienced one in your local area to help you through the remainder of your Chapter 13 case.

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  • May 5, 2011 at 2:04 pm
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    We filed our bankruptcy on 4/25/11 our 341 meeting with trustee is on 6/28/11 he sent us a letter asking for 2009 and 2010 tax returns with details of what we spent the money on.Is he going to hold it against us of what we spent the money on and how detailed?

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  • May 5, 2011 at 2:21 pm
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    Nicole, it's standard procedure for you to send the trustee, prior to your 341 hearing (creditors meeting), your last-filed IRS tax return. Assuming that you filed your 2010 return, the trustee is also asking for your prior year return. I also assume that you mean that that you received a tax refund for one or both of those years and he's asking what you did with that money. I can't be sure what he's looking for, but in general he'd be looking for attempts to conceal assets such as giving money to relatives for safe-keeping, "buying" something with the money without that something being worth the money given for it, etc. You should ask your bankruptcy attorney about this.

    Good luck to you,

    Malcolm

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  • May 5, 2011 at 2:40 pm
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    Before I actually filed I had to get all my bank statements etc for attorney.Does that also go to the trustee once we have filed?

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  • May 5, 2011 at 2:52 pm
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    They go to the trustee if the trustee requests them.

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  • May 27, 2011 at 2:31 pm
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    TishMay 27th, 2011 at 2:29 pm
    Your comment is awaiting moderation.

    (Resent with request to notify me of followup comments via e-mail)
    We filed bankruptcy on 10/29/2010. Our attorney told us to return any tax refunds received to the IRS/State and we do have back taxes. Our bankruptcy case was extended and the trustee assigned an attorney who is now asserting that we should turn over the refunds to the court as part of the settlement. What is the most likely outcome … will we have to pay the refund back to the court? … Or a pro-rated amount … Or because it would be applied to back taxes there is no consequence?

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  • May 27, 2011 at 2:49 pm
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    Tish, I don't know the details of your case so can't give you a specific answer to your question. In general, the trustee has a right to your tax refunds that were "earned" prior to filing bankruptcy and that were not exempted in your filing. You'll need to ask your bankruptcy attorney for more specifics about your case.

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  • May 27, 2011 at 5:15 pm
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    Thanks for your quick response, Mr. Ruthven. I also have a question about stock options – if I may. Does the trustee also have a right to stock which was not vested at the time of filing? In other words – for instance, stock that could not be exercised because it would not be vested for 3 years or only stock that was vested at the time of filing?

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  • May 27, 2011 at 5:48 pm
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    Hello Tish. Again, I'm going to have to tell you that I can't give you a specific answer. In general, the trustee steps into the shoes of the debtor and get the rights to assets that the debtor has at the time of filing. At filing, that unvested stock option was worth something at that time, and also there is good authority that the trustee gets any post-filing appreciation of an asset (like becoming vested). However, as usual, any asset (even one with an unknown value) may be exempted (kept from the trustee) if you have enough exemptions available. Again, you should ask your bankruptcy attorney about this matter because he/she knows the details of your situation and your filing.

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  • May 27, 2011 at 6:44 pm
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    Thank you again. We are in San Diego; I think you're in northern CA. If I am asked for a reference, though, from some friends up that way I will be happy to refer you.

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  • May 27, 2011 at 7:01 pm
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    Thank you, Tish, for the appreciation, and yes I'm in the San Francisco Bay Area. Glad to help.

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  • October 13, 2011 at 6:02 pm
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    I received a tax refund in July 2011 from 2010 taxes. Is that considered income for the means test because it's within the last 6 mos?

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  • October 13, 2011 at 6:43 pm
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    Zel, that's a question that different bankruptcy attorneys and different trustees give different answers to. My take on it is that a received income tax refund is not "income" of a kind to included included in the Means Test, but is instead a repayment of debt owed to the debtor by the government. In addition, the refund was not "income received" by the debtor on the date the refund was paid, but instead represented a return of excess withholding from gross wages which the debtor received when they were originally paid by his/her employer, some time earlier, before the six-month period. As I indicated, in some jurisdictions you may find resistance to those points of view.

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  • October 18, 2011 at 1:48 pm
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    Hello.
    We filed Chapter 7 in June 2011. Our case was discharged and closed in September 2011. In February 2012, when we file our 2011 taxes, will the trustee get a pro-rated portion of the return?

    Most of our return is made up of the Earned Income Credit (EIC) and Child Tax Credit as our business income lowers our AGI. Can the trustee take these credits?

    thanks so much for any insight.

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  • October 18, 2011 at 9:57 pm
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    Stephanie, please see my reply-comment above (May 15th, 2010 at 9:39 pm) which mainly says that it depends on where you are because different courts have held both ways about the Earned Income Tax Credit. I expect that the Child Tax Credit would be considered the same way.

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  • January 13, 2012 at 2:49 pm
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    I filed for chapter 7 on 1/11/12 and will meet with trustee on 2/16. We plan on filing taxes on 1/18. Will the trustee take our refund? If so, should I ask my bankruptcy attorney to add the refund to the filing as an asset and exempt it if it wasn't done? Can this still be added even though it was already filed? What is a wild card exemption and can it be used for this?

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  • January 13, 2012 at 3:28 pm
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    Jill, without knowing the details of your situation and case, I'd assume your attorney included the tax refund as an asset and exempted it. If not, maybe he/she had a reason. And yes, in general you can amend your schedules after they are filed. In any event, you need to talk to your bankruptcy attorney about that issue.

    The wild card exemption, if you're using the set of California exemptions that includes it, may be used for any assets including tax refunds. For information about the wild card exemption, see this article .

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  • January 14, 2012 at 7:04 am
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    I filed Ch.7 on 10/18/2011 i have already had my 341 meeting and received papers from my trustee to turn over my tax refund what are the chances of him keeping it. I havent filed income taxes over a year because i was unemployed in 2010 the last time i filled was in 2009 i pay $150 a mth and i have no children and the state take the max out on me every pay period i did my taxes 1/14/12 and have a refund of 1200.00 will they take the whole check and i am current on my bankruptcy payments. I dont itemize nothing, dont own anything but my car that paid off.

