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Anyone had trustee take issue with large refund?

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    Anyone had trustee take issue with large refund?

    I filed chapter 7 yesterday with DMI of about $25. Although I haven't yet filed my tax return, I know that we'll be getting a large one because my income was basically non-existent last year and my DH didn't change his withholdings (plus we have three kids).

    I've read that the trustee can take issue with this and say that we actually have more DMI b/c we shouldn't have had that much money withheld. Has anyone ever actually had this happen?

    My attorney told me not to file my tax return yet and to tell the trustee at my 341 that I haven't filed and don't know the exact amount of my refund. She basically told me that I *should* be able to fly under the radar and the trustee won't be interested so I'll be able to keep all of my refund. I'm in Georgia.

    IF for some reason he does come back and make me change my DMI, does this automatically mean I have to go argue it with a judge? I honestly can't afford more attorney fees, and we just got a notice that our escrow is short this year and our house payment is going to go up by around $140 a month, in addition to the fact that my part-time job is basically contract so some months I make $1200 and other months I make $0. Will I have the opportunity to explain this in writing w/out having to go to another meeting?

    Sorry so long...just having a "I've filed and there's nothing I can do to reverse my situation now!" freak-out session.

    #2
    We had our 341 3 weeks ago, and the trustee began the session by announcing that he wanted everyones 2009 tax return sent to him. Our attorney told us this is standard procedure for filing at this time of the year. We filed in December.

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      #3
      Do you mind my asking where you live? For some reason I was given the impression that in my district it won't be an issue...

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        #4
        Originally posted by lalap123 View Post
        I've read that the trustee can take issue with this and say that we actually have more DMI b/c we shouldn't have had that much money withheld. Has anyone ever actually had this happen?
        Not that you shouldn't have that much money withheld, but overpayments are in fact income. Our Trustees in Florida use a special version of Form B22A (the Means Test) to figure out over and under-withholding because this is an actual source of money where people, sometimes, intentionally inflate their tax liability to qualify for a Chapter 7.

        In fact, many bankruptcy Districts require that the debtor (or their attorney) take the average refund, divide it by 12, and add that to the monthly income as "additional" income.

        So, you should just follow your attorney's instructions. At this point, it is what it is... meaning that the Trustee may go after or may not. It's out of your hands. It also reads like your State doesn't provide adequate exemption in order to exempt the anticipated refund, because your Attorney would have done that.
        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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          #5
          Southern Disrtict of Iowa. As we left our 341, we were given a paper by the trustee which listed the 2009 tax return. It was the only thing we had to provide. It gave us thirty days. I recevied a note from my attorney after about a week reminding me to get it done. Was in my attorney's hands about 2 weeks after our 341. We owed a couple of grand so it presented no problem for us. Good luck

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