Tax Refund

[KaceeTx]

I realize this will vary state to state, but I’m so anxious about this tax process. I’ve read someplace the first year you file taxes after bk, the trustee can’t take refund from before the month you officially filed. Ex: I file in June, they would only get 50% of my refund. I’m not sure at all if that’s accurate or it depends on the state you’re in.

I am not in a 💯 plan and my lawyer says I’ll probably have to give my whole refund to the trustee, but it depends on what “mood” the trustee is in. I’m hopeful I can keep some.

Also, how do you know how much or how to send? My lawyer keeps saying wait, wait…so will a letter come in the mail? I’m curious how long after your refund if deposited into your account do you have to send it? I got my refund today. Do they take both state and federal potentially? I just want to know so I can get on with it!

Thank you!

[justbroke]

A Chapter 13 doesn't work the same way that a Chapter 7 works, with respect to tax refunds. Your confirmed plan will spell out what is required. It may read "all tax refunds" which means as it literally reads. A Chapter 13 says you must commit "all" disposable income to the care and custody of the Chapter 13 Standing Trustee if you are not in a 100% plan. It's that simple.

So be careful what you read. Only rely on your personal confirmed plan and the word of your attorney.

The most important thing about Chapter 13s and tax refunds (and returns) is that it can differ from State to State and Plan to Plan. You must look to your specific State/District requirements and your specific plan requirements. You can't ask others how it worked for them, because that is only anecdotal. I can't tell you how it works in Oklahoma which has 3 federal bankruptcy districts. It could be different even between the districts and based on a specific Chapter 13 Standing Trustee as to how they deal with tax refunds in a Chapter 13.

If you are in a State, District, or under a Chapter 13 Standing Trustee that requires the surrender of all of any tax refund, then you must do just that. There are procedures to keep some or all of the tax refund, but you must follow that process.

[KaceeTx]

Thank you. I guess I’m just highly stressed and it’s all new to me, so I’m trying to ease my anxiety. I feel like I annoy my lawyer due to the unknown.

[justbroke]

I'm sure every bankruptcy attorney knows that their clients are nervous, anxious, and downright confused by the paperwork. When I joined BKForum, it was a relief because I could share my anxiety with others and they would talk me down! Just know that you are amongst friends and we have been through this too. I like to say "do as I say... not what I did!"

For now, and with tongue firmly in cheek, I say... relax! You paid your attorney to worry for you.