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  • January 14, 2012 at 7:20 am
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    Marci, your tax refund for 2011 taxes was "earned" in 2011 even though you don't receive it until 2012. Therefore at least part of it, the part earned before your filed Chapter 7 on September 18, was an asset, something you owned, at the time you filed. If you didn't "exempt" your tax refund in your Chapter 7 filing, the trustee can take at least the part of the refund that was earned before you filed the Chapter 7. You need to discuss this with your bankruptcy attorney.

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  • January 24, 2012 at 7:30 pm
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    Hello Malcom,
    I am in a bad situation financially. I just completed my 2011 taxes, and will be getting back almost $8000. This will help. I am in NC, and was considering filing a Chapter 7. I plan to use my return to make living expenses and try to catch up on bills. Hopefully this will work. However, if I continue to struggle and decide to file for Chapter 7, will waiting at least 180 days to file my petition be deemed ok by court/trustee? I am not trying to abuse, but to stay afloat.
    Thank you fo your expertise!

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  • January 24, 2012 at 8:11 pm
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    Hello Jeff,

    I'm not clear what problem you foresee that you're asking about. If you get your 2011 tax refund before filing your Chapter 7, that money becomes just like any other money that you have and would need to be spent or, if you still have some, would need to be exempted in order for you to keep it. But do consider your possible Chapter 7 filing before you start to pay debts. If you file a Chapter 7 after paying significant money to your creditors, you would have pretty much wasted your in-short-supply money because those debts would be discharged in your bankruptcy. Do yourself a favor and consult with a qualified bankruptcy attorney in your area to explore your entire financial situation and possible options.

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  • January 24, 2012 at 8:49 pm
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    What I'm asking is that now that I filed taxes, and expect return in 2 weeks, if I go ahead and file Chapter 7, will I probably lose almost all of this return money to trustee? Or does it get exempted?
    Also, if I do spend money on other things and living expenses (not unsecured bills), is there a certain amount of time that I would have to wait for the trustee not to be able to touch that money, or assume abuse?
    Thank you again!

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  • January 24, 2012 at 9:07 pm
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    Jeff, whether your tax refund could be exempted depends on your other assets and the exemption laws of your state. This is not a subject to figure out yourself or with online help. I'll repeat my advice to consult with a qualified bankruptcy attorney in your area.

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  • April 16, 2012 at 2:03 pm
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    So we hired the Attorney, went to our meeting with the trustee in January and no one said anything about our tax refund. When we asked our Attorney before we filed he said it wouldn't be an issue. The trustee never mentioned our tax refund at the meeting and we received nothing in our paperwork about them. In March after we spent our $7800.00 refund on back taxes and catching up on current bills, we were informed that we must hand over the full amount or face dismissal on Chapter 7. I have no idea if there is anything we can do. Our lawyers says he is sorry and that we have 3 months to hand it all over.

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  • April 16, 2012 at 2:34 pm
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    Hello Dawn, I wish I had something encouraging to say but I don't. From your comment, it seems that you filed a Chapter 7 bankruptcy without listing your tax refund for 2011 as an asset (and also exempting it). That tax refund was "earned" almost all before you filed your case in December and therefore was almost all an asset of yours at the time you filed your case. Since you didn't bring it up at the creditors meeting and amend your schedules, now that the trustee found out about it without your help, it's probably too late to amend your schedules and keep the trustee from getting it. Again, I wish I had better news.

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  • September 4, 2012 at 1:03 am
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    I go for 341 meeting this week. I just got out of hospital and need extra money. Can we lower our payroll deductions without getting in trouble. My lawyer said they will take tax return for 2012.

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  • September 4, 2012 at 7:10 am
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    Hello Pat. You hired a bankruptcy attorney for a reason. This is a subject you should discuss with him/her. I know nothing about your available exemptions or anything else about your case, so it would be foolish and dangerous for me to try to answer your question.

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  • October 21, 2012 at 12:39 pm
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    I filed chapter 13, in August 2012, I filed my tax return but had not receied my actual refund when I filed. I gave the information and my tax return at my meeting, I was the victim of identiy theft which delayed my refund I just got my refund, it is only 117.00. I was told that I was paying the maximum income amount for my plan, could I ask the judge/court if I could keep this money I could really use it for car repair and food. Not asking my attorney yet, I have to double check everything I ask him think I got the wrong attorney so I have to work with him to make sure my case goes right

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  • October 21, 2012 at 12:50 pm
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    Lee, I'm not going to jump into the middle of your case and give advice. I know no details at all about your case including what was included in your filings. You retained an attorney to get you through the process so you need to ask your attorney. If you're not satisfied with his work, that's a separate issue and you need take that up with him or get another attorney.

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  • November 8, 2012 at 1:42 pm
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    We filed chapter 7 in Oct 2011. Our attorney did not include our anticipated tax refund as an asset. He never said we could. At the meeting of creditors the thrustee said we had to give her our refund. We recieved a discharge 1/15/12. We thought it was over. Our refund came and we spent it getting our daughter out of a violent situation that was a threat to her life. The trustee just sent us a letter saying that we owed her personally $7845 plus interest. A letter was sent out to creditors saying that money was available. They have until 1 /13/ 12 to make a claim. Can we find out who if anyone does make a claim and if no one does do we still have to give her the money? And if we sign the note does that give her the right to keep the money for herself?

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  • November 8, 2012 at 2:23 pm
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    Lori (I assume that's your name), since you didn't list and exempt your 2011 tax refund, the bankruptcy trustee is entitled to it for purposes of distributing to your creditors. The trustee now wants the money from you since you spent the refund. Your attorney is notified of all claims filed (they're called a Proof of Claim). If no claims are filed, the trustee does not get to keep the money. You should check with your attorney for more details. Good luck!

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  • November 15, 2012 at 9:17 pm
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    I am quite confused and can't seem to find the 'answer' I'm looking for (and when I spoke with our attorney about it he sort of brushed it one direction while my accountant gave me another answer.) I'm looking for another opinion.

    My husband and I filed bankruptcy in the summer of 2012- our discharge date was middle of September 2012. My question is for UPCOMING tax refunds. Do we get to keep our upcoming tax refunds that we will get in 2013?- which is obviously 2012 taxes. If they are subject to being given up, how long do we have to be subject to this? Thank you.

