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Income tax refunds and chapter 13

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    Income tax refunds and chapter 13

    My attorney told me that in chapter 13, all income tax refunds need to be turned over to the bankruptcy trustee. We just turned one in from state, and he sent it back to us saying we did not need to turn it in. Anyone know the ruling on this? MDV

    #2
    It depends on what's in your Order Confirming your Plan. In most Chapter 13 cases, debtors are required to surrender all tax "refunds" to the Trustee. Some attorneys factor in the average "refund" when creating the Chapter 13 plan (and Schedule J - expenses), so it is already accounted for. In those cases, the Trustee is not entitled to any refund unless it exceeds a certain threshold.

    In other cases, the Order Confirming Plan may also set a threshold of say $500 where anything under that amount need not be surrendered. You need to re-read your order confirming plan or have this conversation with your attorney. Still, in other cases, any money that is specially protected from the Trustee, such as earned income credit (EIC), is not property of the Estate and the Trustee/creditors have no right to such.

    Congratulations on being able to keep your refund!
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

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      #3
      I was only required to turn over Federal refunds, not state. That could be the case here. And in my last year I received a reminder notice from the Trustee.

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        #4
        I live in PA, I never had to give my refunds at all. I did have to submit a copy of my filed taxes.

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          #5
          I am also in PA but a different trustee than wendlan, I do not surrender my refunds nor submit my tax returns. It really depends on the trustee and what your confirmation notice says.
          Discharged 5/2015

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            #6
            Northern West Virginia District. Had to submit copies of tax returns and turn over any refund amount that exceeded $1,500 per our confirmation order. Situations vary from not submitting anything at all to turning every cent of any refund over.
            Filed July 2009. Discharged 08/08/2014. Awaiting closing. We made it !!!! Woo-hoo!

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              #7
              Originally posted by jange View Post
              I am also in PA but a different trustee than wendlan, I do not surrender my refunds nor submit my tax returns. It really depends on the trustee and what your confirmation notice says.
              Are either of you in the Eastern District (Philly)? I hoping the same thing happens with me, but I will find out in a few weeks when I should get that confirmation order.

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                #8
                switch625, yes I am in Eastern district. Unless WM changed something don't expect your confirmation notice to say much. I did ask my attorney about tax returns and he told me in 2010, that they can ask for them but don't usually. They have never ask for mine, nor do I surrender my tax returns. I have 7 payments left and I only hear from the trustee in January when they send the annual statement.
                Discharged 5/2015

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