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Tax refunds and chapter 7?
This Q has been pushed around a lot here...and this is what I've pieced together: It depends...a bit on which circuit court your in and how they feel...and expecially how much is involved...(obviously large amounts are wanted for creditors...and it just seems unfair for you to not pay someone your debt, because you didn't have the money, because you had too much withheld or prepaid...when the amount withheld/prepaid is controllable and returned to you!) The other aspect is when you filed compared to when you made your money...If the overpaid tax is for a pre-petition filing period...most trustees want it...but if it really isn't then it's yours. So say it's a refund for the year and you filed BK in December.....well it was basically all withheld as part of the Jan-Dec period in your filing...and it part of the BK...but if you filed in say March...well not much of it is really from the covered BK period. Sort of makes sense.
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Once a chapter 7 bankruptcy case is closed can the trustee order the debtor to relinquish their tax refund if not ordered prior to closing?
I would think that to be highly unlikely. Once a case is closed, the Trustee has filed all the proper paperwork and the case is set aside, usually permanently. Unless th…ere is substancial fraud involved on your part and the Trustee gets wind of it, I'd think you are safe.
No they do not take your refund from my experience, but they do take the state refund. If they do take it, you can contact the trustee and ask for it back. I was told as long …as the payments were being made every pay period we were okay. Hope this helps
I assume you mean "how do you keep your tax REFUND when you file a chapter 7 bankruptcy?" A tax refund is an asset of the estate and, generally, the trustee will take it. Ther…e are two ways to avoid this, first way would be to delay filing your bankruptcy petition until after you have gotten your refund and spent the money. The second way is to declare part or all of the refund to be part of your exemption, however exemptions are small and most people have other assets (like computers, wedding rings, paychecks, etc.) they want to protect with their exemptions.
ALL assets and ALL liabilities are included. Each are given different priority. Taxes are a liability. They are included and given their priority.
The only one that can really tell you anything about your refund is the IRS. They have a service to do so, link provided below. Be aware: Whether you opted for …direct deposit or asked IRS to mail you a check, you can track your refund through this secure Web site. You can generally access information about your refund 72 hours after IRS acknowledges receipt of your e-filed return, or three to four weeks after mailing a paper return. (Note that is access info about it..not that you should expect to receive it by then...it's reasonable to say, once you can access info on it, it is received and in the system...and processing, check issuance, etc will follow in due course. Of course any errors or problems in your filing may delay all of that). Have a copy of your tax return handy. You will need to provide the following information from your return: * Your Social Security Number (or Individual Taxpayer Identification Number); * Filing status (Single, Married Filing Joint Return, Married Filing Separate Return, Head of Household, or Qualifying Widow(er)) * The exact whole dollar amount of your refund LINK BELOW
Absolutely not. Even in the BKs with the highest powered of lawyers...and Corporations....the last things done before filing BK is pay the sales and withholding taxes! In …most all states or taxing jurisdictions, (with California being one large notable exception), these are not taxes on "you", but money the business collects from others (customers or employees) on behalf of the State. They are trust funds....they not only won't ever be discharged....they carry direct, pierce any corporate shield, to the officers and involved parties, responsibility. Better take care of them one way or another ASAP. In the few places they may be legally considered the responsibility of the vendor, they may be discharged in the BK, (as situational as anything else), and would be a priorty claim and even allowed an extended bar date for filing a proof of claim.
Yes. For 3 years. They do not take it all. You will get to keep your EIC and certain other credits that may be given that year. This is per my bankruptcy lawyer.