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  • November 15, 2012 at 9:37 pm
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    P.R., there is no way I can give you a real answer to your question. At the time your filed your bankruptcy, if you had been overwithholding (the usual reason for tax refunds) or otherwise created a source of a tax refund, that part of your total 2012 tax refund was "earned" at that time and because a part of your bankruptcy estate. If you didn't list and exempt the refund (to be received in 2012) in your bankruptcy filing, the trustee has a right to the portion of the refund that was earned at the time you filed bankruptcy. Your bankruptcy attorney should know whether the refund was listed and exempted, and if not what portion of it the trustee is entitled to. Also, sometimes trustees don't check for refunds in cases filed early in the year since the "earned" portion would be small.

    Bottom line… Ask your own bankruptcy attorney.

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  • November 15, 2012 at 10:05 pm
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    Thank you, I will try to get in touch with him. When I brought it up the first time he said they won't be taking any future refunds and that was it; it was a very brushed off answer. With everything else taking place with the bankruptcy it got pushed off. I will get in touch with him and try to get a more definitive answer. Thank you.

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  • December 10, 2012 at 4:23 pm
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    i filed bankruptcy beginning of November and was told by my attorney i would get to keep the 7000 refund i am anticipating on getting again this year. 5500 of this is earned income credit and the child tax credits so would the remaining 1500 go to the trustee to distribute to creditors that did not attend the creditors meeting? please help me i am behind in my mortgage and would like to catch up on and make current.

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  • December 10, 2012 at 4:49 pm
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    Shikha, the only person who can answer your question is your own bankruptcy attorney. What you get to keep of your tax refund depends on things I have no knowledge of, such as how the tax refund was listed in your schedules and how much of it was exempted.

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  • January 7, 2013 at 6:02 pm
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    I hope you can help me, I plan to file ch.7as soon as possible, but am a little nervous because I also have to file my 2012 taxes and im depending on that money to move and buy a car (currently have no transportation) would they be able to take my income tax return? Do you suggest to file for bankruptcy first or wait? And final question do you recommend me getting a lawyer to file or is this something i could do?

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  • January 7, 2013 at 7:04 pm
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    Brandy, your tax refund for 2012 is an asset of yours right now because it's owed to you. So if your file a Chapter 7 now, you'd have to list the refund as an assert. As with all your assets, it's available to the trustee (for your creditors) unless you can exempt it under the California bankruptcy exemptions. There's no way for me to know at this point whether you could exempt it or not. I'd be happy to give you a free consultation on the phone to discuss your entire situation, which would include seeing if you would be likely to be able to exempt your tax refund. Of course you have to have a good idea of how much it's going to be.

    If you want to do the free consultation, go to this section of my website.

    Regarding your last question, I don't recommend that anyone try to do their own bankruptcy. There's too much at stake and too much that can go wrong.

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  • January 14, 2013 at 10:46 am
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    I'm in Arizona and filed bankruptcy ch7 in May 2012 and was discharged in the fall of 2012 I don't have an attorney since I was unable to afford one. I told the trustee that I had spent my 2011 return on getting caught up with mortgage payment and also repairs on my home. When I file 2012 in 2013 will they retain all of that refund or will I keep most of it. Very confused…. thank you.

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  • January 14, 2013 at 11:15 am
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    Vanessa, there's no certain answer to your question.

    1. Did you include a possible 2012 tax refund as an asset in your Ch 7 filing and exempt it for as much as you're going to get? If not, read on.

    2. Any 2012 tax refund should be divided into the part earned before your bankruptcy filing (property of your bankruptcy estate) and the part earned after your bankruptcy filing (not property of your bankruptcy estate). The trustee could request the part that's a part of your bankruptcy estate. However, since you filed relatively early in the year, the trustee may not be following your case at all so wouldn't request anything from your refund.

    In any event, there's not much you can do about it now except wait and see.

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  • January 19, 2013 at 1:48 pm
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    Malcolm,

    My wife and I filed for Ch. 7 on June 19, 2012. After a US trustee audit, it was discharged on Sept. 25, 2012. We only listed $1,000 of potential tax refunds as exempt. After the discharge, I received a significant commission check for work completed AFTER the filing. In addition, I was laid off and then rehired with the same company AFTER the discharge. Fortunately, this new job actually represented an increase in income. Fast forward to the present and the US trustee is asking for my 2012 tax returns. My questions are as follows:

    1) I'm assuming the trustee is seeking a prorated portion of my anticipated 2012 tax returns? Will this be based on the filing date of June 19th? Or will the trustee prorate the refund based on the percentage of income I earned at filing vs. the entire year of 2012?

    2) Because of the commission check I received AFTER the discharge as well as the increase in income I'm now earning with the job change, my 2012 tax return will show an income greater than I expected upon filing for ch. 7. In fact, I'm not quite sure I would have even qualified for ch. 7 based on the amount of income I earned over the course of 2012 (most of it was after the discharge). Therefore, when the US trustee sees my 2012 tax returns, can he possibly reopen or revoke the ch. 7 discharge? Everything was completely honest and accurate from my standpoint at the time of filing. I was just fortunate to make more money after the ch. 7 discharge.

    Any insight you can provide would be greatly appreciated. Thanks!

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  • January 19, 2013 at 6:57 pm
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    Thomas, here's my take on your situation without knowing the details.

    (1) Your bankruptcy estate includes the part of your 2012 tax refund that was earned in 2012 up to the date of your bankruptcy filing. That's often calculated based on the number of days in the period before filing vs. the number of days in the entire year. However, in your situation, a more accurate method would be based on the $ earned in the period before filing vs. the $ earned in the entire year; this would also give you a more favorable result.

    (2) You shouldn't have a problem regarding your after-filing income if that income was not able to be anticipated by you at the time of filing. You may have to show why that was true.

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  • January 19, 2013 at 7:05 pm
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    Thanks so much for your help, Malcolm. It's greatly appreciated. One last question…

    I wasn't in the least bit anticipating the after-filing income. Having said that, in your experience, how hard do you think the trustee will push for me to prove this?

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  • January 19, 2013 at 7:18 pm
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    Thomas, there's really no way for me to even hazard a guess about what the trustee or U.S. Trustee will do. It's a very individual matter.

