Tax return question...

[Ms.Santos]

Do you not get to keep your tax refund of you file BK? I realllly needed that money for several reasons. Please tell me I will be allowed to keep it!

[Granny]

The answer to this varies with the trustee, each has their own rule regarding refunds. Some don't want it, some will let you keep the earned income portion only, some will let you keep up to a certain dollar amountand then they keep the rest, and others want it all.

[Bandit]

I was reading from some of the attorneys here and they say just do not file BK around Dec or Jan. Wait til after that time frame and after the tax has been given back, then you can use it to pay the attorney you hire or whatever you need it for.

Not advice for anyone, but most likely what I would do.

[HHM]

Unfortunately, it depends on the district. Some districts view the refund as income, and therefore the normal income exemptions apply. Some districts view the refund as a cash asset (like a savings accounts) in which case, you need a cash on hand or wild card exemption. If you don't have those exemptions, then the trustee gets the refund. And as granny has pointed out, some districts view the refund as income, but divide it into pre and post BK earnings. For example, if you file BK on Sept. 1 2007, and when you do you taxes for 2007 you would get a $4,000 refund, the trustee would be entitled to $2,666 (which is the amount of refund you earned from Jan to Aug, the time before you filed BK) of that refund and you would get the rest.

Also, the rules somewhat differ between a 7 and 13.

In any event, when contemplating BK, the best advice is, DO NOT COUNT ON being able to keep your refund; meaning, don't plan your financial future, post BK, based on a potential tax refund.

[Lindsay]

Is the earned income credit portion of the check exempt? I've always wondered that but I've never been able to successfully find any examples of it online for New York.

[whatamess]

I think..I say *think* that child tax credits plus EIC is exempt but I am not positive. Anyone?
WAM

[spell]

Simply put, you may be able to protect it, but it is an asset.
The whole point of CH7 bankrutpcy is that you surrender all of your assets.
If you need the money for some reason, just adjust your tax withholdings to not get a tax refund. Spend it on this unnamed need and it's no longer an asset.