6 Months into Chapter 13

[jackson123]

Hello All,
This site has been an amazing help with questions we’ve had about this process. Thank you!
I have a few questions that maybe a few of you have come across.
We filed in August and our case (5 year, 10% plan of CC debt) was confirmed in December. We are due about a $7K tax return this year and have no idea if this will go to the trustee or if we get to keep a portion of it. I keep reading on this site that this is stated on your plan. I have looked at our proposed plan and there is no mention of future tax returns. Where would you find if future tax return refunds were included? I assume if it’s not in our plan we need to contact the lawyer to see what (if any) we can keep.
How do most of your chapter 13 trustee’s monitor income? Do they check bank statements or yearly tax returns? This is also something that was not mentioned in our plan.

[justbroke]

Welcome to BKForum.

Whether your Trustee, Plan, or District requires you to surrender a tax refund is too specific to the debtor, trustee, plan, and district. In the model plan here in Florida, it has language that requires surrender of any "refund" from a tax return. In other district and with some Trustees, surrender of the tax refund is not required.

The only way to answer this is through your attorney that filed your Chapter 13. I say this because of what I wrote in the paragraph above. Some attorneys can actually fashion a plan whereby tax refunds are surrendered (or a small amount) even when the district requires such refunds to be handed over to the Trustee.

Please remember that each plan is really unique and the district, trustee, or even attorney can have more influence on the contents of the confirmed plan.

(From our model plan here... "Unless otherwise ordered, consented to by the Trustee, or ordered by the Court, Debtor shall turn over to the Trustee all tax refunds in addition to the Plan Payments. Debtor shall not instruct the Internal Revenue Service or other taxing agency to apply a refund to the following year’s tax liability. Debtor shall not spend any tax refund without first having obtained the Trustee’s consent or Court approval.")

[flashoflight]

Around my area, trustees monitor income via annual tax returns and almost always do nothing even if you get a big raise. Some trustees will require notification of any job changes but otherwise no notification of any other income changes. No more bank statements after initial filing even with a motion to modify plan. As far as tax refunds, any refund greater than $500 goes into the plan. Problem is you don't live in my area. You have to find out what your trustee wants via your attorney.

[jackson123]

Thank you justbroke and flashoflight

[alaska708]

Hello All,
This site has been an amazing help with questions we’ve had about this process. Thank you!
I have a few questions that maybe a few of you have come across.
We filed in August and our case (5 year, 10% plan of CC debt) was confirmed in December. We are due about a $7K tax return this year and have no idea if this will go to the trustee or if we get to keep a portion of it. I keep reading on this site that this is stated on your plan. I have looked at our proposed plan and there is no mention of future tax returns. Where would you find if future tax return refunds were included? I assume if it’s not in our plan we need to contact the lawyer to see what (if any) we can keep.
How do most of your chapter 13 trustee’s monitor income? Do they check bank statements or yearly tax returns? This is also something that was not mentioned in our plan.

why in the world would you ever be getting money back during a Ch 13? You have to be smarter about your tax deductions here.

[jackson123]

I agree and we are thinking about changing our W-4. However, our lawyer has told us that we will not have to turn over the tax refund this year or any other year.

[shipo]

The challenge with mucking about with the W-4 is if you end up owing money to the IRS while in a Chapter 13; I adjusted mine a single notch one year and ended up owing over $2,000, and that hurts when in a Chapter 13.

[alaska708]

The challenge with mucking about with the W-4 is if you end up owing money to the IRS while in a Chapter 13; I adjusted mine a single notch one year and ended up owing over $2,000, and that hurts when in a Chapter 13.

That’s why I’m going to file single and add whatever’s due into the ch 13 case. No way I can afford to even pay 10-% back of the amount I owe. Am hoping for a 0% payback.