Tax refund after chap 7 BK discharge

[one1luv629]

Hi... as tax season is upon us, I have a question I can't seem to find the answer to.

I filed Chapter 7 BK on 9/2010 and was discharged on 12/2010. I am married but I filed BK as an individual (husband did not file). We are getting ready to do our tax returns and was wondering if the trustee can take any tax refund we might get since my BK was discharged over 3 months ago?

I am an independent contractor and I barely made any money in 2010. My husband is the one on a W2. If we get any tax refund at all, it will be because of my husband. If the trustee wants to take our tax refund away, will they divide up the amount based on the fact that my husband did not file BK and only take my portion away? Is it smart to just file separate returns this year? I would rather file jointly if I know for sure the trustee will not take our refund away since we will be getting $2000 more vs. filing separate. We can really use the money.

Please help! Thanks.

[daylate]

If you are already discharged and the trustee hasn't yet asked, I think you are ok.

[despritfreya]

When in doubt contact your attorney. If you do not have one, contact the Trustee and ask. Unless there is an exemption that applies (I do not know if filing separate returns is another way to protect, at least, your husband's portion) a Trustee is entitled to a pro rata share of the refund based upon when you filed. You filed in 9/10. The Trustee would be entitled to 9/12ths of the refund. Remember, a Discharge only ends your issues with the Creditors. It does not end the administration of the case - so, unless the case has been closed, this is potentially an open issue.

Des.

[UghUghUgh]

I thought when you were discharged it was over? If the Trustee did not ask for something when you filed why would they ask all these months later? Where is the closure? I will be following this thread with great interest.

[despritfreya]

I thought when you were discharged it was over? If the Trustee did not ask for something when you filed why would they ask all these months later? Where is the closure?

There are two aspects to a Chapter 7 - obtaining a discharge and the orderly administration of the case. Obtaining a discharge is the easy part. If no one objects, the discharge is automatic 60 days after the 341. However, the Trustee has a job to do and, depending upon the complexity of the case and the Trustee's case load, can take substantially longer than the entry of the discharge.

If it is a "no asset" case, the Trustee will "close" his file shortly after the 341. If it is an "asset" case, the case will not be "closed" (completely administered) until the Trustee has liquidated or collected the assets (tax refunds can be assets if the amount of the refund justifies its administration), notifies creditors that he is holding money and eventually pays the money out. This is the part OP must look into. Does the Trustee want her 2010 refunds? If the answer is "yes", can she hold back that portion of the refunds belonging to the non-filing husband (I don't know the answer).

Typically, as we get closer to the end of September of any particular year, I warn my clients that the Trustee may be looking to that year's refund. It just depends on the Trustee.

Des.

[UghUghUgh]

Thanks Des. I was confused.

[one1luv629]

Thank you for everyone's input. I guess there is no sure way of knowing the outcome. I don't want to open up a can of worms by calling the trustee. I also filed Pro Se so there isn't an attorney I can ask. I guess best thing to do is to check to see whether my case is closed? Would you then say it's pretty safe to say that they won't come after me for the refund? Maybe even file an extension and wait it out? I absolutely don't want the trustees to take my husband's portion away so worst comes to worst we will file separate. Any other suggestion is appreciated.

[one1luv629]

Oh also it was a chap 7 with no asset

[despritfreya]

Thank you for everyone's input. I guess there is no sure way of knowing the outcome. I don't want to open up a can of worms by calling the trustee.

Folks,

While the Trustee is not your "friend", he is not your enemy either. There is nothing wrong with calling. Whether he does or does not want the refunds calling isn't going to change that and you will have peace of mind. In the mean time, yes, check PACER to see if and when the case was closed. If closed, it is a good bet that the Trustee does not want the refunds -but asking is the only way to be sure.

Des.

[one1luv629]

This might be a dumb question and I apologize in advance... but how can I tell if the case has been closed? I am on PACER right now and this is what it reads:

Case type: bk Chapter: 7 Asset: No Vol: v Judge: XXXXXXXX
Date filed: 09/02/2010
Date of last filing: 12/18/2010
Debtor discharged: 12/16/2010
Date terminated: 12/16/2010

Case Summary

Office: XXX Filed: 09/02/2010
County: XXX
Terminated: 12/16/2010
Fee: Paid
Debtor discharged: 12/16/2010
Origin: 0
Reopened:
Previous term:
Converted:
Debtor dismissed:
Joint: n
Confirmation hearing:

Debtor disposition: Standard Discharge

Nature of debt: consumer
Pending status: Awaiting Trustee's Report ,Case Closed
Flags: MEANSNO, CLOSED

[despritfreya]

Pending status: Awaiting Trustee's Report ,Case Closed
Flags: MEANSNO, CLOSED

This pretty much sums it up. But, to be sure, you should open the docket. There will actually be an entry from the Trustee that he has reviewed the case and had closed the file (not sure of the verbiage but it is quite obvious). The next (and last) entry should be that the Clerk has closed the case.

Actually, I now see that the case was "terminated" on 12/16 - it's closed.

Another edit. I see that the last filing was 12/18. You should check to see what that docket entry actually was.

Des

[one1luv629]

Makes me nervous there isn't any attached documents under # so I am really not sure if the trustee has fully closed the case yet. Looks like the the file was closed on 12/16, same date as the discharge? Is that possible? What is your take on why there isn't an attached document # next to the Bankruptcy Case Closed text? Also, is "Final Decree" considered case closed?

The last two lines on the docket report reads:

Filing Date # Docket text
12/16/2010 Bankruptcy Case Closed (ads) (Entered: 12/16/2010)
12/18/2010 16 BNC Certificate of Mailing with Chapter 7 Discharge and Chapter 7 Final Decree Service Date 12/18/2010. (Admin.) (Entered: 12/19/2010)

[one1luv629]

Also just saw on my discharge letter:

DISCHARGE OF DEBTOR(S)
ORDER OF FINAL DECREE

A petition under title 11, United States Code was filed by or against the Debtor(s) on September 2, 2010; an order
for relief was entered under Chapter 7; no order denying a discharge has been granted.

It appearing that the debtor(s) is entitled to a discharge and the estate of the above named debtor(s) has been fully
administered.

IT IS ORDERED:

The debtor(s) is granted a discharge under Section 727 of Title 11, United States Code, (the Bankruptcy
Code).

XXX (Trustee) is discharged as trustee of the estate of the above−named debtor(s) and the bond
is cancelled.

The Chapter 7 case of the above−named debtor(s) is closed.

[despritfreya]

Maybe the info your district lists on PACER is different from mine. In mine there would be specific docket entries starting from docket #1 (the initial filing) and ending with docket #___ which would be an entry from the Clerk's office that the case was terminated. Just before the last docket entry there would be a docket entry that is a notation by the Trustee that he has finished his administration of the case.

Again, when in doubt, call the Trustee.

Des.

[one1luv629]

Thanks Des. I will actually call the court and see if they can confirm my case is closed. My termination date is the same as my discharge date. I'm keeping my fingers crossed.