How Chapter 13 trustees deal with tax refunds varies somewhat from District to District. The Chapter 13 trustee may take your tax refund. However, if you have calculated your disposable income correctly, your plan may already taken into account any potential tax refunds. In some districts, the Chapter 13 trustee reviews your tax return each year to adjust your plan payment and may require you to turn over any tax refunds you receive. In other districts, as long as you are current on your plan payments, an unexpected refund will be yours to keep. However, before looking to the practice in your District you should check your plan for the answer. Your plan and the court's plan confirmation order govern what gets paid into your Chapter 13 plan. The order, or even your plan, might provide for the tax refund to be turned over to the Chapter 13 trustee to be used in your plan.
Answered on Feb 27th, 2013 at 7:00 PM