Tax Refund after Bankruptcy

[saint782]

I could really use some advice if anyone has any knowledge to impart. I had posted this issue in another section but maybe nobody saw it.

So I received my discharge and my case closed on 8/4. I thought I was over and done with this and ready to move on and then this weekend I see this 4K deposit from the IRS going into my bank account completely out of nowhere. Normally this would be great but in this case I’m really worried. It was apparently because of the cares act a law went into effect after I filed my taxes that exempted taxes on unemployment wages so This refund is for an overpayment on taxes from unemployment wages.

I contacted my attorney he was not very helpful. Basically told me it’s up to me and that I can contact trustee if I want to and they will probably want the money. I emailed the trustee and I’ve heard nothing. it’s been a few days at this point.

what should I do? Do I let it go? I don’t want this hanging over my head forever and I don’t want someone coming back someday saying I never informed anyone about this asset. 4K is a good amount of money but I discharged over 100k I highly doubt the creditors would care about getting a few hundred bucks each. I’m just really uncertain on what else to do if the trustee never responds am I to assume
they just don’t care? Colorado doesn’t have wild card exemptions and nobody really knows how much cash you can really have in your bank account at time of
filing here. Trustee never asked for any money at all.

any advice would be greatly appreciated.

[justbroke]

A couple of people had responded to that thread. It just may be that no one has an answer for you.

You did your duty to contact both your attorney and the Trustee. Just let it sit as it's only been a few days. Nothing moves quickly in bankruptcy and the Trustee spends a whole lot of time in court.

There's no more advice than your attorney provided.

[saint782]

Thank you for the reply I appreciate it. So long as I’ve done what I can do I guess it’s just a wait and see.

[saint782]

Update: Trustee emailed me today and said that if the refund has to do with unemployment income they will not pursue it. Asked that I send the letter from IRS when I get it that explains the refund. I believe I should receive that in a few weeks.

[justbroke]

Sounds good to me. Nice that the Trustee didn't make you go back and update your exemptions in any way. Very nice.

[saint782]

Yes I think that was the most valuable thing we received in terms of working with our attorney: knowledge of the trustees and who to avoid. Spoke with other attorney who personality wise seemed a better fit but in the end who’s to say we would have gotten the results. Our case wasn’t really difficult though so who knows. Just glad this is all coming to an end and we can move on.

[holycowe]

I’d go ahead and spend that money wisely and slowly. Necessities expenses.

[Barbisi]

Saint782, I'm so glad you won't have to turn over that tax refund. I too live in Colorado (at least until next year when this unpleasant ordeal is scheduled to end) and wondered how the creditors could seize Cares Act unemployment benefits when our stimulus payments from 2020 and 2021 were supposed to be exempt from trustee collection. Hopefully once you can show proof of IRS refund status and whatever code or wording shows the correct designation,the trustee will leave you alone.
Congratulations and best of luck moving forward in life!

[saint782]

Thank you. Yes my understanding is Trustees have been told not to try and go after unemployment or stimulus funds in general but as I have discovered with this process you ask 10 people a question you will get 10 different answers. I get why their is a push to make the process simpler and easier. I was fortunate to have a good attorney who knew all the local trustees and who to avoid. I should get this letter in a few weeks from IRS that explains this is a refund for overpayment on taxes for unemployment and finally be done. Good luck to you as well!

[alaska708]

Just have less taxes taken out, pay at the end of the year, solves that

[saint782]

That wasn’t an option the money was direct deposited in my bank account and then I figured all this out. All is well though I received letter from IRS and sent to trustee it was related to unemployment income and it’s exempt.