Tax Refund Question

[hearr]

I live in Texas & my Chaper 13 was confirmed last November. When it was set up, it was written into the plan that the Trustee would get/receive any income tax refund I might get in excess of $2000.00. After calculating my taxes, I am entitled to a refund in the amount of $680.00, which is definately less than the $2000 allowed. Should there be any reason the IRS would still send that refund to the Trustee even though it's less than the amount allowed? Seems like I read somewhere where this does happen sometimes. And if it does, will the Trustee send it on to me or will I be out of luck? My attorney never made it clear to me whether or not any refund would be sent to the Trustee first regardless of the amount & then sent from him to me if it was under the $2000.00. Does anyone know how this typically works in Texas?

Ken

[oops123]

We are not confirmed yet, and the trustee has our refund (also under the 2k cap). Asked the attorney yesterday when we will see the check. He said if all goes smooth... 3-6 mos. If not, 12mos.

Sux to be me.

edited to add, I am also in Texas

[hearr]

We are not confirmed yet, and the trustee has our refund (also under the 2k cap). Asked the attorney yesterday when we will see the check. He said if all goes smooth... 3-6 mos. If not, 12mos.

Sux to be me.

edited to add, I am also in Texas

This seems ridiculous to me that if the Trustee automatically gets the refund even if it's less than the amount originally agreed upon, that it would take 6-8 months for the Trustee to return it to you. Why does he/she need to keep it that long? Sounds like I might as well just assume that any refund will be sent to the Trustee & to not count on getting anything back regardless of what was written in my plan. Hardly gives me any incentive then to file before the 4/15 tax deadline. Why is it then that we must, by law, comply with all parts of the Bankruptcy law(s), but the Trustee is not held to the same compliance?

Ken

[oops123]

I have no idea, and no idea if this will be an annual problem.

[hearr]

Anyone else have any ideas/input on this. Is this strictly dependent upon the Trustee or is it a State thing?

Ken

[lrprn]

Anyone else have any ideas/input on this. Is this strictly dependent upon the Trustee or is it a State thing?

It could be a trustee or local court thing. This is just one of those many Ch 13 situations where practices vary widely across the country.

The reason that in some situations any refund no matter how small comes to the trustee first is to ensure that if the refund amount is over what is allowed, the trustee gets their money first. For some filers, if they get their money plus the trustee's money first, it can be very tempting to spend all of it and then end up in big trouble when they can't come up with the money to pay to their trustee when it's due. It's the same reasoning that some trustees use to require that your monthly Ch 13 payment be sent directly from your employer rather than being paid by you.

If you *really* need the refund money now that you are entitled to keep (serious car repairs needed, pay post-filing medical bills that are due, household needs an emergency repair, etc) then ask your lawyer to ask your trustee to expedite returning your refund with documentation for why the cash is needed now. Can't hurt and should increase the chances of getting your less-than-$2K refund back more quickly.