Trustee and Refund Questions

[Worriedmom4]

Since getting these answers from my attorney is like pulling teeth, I've decided to post them here. I must be asking him too many questions

1. The trustee can claim my tax refund for last year up to the filing of my bankruptcy? We filed in August.

2. We get the remaining percent, or months, after our filing? We would get half of August, then the remaining months?

3. We have an exemption on our taxes. Is that exemption applied to the trustee's percent or for the whole year?

4. When the trustee asks for the refund, is it done through a motion or does he just send a letter to the IRS requesting the money?

5. When, in anyone's experience, does the trustee send this letter/motion for the tax refund? Does he wait til April?

Thanks and Happy Friday

[tobee43]

i'm sorry, i haven't been following your situation very carefully, forgive me please...

if you already filed bk and your bk is CLOSED, no need to worry at all about your taxes if you get REFUND this year.

however, if your 7 is any asset case, most likely the trustee will either want all or part of your refund. your personal tax exemptions has nothing to do with the bottom line. if the trustee is still able to recover funds they really don't care how many exemptions you claim on your taxes.

no no...not via the irs. your atty if your case is still open will let you know, i believe you most likely and i'm not a pacer user, but if the trustee files any motion you would be able to pull it up there.

it usually is decided at the meetings of the minds for a lack of a better term, which your atty, you and the trustee would/should have discussed. if you are an asset case, most likely the trustee has already told you what they expect you to sell, or pay, or usually you or one would know if the trustee expected you would be getting a refund as a result of your tax return, submission, that is usually known up front. (maybe not always, but usually).

[Worriedmom4]

i'm sorry, i haven't been following your situation very carefully, forgive me please...

if you already filed bk and your bk is CLOSED, no need to worry at all about your taxes if you get REFUND this year.

however, if your 7 is any asset case, most likely the trustee will either want all or part of your refund. your personal tax exemptions has nothing to do with the bottom line. if the trustee is still able to recover funds they really don't care how many exemptions you claim on your taxes.

no no...not via the irs. your atty if your case is still open will let you know, i believe you most likely and i'm not a pacer user, but if the trustee files any motion you would be able to pull it up there.

it usually is decided at the meetings of the minds for a lack of a better term, which your atty, you and the trustee would/should have discussed. if you are an asset case, most likely the trustee has already told you what they expect you to sell, or pay, or usually you or one would know if the trustee expected you would be getting a refund as a result of your tax return, submission, that is usually known up front. (maybe not always, but usually).

Thanks for the quick reply. We are a Chp 7 asset case, discharged in December but not closed.

As for exemptions, my attorney said we used/have $1,300 exempt on the refund.

The trustee has not mentioned one thing about our refund to our attorney BUT you never know what lies ahead. We have a buy back option on the house, very little amount in the grand scheme of things but a lot of money to us. We are paying this amount with our tax refund and don't want to get hurt in the end. Knowing the answers to my questions will help me decided if we should work out a payment plan or pay him one lump sum the later of which the trustee wants.

[LadyInTheRed]

Just to be clear, because it was confusing in your original post: You were able to exempt $1,300 of your refund using BK exemptions, correct?

Was your refund more than $1,300? If so, prorate your refund to determine what portion was attributable to withholding that occurred before you filed BK and subtract $1,300. The result is the amount the trustee can take. The trustee will ask you, not the IRS, to pay that amount. It is also possible the trustee won't bother. But, don't count on it.

[Worriedmom4]

Just to be clear, because it was confusing in your original post: You were able to exempt $1,300 of your refund using BK exemptions, correct?

Was your refund more than $1,300? If so, prorate your refund to determine what portion was attributable to withholding that occurred before you filed BK and subtract $1,300. The result is the amount the trustee can take. The trustee will ask you, not the IRS, to pay that amount. It is also possible the trustee won't bother. But, don't count on it.

PERFECT~~just what I needed to know. Yes, the $1,300 is the remainder from our wildcard. If that amount gets subtracted from the prorated amount the trustee will be getting then that helps. We filed in August of 2012. I am guessing the trustee would get 62% of our refund. Got that % by using our filing date of 8/16 (the 228th day of the year). 228/365 days in the year is 62%.

And yes, am I counting on the trustee squeezing every penny he can out of us!

[LadyInTheRed]

Keep in mind that when I suggest that proration, it is based on logic and my knowledge of how asset exemptions work in general, not personal experience with exempting a tax refund. I can't say for sure that your trustee would do it the same way. But, with the exception of an inheritance or marital settlement, the trustee can only get assets you were entitled to on the day you filed BK. The money withheld during the 4 months after you filed was not an asset on the date you filed.

[tobee43]

thanks litr, clarifying that is was specifically an bk exemptions helps answer the question correctly.

OP, i did think you were not referring to remainder of a wildcard exemption, i did view it as a simple tax exemption.

[jst4f]

I think thole use whole months not days. 8 / 12 = 3/4. sorry