QUESTION
Can I keep state and federal tax refunds under chapter 13?
Asked on Feb 01st, 2014 on Bankruptcy - New York
12 ANSWERS
The answer to your question depends entirely on your Chapter 13 plan, as proposed and confirmed. Some debts can keep tax refunds under certain circumstances, in whole or in part, and others cannot.
Answered on Feb 14th, 2014 at 5:23 AM
Yes and no. If you filed your BK earlier this year and received your refund after you filed, your attorney will have to reconcile this in the Chapter 13 plan analysis (you end up paying a portion of the refund you are not allowed to keep to the Chapter 13 Trustee for the benefit of your creditors). Earned Income Credit and Child Tax Credit can not be touched by the Trustee, so these amounts you can keep with no adverse affect.
Answered on Feb 05th, 2014 at 9:01 AM
2 Awards
No. They are contributed to your plan, in addition to your monthly payments.
Answered on Feb 05th, 2014 at 9:01 AM
Consumer Bankruptcy Attorney serving Los Angeles, CA
at
Orantes Law Firm
Update Your Profile
It depends. Most confirmation orders require you to contribute the refunds to your Chapter 13 plan if your plan pays your creditors less than 100% of their debt. Cases with plans paying much less than 100% of the unsecured debt represent over 90% of my clients' cases (i.e., very few pay 100%) and most actually pay 0%. However, some judges in the Central District simply do not require that you contribute your tax refunds. You should look at your confirmation order to see if it is required in your particular case and confirm with your counsel. Regardless of that, though, there are perfectly proper and legal ways to keep the amounts that would be refunded to you by planning properly and amending your W4 forms ahead of time.
Answered on Feb 05th, 2014 at 9:00 AM
Not unless you have found an exemption that covers these assets and your plan doesn't say that you are required to turn them over. However, every chapter 13 plan that I see does require the tax refunds to be paid into the plan to be used towards paying unsecured debts.
Answered on Feb 05th, 2014 at 9:00 AM
Commercial Bankruptcy Attorney serving Davie, FL
at
Law Office of Jeffrey Solomon
Update Your Profile
Chapter 13 bankruptcies last from 3-5 years. The issue of each year's tax refund depends on where you are located. Different chapter 13 trustees have different practices on how refunds received during the plan are treated. Sometimes the issue is just whether the refund is larger then the refund in the year prior to filing. This issue should be discussed with your local attorney.
Answered on Feb 05th, 2014 at 8:59 AM
Chapter 7 Bankruptcy Attorney serving Woodland Hills, CA
at
The Law Offices of Marc Weinberg
Update Your Profile
My experience has been the Trustee will want you to turn over the refund, unless you have a compelling reason what it should not be turned over.
Answered on Feb 05th, 2014 at 8:59 AM
Deborah F. Bowinski
It depends upon the language in your plan and the practices in your jurisdiction. Check with your lawyer!
Answered on Feb 05th, 2014 at 8:59 AM
Not unless you have exempted them somehow. Usually a debtor forecasts the next tax refunds s/he is expecting to receive and lists them as a potential asset on Schedule B and applies as much exemption as possible on Schedule C. The Chapter 13 trustees in Oregon allow you to exempt the federal Earned Income Credit on a continuing basis in your Plan, and if you have appropriate documentation, you can set aside an additional amount every year from your tax refunds. You can exempt refunds on an ad hoc basis if emergencies arise but that requires filing an amended plan which must be served on all your creditors, so it is not a simple process. You should not attempt a Chapter 13 without a lawyer unless you are prepared to deal with all the paperwork and approvals for 3 to 5 years.
Answered on Feb 05th, 2014 at 8:58 AM
Bankruptcy Attorney serving Bloomfield Hills, MI
at
Bredow Law PLC
Update Your Profile
Every case is different, whether or not you have to turn over your tax refund will depend upon how much of your debt your plan will pay, and will depend upon other factors. The terms of your plan will determine your responsibilities. But generally speaking, the Chapter 13 Trustee will want you to turn over your federal tax return and does not usually seek your state or local refunds. You should consider changing the amount of the tax exemptions that you claim and reduce the amount of your refund that you expect to receive.
Answered on Feb 05th, 2014 at 8:58 AM
bankruptcy Attorney serving Paul, ID
at
Paul N. J. Ross Law, PLLC
Update Your Profile
Generally, in Idaho, no. They usually must be turned over to the Trustee.
Answered on Feb 05th, 2014 at 8:58 AM
Only up to 1500.
Answered on Feb 05th, 2014 at 8:57 AM