Comments on: Are you expecting a tax refund? http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/ Wed, 25 Jan 2012 04:07:34 +0000 hourly 1 By: Malcolm Ruthven http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-3173 Malcolm Ruthven Wed, 25 Jan 2012 04:07:34 +0000 http://ca-bankruptcylaw.com/?p=418#comment-3173 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. 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.

]]> By: Jeff http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-3172 Jeff Wed, 25 Jan 2012 03:49:01 +0000 http://ca-bankruptcylaw.com/?p=418#comment-3172 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! 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!

]]> By: Malcolm Ruthven http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-3171 Malcolm Ruthven Wed, 25 Jan 2012 03:11:45 +0000 http://ca-bankruptcylaw.com/?p=418#comment-3171 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. 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.

]]> By: Jeff http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-3170 Jeff Wed, 25 Jan 2012 02:30:51 +0000 http://ca-bankruptcylaw.com/?p=418#comment-3170 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! 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!

]]> By: Malcolm Ruthven http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-3125 Malcolm Ruthven Sat, 14 Jan 2012 14:20:31 +0000 http://ca-bankruptcylaw.com/?p=418#comment-3125 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. 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.

]]> By: Marci Moore http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-3124 Marci Moore Sat, 14 Jan 2012 14:04:57 +0000 http://ca-bankruptcylaw.com/?p=418#comment-3124 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. 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.

]]> By: Malcolm Ruthven http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-3120 Malcolm Ruthven Fri, 13 Jan 2012 22:28:32 +0000 http://ca-bankruptcylaw.com/?p=418#comment-3120 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 <a href="http://ca-bankruptcylaw.com/2011/12/bankruptcy-wild-card" rel="nofollow"><strong>this article</strong></a> . 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 .

]]> By: Jill http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-3119 Jill Fri, 13 Jan 2012 21:49:00 +0000 http://ca-bankruptcylaw.com/?p=418#comment-3119 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? 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?

]]> By: Malcolm Ruthven http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-2512 Malcolm Ruthven Wed, 19 Oct 2011 04:57:01 +0000 http://ca-bankruptcylaw.com/?p=418#comment-2512 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. 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.

]]> By: Stephanie http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-2505 Stephanie Tue, 18 Oct 2011 20:48:38 +0000 http://ca-bankruptcylaw.com/?p=418#comment-2505 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. 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.

]]> By: Malcolm Ruthven http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-2477 Malcolm Ruthven Fri, 14 Oct 2011 01:43:39 +0000 http://ca-bankruptcylaw.com/?p=418#comment-2477 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. 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.

]]> By: Zel http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-2476 Zel Fri, 14 Oct 2011 01:02:28 +0000 http://ca-bankruptcylaw.com/?p=418#comment-2476 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? 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?

]]> By: Malcolm Ruthven http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-1626 Malcolm Ruthven Sat, 28 May 2011 02:01:00 +0000 http://ca-bankruptcylaw.com/?p=418#comment-1626 Thank you, Tish, for the appreciation, and yes I'm in the San Francisco Bay Area. Glad to help. Thank you, Tish, for the appreciation, and yes I'm in the San Francisco Bay Area. Glad to help.

]]> By: Tish http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-1624 Tish Sat, 28 May 2011 01:44:34 +0000 http://ca-bankruptcylaw.com/?p=418#comment-1624 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. 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.

]]> By: Malcolm Ruthven http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-1623 Malcolm Ruthven Sat, 28 May 2011 00:48:43 +0000 http://ca-bankruptcylaw.com/?p=418#comment-1623 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. 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.

]]> By: Tish http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-1622 Tish Sat, 28 May 2011 00:15:27 +0000 http://ca-bankruptcylaw.com/?p=418#comment-1622 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? 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?

]]> By: Malcolm Ruthven http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-1620 Malcolm Ruthven Fri, 27 May 2011 21:49:01 +0000 http://ca-bankruptcylaw.com/?p=418#comment-1620 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. 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.

]]> By: Tish http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-1619 Tish Fri, 27 May 2011 21:31:30 +0000 http://ca-bankruptcylaw.com/?p=418#comment-1619 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? 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?

]]> By: Malcolm Ruthven http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-1411 Malcolm Ruthven Thu, 05 May 2011 21:52:53 +0000 http://ca-bankruptcylaw.com/?p=418#comment-1411 They go to the trustee if the trustee requests them. They go to the trustee if the trustee requests them.

]]> By: Nicole Cardinal http://ca-bankruptcylaw.com/2009/08/are-you-expecting-a-tax-refund/comment-page-1/#comment-1409 Nicole Cardinal Thu, 05 May 2011 21:40:50 +0000 http://ca-bankruptcylaw.com/?p=418#comment-1409 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? 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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