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  • January 22, 2013 at 7:44 pm
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    I filed chapter 7 bankruptcy in Feb 2012 was discharged in April 2012, will I get to keep tax return for 2012?

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  • January 22, 2013 at 7:54 pm
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    Heather, the short answer is that you'll probably get to keep all of your 2012 tax refund because (1) presumably almost all of your income in 2012 was earned after your filed your bankruptcy and (2) the bankruptcy trustee probably isn't looking at your case because you filed so early in 2012.

    The longer answer is that if you didn't list and exempt the possible refund in your bankruptcy filing, then the trustee could take the part of your refund that was earned prior to your bankruptcy filing. But that would be such a small part that it's probably not going to happen.

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  • January 29, 2013 at 7:58 pm
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    Hi
    My Wife and i filed bankruptcy in Sept2012 and received our discharge letter in Dec2012. We are getting ready to file our 2012 taxes this week. Will I be able to keep my tax refund or will it go to trustee?

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  • January 29, 2013 at 8:42 pm
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    Kevin, there's no way I can know the answer to that question. It depends on (1) whether you listed and exempted the possible refund (from 2012 earnings prior to your filing) in your bankruptcy filing, (2) whether the refund will be enough for the trustee to bother with, and (3) whether the trustee is still looking at your case; since you filed later in the year, that last point is possible. You should ask your own bankruptcy attorney about this.

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  • January 31, 2013 at 7:40 pm
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    Hello Malcolm,

    If I need to file Chapter 7 but I am anticipating a refund that will help me in my current unemployed status when is the best time to file for Chapter 7 and avoid having it taken by the trustee?

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  • January 31, 2013 at 7:50 pm
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    Mary, if you file bankruptcy now, in early 2013, you may have a refund for 2012 that you would need to exempt to prevent the trustee from taking it. If you can't exempt it, better to get the refund and "spend it down" before filing bankruptcy. If it's still early in 2013, you probably wouldn't have much to worry about for a refund on your 2013 taxes unless it was to be very large. But exempting it, if you can, is always best.

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  • February 5, 2013 at 9:37 pm
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    Hello,
    My husband and I filed Chapter 7 in April 2012 and we received a discharge in September 2012. I was told by my attorney that I have to send a complete copy of our 2012 returns (which I did last week) and then once we receive a refund check that is to be sent to the trustee as well. Reading some of the previous comments, since we filed early the prorated portion should be small but if there is a chance he would not take any is this something they usually notify you of before you send the refund check or do they just make you send it and then send the check back to you? Is this different per state? I did ask my attorney but he seems to think he will take his portion no matter what it is (at least that's the impression I got). I've tried researching whether or not they can take EIC and child tax credits in AZ since that is basically our refund but have not had much luck. Any insight would be appreciated. Thanks.

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  • February 5, 2013 at 9:47 pm
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    Krys, I'm not going to be much help to you because your own attorney is familiar with the procedures in your particular court and trustee and I haven't a clue. Your attorney is also the one to ask about your EIC and child tax credits. Good luck to you!

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  • February 11, 2013 at 6:43 pm
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    Hello,

    I filed Chapter 7 on July 5, 2012 and it was discharged Oct. 15, 2012. After filing my taxes and checking my refund status I found out my refund was being sent to my bankruptcy trustee. This is something I did not know since I filed my bankruptcy on my own. After speaking with the trustee I know that I will receive a portion of refund. Not all of my income for 2012 is from earned income. My income was from working, closing out my retirement and unemployment. I only worked of 3 months prior to filing for bankruptcy and afterwards worked 4 months before receiving unemployment. No federal taxes was deducted from my employment but was deducted from retirement and unemployment. My refund consisted mainly of the EITC and Child Tax Credit. My question is how will the trustee calculate what goes to them and what comes to me since the majority of income was received after filing in July? Even though they have my tax returns will review as carefully as I have and should I contact them with my breakdown?

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  • February 11, 2013 at 7:40 pm
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    Joy, you're asking more detailed questions than I can answer without me being your bankruptcy attorney and knowing all the details of your case. In general, the trustee should determine in some manner the portion of the refund earned prior to your bankruptcy filing, and that would be the part that he/she could take for your creditors, assuming that you didn't exempt the refund and that you owe your unsecured creditors more than that. You could send them your breakdown if you wish. Good luck to you.

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  • March 16, 2013 at 11:50 am
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    I have filed a chapter 13 and am paying it over a 5 year plan which will pay off all my debt, through wage garnishment, I just found out that my taxes are being delayed because I am in the chapter 13, at no point of our attorney meetings OR creditor meeting were we told that we would have to forfeit our taxes . I really need to do some home repairs, kitchen floor about too cave in, roof leaking, carpets are horrible and to throw into the mix I have a granddaughter put into the mix now. I have been reading so many different things and the above basically pertain to chapter 7. I live in North Carolina and filed in Winston Salem . Would this information be told up front, and will I be able to keep my refund ?

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  • March 16, 2013 at 12:06 pm
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    Anna, you're asking me a question that is one you need to ask your own bankruptcy attorney. I know nothing about what was included in your Chapter 13 filing schedules or the practices of your particular court and trustee. Sorry, but I'm going to have to leave it at that.

    Good luck to you!

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  • March 19, 2013 at 8:44 pm
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    HI, I had my bankruptcy disharged Sept 2012, but the trustee petitioned for my 2012 tax return. My boyfriend and I take turns each year claiming our son. If this year its his turn to claim our son and I don't, can the trustee leagally do anything if I don't claim my son,which would make my tax return that she is taking smaller?

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  • March 19, 2013 at 8:51 pm
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    Sara, I "think" what you propose would be fine, but I'm not a tax expert so without researching your issue I couldn't say for sure. Good luck to you :-)

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  • April 20, 2013 at 1:40 pm
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    I filed a chapter 7 bankruptcy in June of 2011 which was discharged in March of 2012. Can they withhold my 2012 tax return if I didn't expect to receive it?

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  • April 20, 2013 at 5:20 pm
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    Tara, the way I read the facts you presented is that since all your earnings for 2012 were received after you filed your Chapter 7 in 2011, any tax refund you receive for 2012 is not a part of your bankruptcy estate and therefore would not be available to the trustee in your bankruptcy.