A basic, rough primer: BK is always done under FEDERAL Laws, in a Federal Bankrutpcy Court. Basically State makes little difference. (Yes the BK Courts operating in… certain areas have certain special exemptions and such, minor in the overall, generally intended to make things adhere to the local laws and customs better). In a personal bankruptcy, YOU go bankrupt. Not a debt, not a loan...not a car...not a this or that. ALL of your assets, of all types, MUST be disclosed and reported in BK, and ALL of your liabilities/debts must be too. No exceptions, no picking and choosing. They are all, always involved in some way. The court will then order each of them in priorities according to the laws. Some things may be exempt from use or discharge (like your personal furniture and retirement accounts are exempt and child support cannot be discharged) - and the rest may be used. With one to pay the other. (All possible creditors are contacted and asked to say what they are owed....you may be required to even take advertisments out to make sure everyone is notified). Any deal you've done for several years is open to scruitiny and review. The court can reverse them, take them out of the BK, or even have them prosecuted as trying to defraud your creditors. (So, no you can't sell your boat to your brother and then declare BK). Debts secured by an asset (say a car) have first call or right to the money received from that asset. If it isn't enough to pay the debt, the remainder of that debt becomes a general or unsecured claim against the BK., and has a chance to payment on that level too (albeit a lower priority than those who have yet to receive anything). The end/remaining amount that can't be satisfied is generally discharged by the court...meaning you no longer owe it. You get a fresh basically debt free start....many of those you owe don't get paid what they had expected and relied on, if anything. There are many other considerations too. BK will severly hurt your ability to get credit for a very long time for example. It is on your credit report for at least 10 years...and employers refer to that too, as do landlords and more. Many do not trust people with bankruptcies in their past, especially in the last few years. Many more things. Not disclosing all items is frequently tried and easily discovered, in which case - as you are swearing under oath to the court you included all info - your case is dismissed, and regularly, fraud charges are pursued. (Courts don't take to being lied to well). Many seem to fall into the trap thinking that they can trick or change or especially shortcut the system, or want to believe what they wrongly understand overrides things (like I don't have to report that asset because it is exempt). It simply ain't going to happen. The courts, Judges, laws, bankers, all those zillions of attornies, etc, have been through this thousands of times for many, many years. The processes are fairly well worked through and prepared for tricks and games. It is unlikely you would discover one that hasn't been tried a zillion times before! The Cos that claim they can change your record, or make magic happen (either before or after BK), are scams, and getting caught doing something unsavory (intentional or not), other than screwing up your bankruptcy filing, is frequently considered and persued criminally. (Think your financial troubles are bad, try adding in criminal ones). The legal process and system is demanding even for those experienced with it. Many of your creditors will have an attorney to assure they get as much as possible, even groups of lawyers, who specialize only in bankruptcy. Simply you should/better/need to have one too
If a final decree states that trustee is hereby discharged and any bond required is cancelled and that the chapter 7 case of the debtor is closed might they still ask for your tax refund?
They may not be able to as for your tax refund because they have freed you of all obligations. However, you need to read the paperwork and make sure there is no language t…hat gives the right to go after the money in the future.
Depending on some things, like when the tax was paid and when the BK was filed, the refund is like any other asset and available to creditors. The trustee or court would… take it and pay it to creditors according to their standing in the case.
Either way they will want a tax return filed before filing for chapter 13. If you are expecting a refund then they will seize it if it is after so to keep the money fi…le first and wait for the return, it will be considered as part of your income. If you owe it is better to know the amount before filing.
Can you apply partial refund to next years tax if in chapter 11 therefore keeping the max refund amount allowed by trustee?
Wow...you've got things figured out so well. Suprising your in bankruptcy (pretty well defined as failure) because you can't figure out how to make enough money to pay your de…bts and need to others to take care of you! And when you have to provide your return (fairly standardly part of the process), I guess you figured out how to explain what is on it so it doesn't look like your trying to do anything illegal, or criminally contempteous/fraudulant, like being against your sworn committment to the Court/trustee you made when filing a petition with them begging protection by allowing and enacting bankuptcy for you. By the way - sure your in C-11 - that is only for Business/Corporations. C-13 (which goes on for several years, which includes next year) or C-7 are for individuals. (REPLY) Actually, I am in Chapter 11 as an Individual, obvious you don't know what much about the chapters, and yes we were unfortunate enough to lose half our income due to loss of one's employment. As far as begging, I really wasn't, I actually should've filed chapter 7 and let them take my house in the ghetto, and my vehicle with a 17 percent interest rate, but I am making ends meet now and was unable to make up the rearrage of 2-3 months without the restructure. Illegal? Well, that's a pretty far statement. You either can or can't. to each their own And your right it can be done, but really rather uncommonly - even as the exception to the rule, (and why 11 when 13 realy accomplishes so much of the same thing I agree to not see). True I've been scolded for doing the too conditioned and qualified responses enough that I try to stay to the more direct as much as possible. While instructing what should be done with your overpayment, like crediting to next year is available to any taxpayer, it is illegal to try and keep/hide from the administrator what he would otherwise have rights to. From another independent source defining C-11 Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to any business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. In contrast, Chapter 7 governs the process of a liquidation bankruptcy, while Chapter 13 provides a reorganization process for the majority of private individuals with unsecured debts of less than $336,900.00 and secured debts of less than $1,010,650.00 as of April 1, 2007. And yet, the below from the official US Courts website introducing the laws involving C-11, with link following. Better tell them they don't know what they are talking about too. A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a "reorganization" bankruptcy. An individual cannot file under chapter 11 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court, or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d)-(e). In addition, no individual may be a debtor under chapter 11 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court. http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter11.HTML
No! You must claim more dependants on your paycheck to avoid the trustee claiming your refund. 1500$ is the limit from Fed and State combined. Keep your refund below that amou…nt combined and you will be in the clear. I find it ironic that if you owe the irs any money the trustee does not help out with that but if your refund is good then the trustee will claim it. Hope this helps!
You may get it, but you will have to turn it over to the trustee. It may shorten your plan payment time period.
I spoke to my lawyer about it and he said that he has never know the trustee to take the refund in this district. I would advise you to talk with your lawyer, I am sure your c…ase wasnt his first and they should have a history with the trustee.