Comments on: Are you expecting a tax refund?

By: Malcolm Ruthven

Malcolm Ruthven — Sun, 16 May 2010 04:39:20 +0000

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.

By: Rob Dean

Rob Dean — Sun, 16 May 2010 03:55:12 +0000

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?

By: Malcolm Ruthven

Malcolm Ruthven — Thu, 06 May 2010 02:48:26 +0000

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!

By: Sharon

Sharon — Wed, 05 May 2010 18:10:58 +0000

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

By: Malcolm Ruthven

Malcolm Ruthven — Mon, 22 Mar 2010 00:33:50 +0000

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.

By: Krista Arata

Krista Arata — Sun, 21 Mar 2010 20:04:28 +0000

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.

By: Malcolm Ruthven

Malcolm Ruthven — Fri, 23 Oct 2009 23:43:27 +0000

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.

By: Lynn Topolinski

Lynn Topolinski — Thu, 22 Oct 2009 17:16:13 +0000

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?