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  • July 29, 2013 at 1:52 pm
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    my question is im in the process of filing bankruptcy i have my creditors meeting on 08/27 will i be entitiled to give my tax refund TO THE TRUSTEE OR A PORTION?

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  • July 29, 2013 at 2:10 pm
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    Andrea, it sounds like you've already filed your bankruptcy case; I'm assuming that it's a Chapter 7. I think you are asking is you will have to give all or a part of your tax refund to the trustee. If you received that refund before you filed your case, then there is no refund to consider. That money is just like any other money you have and would need to be exempted to prevent the trustee from taking it. If you've not received the refund yet, then it depends on how you listed the refund in your bankruptcy filing and if it was properly exempted. You need to discuss this with your own bankruptcy attorney. If you don't have one, you should consider retaining one.

    Good luck to you!

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  • July 30, 2013 at 10:40 am
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    My husband and I filed chapter 13 in November 2012. We received a tax refund of 4100.00 in May. My husband spend the money on necessary car repairs. I believe that we were supposed to give the money to our trustee. What will happen next? I am very nervous about this…

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  • July 30, 2013 at 12:42 pm
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    Marie, I can't tell you the answer to your question because I don't know what was in your filing schedules and payment plan. and also don't know what court and trustee you're dealing with. You need to ask you own bankruptcy attorney. If you don't have one, I recommend that you get one in your area who is experienced in Chapter 13s.

    Good luck to you!

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  • February 28, 2014 at 1:56 pm
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    I filed a chapter 7 without an attorney in june2013 it was discharged in September 2013. I hadn't worked until the last quarter on the year in 2013. The trustee notified the IRS and now my refund is being sent to the trustee.I live in Az. Are there ways to find out how much of my refund he can keep? Is this soley up to his discretion? Aren't there guidelines or laws he has to follow? Most of my refund in from earned income and child tax credit..please help

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  • February 28, 2014 at 2:12 pm
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    Alondra, if you didn't list and exempt a possible tax refund, then the trustee can take all of it (or at least the part that was earned before your filed your case) up to the amount you owe your unsecured creditors. About the fact that the refund is from earned income and child tax credit, it depends on the particular court and trustee. Filing a Chapter 7 bankruptcy is filled with peril for the unknowing. If it were simply a matter of filling out some forms, there would be no profession of bankruptcy attorneys. If you want to have any chance of improving your position in this matter, you need to retain an experienced bankruptcy attorney in your local area.

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  • April 3, 2014 at 1:53 pm
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    Hi we filed for bankruptcy in November, we filed our taxes February 14 how long does it normally take to get your taxes back when in bankruptcy we are to get 1500 that was in our agreement with the trustee , thanks

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  • April 3, 2014 at 2:58 pm
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    Shane, as far as I know your bankruptcy won't have any effect on when you receive your tax refund unless special arrangements were made with the IRS. You really should be asking this of your own bankruptcy attorney since he/she knows the details of your case.

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  • April 17, 2014 at 7:42 pm
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    My husband and I filed bankruptcy in Dec. 2013 and had our hearing in Feb. 2014 we asked for our 2013 tax refund to be exempt and it was granted. We received the refund but the bankruptcy hasn't been discarged yet. It will be complete soon. If we are entitled to tax refund next year 2015 (for the 2014 tax year), will we lose it?

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    • April 17, 2014 at 7:52 pm
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      AJ, I assume this is a Chapter 7 bankruptcy. Only assets you owned at the time you filed your bankruptcy (like your right to the 2013 tax refund) became a part of your "bankruptcy estate" and available for the trustee to take and give to your creditors (if you couldn't exempt them). None of your tax refund for tax year 2014 was earned before you filed your bankruptcy, so you get to keep it. Enjoy!

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  • July 27, 2014 at 3:37 am
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    Hello, and thank you in advance. I live in Atlanta, GA. I plan to wait until early 2015 ( just after receiving my 2014 tax refund check in hand ) to file chapter 7. Should my 2014 tax refund money have anything at all to do with my filing bankruptcy in 2015? Will I need to spend the return money from 2014's taxes ( keeping receipts to show it was spent on living expenses ) before filing chapter 7? I guess my question is does money earned the year before filing bk have any bearing on a case?

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  • July 27, 2014 at 6:19 am
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    Erica, after you receive your tax refund in early 2015, the refund money is "just money" like any other money your have in your bank accounts. All your bank accounts (and cash) would be listed in your bankruptcy filing. They would need to be "exempted" in order for you to be able to keep that money and not pay it over to the trustee for the benefit of your creditors. Therefore the subject of exemptions is an important one in bankruptcy. Also, exemptions vary state by state. Do yourself a big favor and consult with an experienced bankruptcy attorney in your local area so you can plan properly for your upcoming bankruptcy.

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  • January 21, 2015 at 9:09 pm
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    Hello,

    My case was filed in September 2014, I had my meeting of creditors in November 2014. The discharge is supposed to happen at the end of January 2015. I did not work from January until end of June 2014. The trustee asked about my predictions for 2015 tax refund, but upon finding out that I did not work for over half a year, he said "nevermind" and said he isn't listing it. I just calculated my refund to be around 5k since I used an online calculator (as a single mom and head of household). How will that work for me? I used all of my wildcard exemptions.

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  • January 27, 2015 at 10:40 pm
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    I live in SC my husband and I filed bankruptcy in March 2014 and the case was discharged in July 2014 can they take our tax refund this year???

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    • January 27, 2015 at 10:48 pm
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      Tara, from the facts you outlined, I'd say that you probably don't have to worry about that. Even if the trustee inquires about your tax refund (which the trustee is very unlikely to do), you would lose only the part of the refund that was earned before you filed your bankruptcy, which would be about 1/6 of it.

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  • February 1, 2015 at 5:58 am
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    This all has been a nightmare!!! I wish I never had filed for bankruptcy….I was making payments on both of the main bills one of which was medical bills, well need less to say my spouse filed first not making me aware he was filing (separated at the time) and then I get stuck with some of the Joint debt….Then I started getting garnished and I freaked out, filed then got a dismissal for failure to appear (miscommunication w/ attorney) which I guess is good thing because I can keep my refund, so he says He's going to file again after I file my taxes which will be tomorrow…I plan on using my refund to pay off my son's braces and putting some money down for a used car can I pay my rent 3 or 4 months and car insurance in advanced…I just wish I was given better advice because my debt is not even over $8,000, in Utah they have the homestead exemptions.

