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Will the bankruptcy court take a tax refund?

Chelsea Hayes

in Student Loans

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Blair Lewis on July 27, 2019

Depends on the person. Your attorney should be able to answerthis question the best because they know the situation. I had thissame question. My lawyer told me not to they do not take taxrefunds. However, if you owe student loans to the government theycould take your refund. I had no problems receiving my tax refundsafter the filing of the bankruptcy. The answer I think that if you have any type of money over $2000 the court willmake you pay your debts, if you receive it within 6 monthsafter the download. When I went to court, they told me that if my taxestotaled more than $2000, you would have to pay the court. Weonly received $1200, so we must keep it. Answer The answer to this question varies from jurisdiction tojurisdiction, and also depends a bit on what Chapter ofbankruptcy which you are submitting. In Southern Indiana, trustees haverecently started taking tax refund checks of $1,000.00 or more inChapter 7 cases. In Chapter 13 cases, some trustees take halfregardless of the amount, and others take half if it is a sizableamount, and if none is $1,000.00 or less. In addition, each State hastheir own exemptions (which say how much property you can keep), soif you're in a State that allows you to protect a lot of cash, then thethreshold at which trustees seize tax refund checks may be higher.A good rule of thumb is to assume that you're going to lose. If youlose of $2,000.00 refund check, but the download of $20.000.00 inbills, you're still $18,000.00 best, so forget the refund and move forward with your life. And, if you're lucky and manage to maintain itthen you're pleasantly surprised, as opposed to the expected keepit then when the manager takes it. Answer Yes-in Arizona-they took a $600 State rebate, and $1300 Federalrefund. Oh well, while I'm in the clear, what difference doesit make? Answer I am confused by all of the above. Bankruptcy is done under FEDERAL laws and in a FED Court. I shouldthink that your filing Status, or residence, have little ifanything to do with the rules that follow, except to say that therules of the property and such (as Arizona is a communityproperty state), can have an influence. When filing you must claim and attest to all of its assets andliabilities to the court. Obviously, the penalties for not doing socorrectly can and should be fierce. Forget an active and thenkeeping - that only appears to be fraudulent and possiblycriminal. An advance refund (tax or otherwise) would be anasset must declare it. I think that like any other "free"assets, may be used to satisfy the creditors. It certainly should be...if I was a creditor and has asked thecourt to eliminate a debt that he owed me....and it did - but at the same time allowed him to continue to look in the mail every dayuntil Bank sends US some money that had hidden with them....thatwould be very unfair! You can imagine why: I can manipulateeasily the amount of refund I expect, in anticipation of bankruptcyor even during, many ways: Decrease the number of withholdingexemptions I request from my payroll (so more money is withheld),even make an estimated payment (or additional amounts withheldfrom payroll) - which self employed or someone with non-employeeincome (such as investment income, etc) it is necessary to make. MoreInput Bankruptcy can be a state or federal filing depending onwhether or not the state has opted out of the federal bankruptcyprocedure and the amount of the debt. Tax refunds are levied depending on the difference of time between the filing of the bankruptcy and of the receipt of the return. In manycases the amount of your federal reimbursement is subject to levy bepro-rated monthly. Please refer to the link of "Bankruptcy Action" tofind out if your state requires a federal or state bankruptcy filingor a choice between the two. More about themore I'm pretty sure that Bankruptcy is ALWAYS handled under Federal Law,in a Federal court. There is an entire level of Federal courts thatonly does bankruptcy and interestingly, it has a great power and cantrump and take control of matters even in other courts - likelitigation. Like most all matters determined to be the purvue of the federal Government, a State can opt-out or essence about taking aFederal right/obligation. (And when you consider operating Courtsis expensive, have little motivation to). The federal law of natureis necessary, if for no other reason than to avoid (perceived orotherwise) preferential treatment of a state residentcreditor/debtor to those who also have something at stake in the presentation, but not a taxpayer or resident there. It would be bemaking them subject to the dictates of a jurisdiction that theyaren should not be subject to a Constitutional question. However, maybe the confusion is that, as in all Federal courts,there are many different DISTRICTS of the US Bankruptcy Courts,generally with District names of the primary area they cover. EX:US Bankruptcy Court for the District of Alabama; US Bankruptcy CourtEastern District of New York, etc, etc, as well As in all Federal District Courts, some procedures, limits, andmany precedents (generally decisions) are individual to thatCircuit, and in fact, may be contradicted in the others. (Whenthis becomes too problematic, it is a Supreme Court of the united states matterto decide what should be universal). I would agree that it makes sense that only the part of a taxoverpayment that is prior to the bankruptcy filing period shouldever be subject to the bankruptcy. (So, something in the way ofif you filed bankruptcy half way through the fiscal year, only half of the overpayment is subject to the bankruptcy). Note a Corporatetaxpayer may have a different result because it has a "short taxyear", with a beginning and end on the date of the bankruptcy. In reality, States may "opt out" of the Federal Exemptions forBankruptcy actions. In Maryland, state law determines exemptionsand collection procedures. The short answer is yes, the Trustee may attempt to go after yourtax refund And, depending on the state you are in, you may be ableto get Exempt (meaning, Trustee can't touch this). In general, depending on what Chapter you filed under, the issue of their tax refund that will be included in the "plan" decided by thecourt. It was decided on an individual basis, but losing part of its tax return if it is more than a certain amount seems tobe what is currently happening.


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