Do they take state and federal taxes?

[bktmom28]

I live in OR and I was just wondering, do they take your state taxes as well? I was just wondering as the TT said case won't be closed until we file our taxes. Do you think that they will take our refund as we our expecting to only get about a $1000? On 244,000 debt, that doesn't seem too significant. Mind you, that is 204,000 in mortgage debt, and the rest in CC debt.

[HHM]

Well, if the trustee said he is keeping the case open until you file your taxes, you can sure bet that is what he is waiting to see.

$1,000 is about the cut off. If the amount is less than $1,000, the trustee's usually won't bother, but if the refund is more than $1,000 you can kiss it good by. (note, the earned income credit is exempt from BK, so if part of your refund is due to that benefit, your risk lessens).

[bktmom28]

Thanks for responding back. Last year we got back about $7000, but a HUGE part of that was due to the fact that we paid interest only on our house and could write that off. This year we only paid 6 months on our house. We also took a hardship withdrawal out on my husbands 401K which we will have to pay for in our taxes. I think it will be really close but I am hoping that we get it back. Also, do you know if they take state as well as federal or if it is just federal?

[HHM]

State refunds tend to be small, so the trustees don't bother. But, as with any asset, unless it is exempt, then it is at risk.

[anime-chicka]

The trustees won't bother, but they will take their sweet time getting back to you when it's under a certain amount. In my case, it was half of just under $1500 Federal (state was a measly $26, IIRC). The other half belonged to my husband (single filer for BK, he didn't file with me). I think after I told the lawyer that if he TT wanted my husband's share, he'd better be prepared for a fight, the peition was amended to include the tax return. I think hubby was about ready to call the trustee and give him a piece of his mind.