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  • February 1, 2015 at 7:48 am
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    Joanna, I don't see a problem with your tax refund for 2014 if you file a bankruptcy now, in 2015. But you should ask your own attorney these questions, not an outsider who doesn't know the details of your situation.

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  • February 13, 2015 at 11:58 am
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    This has also been a nightmare for me!! I wish I would have got better advice. I filed chapter 7 had meeting with attorney and judge December 19th thought everything was fine and over no one said anything about any of this effecting my taxes. filed my taxes January 20 and just found out last week that my 7500$ refund was issued to my trustee??? I am not sure at this point what to do I feel like I am getting the run around my attorney clearly made a mistake on my paperwork and has put in an amendment but who knows what will happen….nys

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  • February 13, 2015 at 5:48 pm
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    Jessica, I don't know what to tell you except to discuss this with your attorney and see if you can amend your schedulers and exempt that tax return (you would have to have enough exemptions available), and if that would work at this late date.

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  • February 15, 2015 at 4:55 pm
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    I filed chapter7 in April 1 2014 was discharge in August 2014 my trustee took my refund call my attorney did not get a clear answer I live in AZ. Can I get part of my refund

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  • February 15, 2015 at 5:12 pm
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    Jessica, theoretically, the trustee could take the portion of your tax refund that was earned prior to the date you filed your bankruptcy. From what you said, that would be only two to 2 1/2 months out of the six months that the refund was earned (since you only worked the last six months of the year). So that would be maybe a third of your refund. But unless the trustee contacts you, I don't see that you have any duty to notify the trusee of anything. But of couase I don't know the dcetails of your case.

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  • February 15, 2015 at 5:13 pm
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    Clara, you're asking the wrong person. I know nothing about the schedules you filed in your case. You need to ask your own attorney who knows the details of your case.

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  • February 19, 2015 at 1:55 am
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    Recv'd my 2014 refund check. There was a % sign in front of my name. My last name did not appear on the check. Of course the bank would not cash the check. Does this mean the bankruptcy trustee took my refund? I am behind on my payment as my husband recently dies & I'm on disability. I told the trustee I would pay them $1,000.00. They asked where was I getting the money from … I told them my tax refund (check total was $1500.00, which I did not advise them of)

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  • February 19, 2015 at 6:32 am
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    Deb, I have no idea about that "bad" name on your tax refund check. I suggest you contact the IRS about that. I doubt that it has anything to do with the bankruptcy trustee. Also, I have no idea what payment you're talking about that you're behind on, or anything else about your bankruptcy case. You need to discuss this with your own bankruptcy attorney.

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  • February 24, 2015 at 11:36 am
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    I filed bankrupcy in late dec. Had my meeting with the trustee and she wants my taxes. My husband and i are seperated but still legally married if we file together and they take my taxes will he still be able to recieve his portion?

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    • February 24, 2015 at 11:45 am
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      Carmen, I can't tell from what you say what your situation really is, what you listed and exempted in your bankruptcy schedules, and how you filed your taxes with your husband. You should ask your own bankruptcy attorney those questions because he/she knows the details of your situation.

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  • March 8, 2015 at 2:19 am
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    I filed ch7 2014. & filed my taxes Jan 24,2015 suppose to get back 6178.00 trustee took whole amount but my lawyer said that amount would be divide in half cause my bankruptcy was filled 6/30 2014 which is half a year, minus 450.00 & 1225.00 leaves 1414.00 owed to the trustee per ohio laws but why would he hold my entire refund?

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    • March 8, 2015 at 7:22 am
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      Tara, it sounds correct that because you filed your Chapter 7 in mid-2014 that the trustee could take only one half of your tax refund (less any exemption you claimed for the refund). Regarding why the trustee is holding your entire refund, and how to get back the part that you're supposed to get back, you'll have to ask your own bankruptcy lawyer who knows the details of your your case, your filing schedules, and local procedures for dealing with the trustee in this matter.

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  • March 9, 2015 at 10:50 am
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    T brooks again, well my refund came back but it's less than what I expected, by another 1,534.53, I ask my attorney why he said he would have to play wit some #'s, is there away I can talk to my trustee? My lawyer told me I wasn't aloud to speak with him, why is that? I'm not feeling good about this…

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    • March 9, 2015 at 11:34 am
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      Tara, I simply can't interfere in a matter already being handled by another attorney, especially one way out of my geographic and judicial area. If you're not satisfied with the way your attorney is handling this, you can probably find another attorney in your local area to consult with about it (for a fee of course).

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  • March 17, 2015 at 12:50 pm
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    Hello Malcolm,

    My ex husband, who lives with me filed Chapter 7 last October and is supposed to send his tax refund to the trustee (Ohio). That is all well and fine, but $2123.00 of the refund is EIC which is absolutely exempt. I want to cash the check, take my $2123.00 and then send the trustee the remainder via a personal check. They already have said that that amount is exempt in the paperwork. What can happen if I do this?

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    • March 17, 2015 at 1:51 pm
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      Sandy, you're asking me, a California bankruptcy attorney, questions about specifics in your ex-husband's bankruptcy case in Ohio, including issues which depend on local rules and procedures. I simply can't answer those questions. A local-to-that-court bankruptcy attorney should be able to help you.

      All the best…

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  • March 22, 2015 at 8:36 pm
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    I live in AZ and filed chapter 7 bankruptcy at the end of May of 2014 and was discharged on September 2014. I just filed my taxes and I received back $1400. I was not informed by my attorney or trustee if I need to send in all or any of my refund. Nothing was exempt or mentioned in regards to it. Do I need to send in my entire refund? Will I be entitled to a pro rated amount?

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    • March 22, 2015 at 8:48 pm
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      Jessica, the real answer is that you need to ask your own bankruptcy attorney that question since I don't know the details of your case or the practices of your court and trustee. That said, I'd be surprised if the trustee has any interest in your case or tax refund at this time.

