Will the chp 13 trustee get my federal tax refund?

[VegasBKLwyer]

Usually, unless you are paying your UNSECURED creditors in full (100%), you must give your tax returns to the Trustee for the length of your Chapter 13 Plan. In this regard, your Chapter 13 Plan WILL address whether your are required to turn over your tax returns and for how long.

[ABC]

Seems like a recipe for disaster.

I have no savings, how am I supposed to set aside some for an emergency if it's constantly evaluated ?

[lrprn]

I have no savings, how am I supposed to set aside some for an emergency if it's constantly evaluated ?

Let's look at this in another way.

Instead of keeping your withholdings at a level that produces a large amount of tax refund at the end of the tax year, instead adjust your withholdings to get *less* combined federal, state, and local tax refund back - ideally around a positive $500 overall. That way you keep more of your own money throughout the year - money you can immediately put into your own savings/emergency fund every month, plus it keeps the cash immediately available for use as needed without any penalty.

If the real underlying problem is that you need more savings discipline, then it makes more sense to focus your energies on increasing that important skill rather than bemoaning the fact that your trustee may take all your refund.

You have the power to reduce your refund amounts yourself for the life of your plan and keep most or all of it out of your trustee's reach. It's perfectly legal to do so. You just have to implement doing it, and then all that extra cash will yours for your emergency fund.

[t45032]

very good so its mean i will get my tax refund not trustte.

[newbie2]

LPRN, please be careful when giving this advice: "Instead of keeping your withholdings at a level that produces a large amount of tax refund at the end of the tax year, instead adjust your withholdings to get *less* combined federal, state, and local tax refund back"

In Michigan it states on our confirmation order to not do anything to change our federal tax status. (Not the exact words, but I don't have my bk papers in front of me.)

This could be true in other states or districts as well. As always, I wouldn't change or do anything during the plan without talking with an attorney.

[jade73]

GA has to turn over theirs unless you have a vehicle that needs to be repaired, otherwise the unsecured creditors divide your refund.

[lrprn]

LPRN, please be careful when giving this advice: ...[/I]

Thanks, newbie - some trustees may have different rules about adjusting withholding. It's a good reminder to always check with your lawyer about any financial changes before doing anything.

[redyhws]

Assuming you are expecting a large tax return amount for 2009, is it best to get it, spend as much as possible on reasonable expenses (like insurance payments, necessary house repairs, etc.), and then file for chapter 13? If you do that, will the trustee get pissed and expect you to pay it back to him (either immediately or increase your monthly payments by such amounts)?

[forgotten]

In my district you can keep your tax refund of any amount.
The only exception is if the trustee finds you are grossly overwitholding, which they determine from the paystubs you submit when you file.