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  • March 28, 2015 at 12:23 am
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    We live in CA my parents file for bankruptcy in January 2015 and went to court on February, the judge then said they need to file their 2014 taxes and gave them a new court day so they can take all their tax returns, what happens if they don't show up? I heard that the case would be dismiss and they can redo the same bankruptcy in a few months later is that true? Or will they be in trouble help please

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    • March 28, 2015 at 7:52 am
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      Mayra, what (I think) you're saying is that your parents filed a bankruptcy (Chapter 7 I also assume) in January 2015, then went to the "creditors meeting" in February where the trustee "continued" their meeting to a later date, telling them they must first file their 2014 income taxes (probably so the trustee would know if they were getting a tax refund).

      Why wouldn't your parents want to do what the trustee said? If it's to hide a large tax refund (that can't be exempted), then there could be a real problem if they don't show up.

      Your parents (and you) should be asking these questions of their bankruptcy attorney, not me who does not know the details of their case or the practices of that particular court and trustee. If they don't have a bankruptcy attorney and filed this on their owe, that was a big mistake. If that's the case, my recommendation is for your parents to very quickly retain an experienced bankruptcy attorney in their area.

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  • April 19, 2015 at 6:49 pm
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    We filed for bankruptcy on April 15th. We received a letter from the trustee requesting our tax refund. However we listed it as exempt under 11 U.S.C. § 522(d)(5). We are low income and own little or no property. We also have a daughter that is Autistic and we were planning on using the refund to pay for to attend a special school this summer. We have lived in Arizona less than 8 months and Colorado, where we were previously, we cannot use their exemptions because we have lived here longer than 6 months. We are having to use the federal exemptions My question is this: What federal code should we have used to claim our tax refund so the trustee cannot take it? Can we amend it so we can keep it?

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    • April 20, 2015 at 11:33 am
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      – Did you have a bankruptcy attorney prepare and file your case? If so, you should direct your questions to him/her. I'm going to guess the answer is no, or else you wouldn't be in this situation.

      – How long did you live in Colorado before you moved to Arizona? If more than 910 days (about 2 1/2 years) or more, then Colorado is the state that controls which exemptions you must use, but since you don't live there now you can't use Colorado exemptions. Therefore you need to use the Federal exemptions. Federal exemptions are in 11 USC § 522(d). The section you used, 11 U.S.C. § 522(d)(5), is the correct one. Did you have a version of that section with up-to-date numbers?

      – Here's a link to a site that has the full text of the section, but with out-of-date numbers.
      https://www.law.cornell.edu/uscode/text/11/522

      – Here's a link to a pdf document that has up-to-date numbers to put into that section.
      http://www.mdb.uscourts.gov/sites/default/files/pricechart_040113.pdf

      – Did you know that (the last time I checked) if you as a married couple filed a joint case, then you get to double the individual exemptions.

      – Yes, you can amend your schedules to change the exemptions. Is it too late to do that? Since you filed on April 15 and it's now only April 20, you should be able to amend any schedules you like

      – I strongly recommend that you retain an experienced bankruptcy attorney in your area to try to remedy your situation.

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  • April 23, 2015 at 1:15 pm
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    I filed Chapter 7 and it was discharged in June of 2014. Federal is still taking my Refund from 2011 Income Taxes. I am not sure who to contact about this. I live in Wisconsin

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    • April 23, 2015 at 10:20 pm
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      Beth, I have no idea about what you listed in your schedules in your bankruptcy or any details about those taxes. You need to ask your ow bankruptcy attorney these questions..

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  • April 23, 2015 at 1:39 pm
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    We filed for Chapter 13 September 2011 for 5 years plan. When we filed our BK our lawyer and the trustee never mentioned to us about sending copies of tax return and tax refunds. We are now on 4 1/2 years of our payments plan. This year we are expecting a tax refund of $6,700, partly because we over paid my health insurance through covered California. Are we suppose to send our refund to the trustee even though he didn't ask for it. In the passed 4 years the trustee never asked any of our refunds and income tax return. We emailed our attorney about this matter but she hasn't responded yet.

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    • April 23, 2015 at 10:23 pm
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      Rey, that's much to complex a situation for me to say anything about it except that you definitely need to ask your own bankruptcy attorney about it.

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  • May 19, 2015 at 5:39 pm
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    My husband filed a bankruptcy chp 7 in 2014. They are now holding our joint return. The trustees office said we need to bring last yrs 1040's so that they can pro-rate it. What does this mean? I am in the process of buying a house in my name & we need that money to put down on it. Now I am worried. Is there anything we can do? I am really devastated over this. And really upset he didn't have his atty doing more to protest this. Any answers for us would be greatly appreciated ♡

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    • May 19, 2015 at 5:49 pm
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      Vanessa, I can't give you legal advice about your husband's Chapter 7. For that, he needs to ask his own bankruptcy attorney. But in general, if that tax refund wasn't "exempted", the trustee gets to take the portion of it that was earned prior to him filing bankruptcy. Could it have been exempted (if it wasn't)? I have no way of knowing that. It depends on your state's exemption laws and also what other assets he had. Again, get him to ask his own bankruptcy attorney about this.

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  • July 30, 2015 at 10:14 pm
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    Hi Mr. Ruthven,

    I thank you in advance for reading this message. I have a 20-year legal background as a paralegal in civil lit (not bk), so I am preparing to file my own Chapter 7 soon. I have read the Nolo book several times, and with my background feel pretty comfortable with everything except this issue. Right now my husband and I are both students working part-time, so we cannot afford an attorney. I am in Southern Cal., San Diego. Regarding the tax refund issue, I do not have real estate, assets or major property and seem to have funds left from the wildcard exemption to cover any past or future tax refunds. In May 2015, we did receive a tax refund for tax year 2014, which has mostly been spent on living expenses and for sure no "luxury" items.

    So, should I: 1) Claim that refund which has already been received and spent as exempt, or just the money that is left as exempt; and, 2) From past posts here, I gather I should claim any future refund from 2015 tax year as exempt as well. I just wanted to make sure that is correct. (I don't know exactly what my refund would be, and it would be mostly EIC, child tax credits, and Education credits, so I wouldn't know how to estimate except look at last year's tax table and estimate what we think our earnings will be from this year); and 3) Do I include that tax refund (which was mostly tax credits) as income on my Statement of Financial Affairs? Any help is greatly appreciated! Thank you.

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    • July 30, 2015 at 10:54 pm
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      Terese, any tax refund you've already received is now just money like any other money you have (or don't have). Re the prospective tax refund for 2015, you should list and exempt what you think it might be, but only the amount earned in 2015 prior to filing your
      Chapter 7. Just pro-rate it based on the number of months prior to filing divided by 12.

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  • August 13, 2015 at 7:03 am
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    We filed bankruptcy in 2010 was discharged in 2012 July 2012 we finally got approved for my daughter's disability so we're owed back taxes and some of its prior to bankruptcy from 2007 to 2014 thier reasesing are then entitled to the years before bankruptcy after discharge

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    • August 13, 2015 at 7:12 am
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      Amanda, I'm unable to understand some of your question, but in any event your issues are complex (discharge of back taxes) and you need to direct your questions to your own bankruptcy attorney. If you didn't have one for your bankruptcy, you should retain one to analyze your situation.

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  • January 22, 2016 at 1:09 pm
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    My husband and I filed bankruptcy in NYS on November 30, 2015. Had the 341 meeting on 1/8/16 with the trustee who saw our income is well below the federal poverty level and only asked to see a copy of our 2014 Federal taxes where we got back less then $900. He never said anything about taking the 2015 refund as we didn't even realize we would be getting one. Our court filing fee was even waived due to our income. A paralegal filled out our forms – we took the NY not federal exemption. Only listed personal items + 2 cars that are under $3500 book value. Didn't list tax refund but being we don't own real estate I was reading we might be able to keep our tax refund as long as assets/cash are below $10,000. I lost my job in May 2015 (self-employment). Normally we barely got anything back or had to pay in but with the job loss we are getting a nice refund that would be used for car repairs, heating expenses, etc (nothing lavish). What can we expect?

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    • January 22, 2016 at 4:34 pm
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      Kathy, I really don't know what you can expect. I have no knowledge of the practices of trustees in your area. If you want to be sure you get to keep a refund, you'll need to amend your filed schedules to list the refund and exempt it. You would probably need the assistance of a local bankruptcy attorney to do that.

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      • February 9, 2016 at 6:39 pm
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        I was able to amend a couple of weeks ago with no issues. I had a private creditor wanting a portion of my refund and had a teleconference with her and the judge and he flat out told her my husband and I have no assets.

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        • February 9, 2016 at 6:56 pm
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          Congratulations, Kathy! It also sounds like you had a very good judge.

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  • February 9, 2016 at 5:24 pm
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    I received my 2014 refund check 2/2015. The money was spent buying food, books, housing, clothes for my two college age children. I filed Ch. 7 in April/2015. When the trustee asked about the refund I gave him an itemized list of what the money was used for. My case was discharged 7/2015 but it has not been closed. I got a notice from his office stating that I should not deposit or cash my 2015 refund check and send it to his office. As I understand it, the trustee is only entitled to the portion of the refund that I earned before I filed in April. So why does he want me to send the entire check to him? Can he revoke my discharge if I don't send the entire check. If he does revoke my discharge will he return all the assets in the bankruptcy estate back to me?

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    • February 9, 2016 at 5:41 pm
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      Dorothy, from what you said the trustee would be entitled to the portion of your refund that was earned in 2015 prior to your Chapter 7 filing. You need to challenge him/her on this. But first, did you list and exempt the tax refund in your Chapter 7 filing? If not, you'll need to amend the schedules to do that. Contact your own bankruptcy attorney and get him/her to handle this for you. If you didn't have a bankruptcy attorney when you filed your Chapter 7, it's time to get one now.

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  • March 4, 2016 at 2:06 pm
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    I filed for chapter 7 in Michigan in 2014. It was granted in 2015. I just filed my taxes and I'm suppose to get 715.00 back this year,2016. Can they keep my taxes after my bankruptcy was granted.?

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    • March 4, 2016 at 2:17 pm
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      John, if you listed the tax refund in your filing and also exempted it, there's no problem. If you didn't, it depends on whether the trustee is still looking at your case which I have no way of knowing. Good luck!

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  • May 1, 2016 at 10:43 am
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    I want to dismiss my ch 7 discharge. My debt is nothing but small collection items that are my medical bills after heart surgery. What consequences am i facing? I think the best way to dismiss my discharge by not giving back my tax refund back to trustee. Reason for all this is that i will have 80k in cash i can play with to reistablish my credit. My debt was 215k that included 130k mortgage. What are your thoughts? What can i file to dismiss my bankruptcy without getting my attorney involved? I am working with bank to do short sale.

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    • May 1, 2016 at 12:44 pm
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      Gina, I gather from what you said that you filed a Chapter 7 bankruptcy and now want to have that case dismissed before you receive your discharge of debts. First, you have no absolute right to have your case dismissed. Second, from what you said, it seems that you have $85K in unsecured debts (medical bills, credit cards, etc.) and also have $80K in cash and/or due from a tax refund. If that's correct, I can certainly see the trustee objecting to a dismissal. Next, simply not giving your tax refund to the trustee won't accomplish anything except (possibly) get you into serious trouble. And you want to have your case dismissed without getting your attorney involved? Why in the world would you want to do that? Your bankruptcy attorney knows far more about your case and your situation than I (or you) do.

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  • February 22, 2017 at 11:37 pm
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    I filed bankruptcy september 28 2016 hearing was nov . Discharged 1/11/2017 i have a offset on my income taxes my amount of taxes 6385 i got a redund for 3695.00 mostly earn income credit will i go to jail or my discharge will be revoke. I have kids i didnt except anything i usually get nothing back. Last year i was unemployed for a couple of months. Most of it is my EIV credit are you familar with Arizona laws.

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    • February 23, 2017 at 7:23 am
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      Jamesa, I don't think there is any way that you would go to jail or your discharge would be revoked. That said, I can not advise you about your bankruptcy case that I had nothing to do with and really know nothing about, and also is in Arizona where I don't those laws or court and trustee customs. You need to direct your questions to your own bankruptcy attorney who prepared and filed your case.

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  • February 23, 2017 at 1:16 pm
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    Some trustees don't even worry about taking the taxes. We had no issue last year with ours.

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    • February 23, 2017 at 1:24 pm
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      Kathy, if you didn't list the possible refund as an asset and exempt it in your bankruptcy filing, you probably just lucked out which is great.

      Reply

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