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It depends on the individual. Your lawyer should be able to answer this question the best because they know the situation. I had this same question. My lawyer told me that no they will not take tax refunds. However, if you owe student loans to the government they could take your refund. I had no problems receiving my tax refunds after filing bankruptcy.

AnswerI believe if you get any type of money over $2000 the court will make you pay it on your debts, if you receive it within 6 months after the discharge. When I went to court, they told me if my taxes totaled more than $2000, we would have to pay it to the court. We only got $1200, so we got to keep it. AnswerThe answer to that question varies from jurisdiction to jurisdiction, and also depends somewhat on which Chapter of bankruptcy you are filing. In Southern Indiana, trustees have recently started taking tax refund checks of $1,000.00 or more in Chapter 7 cases. In Chapter 13 cases, some trustees take half regardless of the amount, and others take half if it is a sizable amount, and none if it is $1,000.00 or less. Also, each State has their own exemptions (which say how much property you can keep), so if you are in a State that lets you protect a lot of cash, then the threshold at which trustees seize tax refund checks may be higher. A good rule of thumb is to assume you're going to lose it. If you lose a $2,000.00 refund check but you discharge $20,000.00 in bills, you're still $18,000.00 better off, so forget the refund and move on with your life. And, if you luck out and get to keep it then you're pleasantly surprised, as opposed to expecting to keep it then being let down when the trustee takes it. AnswerYep-in Arizona-they took a $600 State refund, and a $1300 Federal refund. Oh well, as long as I am in the clear, what difference does it make? AnswerI'm confused by all the above.

Bankruptcy is done under Federal Laws and in a FED Court. I should think that your State of filing, or residency, would have little if anything to do with the rules they follow -- except to say that the rules concerning property and such (like Arizona is a community property state), may have influence.

When filing you must claim and attest to all of your assets and liabilities to the court. Obviously, penalties for not doing so correctly can and should be fierce. Forgetting an asset - and then keeping it - that just seems to be fraudulent and possibly criminal. An anticipated refund (tax or otherwise) would be an asset you must declare. I should think that like any other "free" asset, it may be used to satisfy creditors.

It certainly should be...if I was a creditor and you asked the court to eliminate a debt you owed me....and it did - but at the same time allowed you to continue to look in the mail every day until Bank US sent you some cash you had stashed with them....that would be grossly unfair! You can imagine why: I can manipulate easily the amount of refund I expect, in anticipation of bankruptcy or even during, many ways: Decrease the number of withholding exemptions I request from my payroll (so more money is withheld), even make an estimated payment (or have additional amounts withheld from payroll) - which self employed or someone with non-employee income (like investment income, etc.) is required to do.

More InputBankruptcy can either be a state or federal filing depending on whether or not the state has opted out of the federal bankruptcy procedure and the amount of debt.

Tax refunds are levied depending upon the time difference between the bankruptcy filing and the receiving of the refund. In many cases the amount a federal refund is subject to levy will be pro-rated monthly. Please see the link for "Bankruptcy Action" to find out if your state requires federal or state bankruptcy filing or a choice between the two.

More on the moreI'm fairly certain Bankruptcy is ALWAYS handled under Federal Law, at a Federal court. There is an entire level of Federal courts that only does bankruptcy and interestingly, it has major power and can trump and take control of matters even in other courts - like litigation. Like most all matters determined to be the purvue of the Feds, a State cannot opt out - or by essence over take a Federal right/obligation. (And when you consider operating Courts is expensive, they have little motivation to). The federal nature is needed, if for no other reason than to avoid (perceived or otherwise) preferential treatment of a state resident creditor/debtor to those who may also have something at stake in the filing but aren't a taxpayer or resident there. It would be making them subject to the dictates of a jurisdiction that they aren't supposed to be subject to - a Constitutional issue.

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 of the Alabama District; US Bankruptcy Court Eastern District of New York, etc., etc.

As in all Federal District Courts, some procedures, limits, and many precedents (generally decisions) are individual to that Circuit, and in fact, may be entirely contradicted in others. (When this becomes too problematic, it becomes a US Supreme Court matter to decide what should be universal).

I would agree it makes sense that only that part of a tax overpayment that is from the pre bankruptcy filing period should ever be subject to the bankruptcy. (So, something along the way of if you filed bankruptcy half way through the tax year, only half of the overpayment is subject to bankruptcy). Note a Corporate taxpayer may have a different result because it has a "short tax year", with one starting and ending on the date of bankruptcy.

Actually, the States can "opt out" of the Federal Exemptions for Bankruptcy actions. In Maryland, state law determines exemptions and collection procedures.

The short answer is yes, the Trustee may attempt to go after your tax refund AND, depending on the state you are in, you may be able to get it Exempt (meaning, Trustee can't touch it).

Generally, depending on what Chapter you filed under, the issue of your tax refund will be included in the "plan" decided by the court. They are decided on an individual basis but forfeiting a portion of your tax return if it is over a certain amount seems to be what is currently happening.

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Q: Will the bankruptcy court take a tax refund?
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Related questions

Will the bankruptcy court take a tax refund in Montana?

Yes.


Will the bankruptcy court take a tax refund in Colorado?

Yes unless it is Earned Income Credit.


Will the bankruptcy court take a tax refund after your bankruptcy is discharged?

Usually not. Your bankruptcy petition will ask you for information on whether or not you received a tax refund for the year prior, but they don't usually track you afterwards to find out if you got a refund after your discharge. You are applying for a clean financial slate, and taking away your refund would negate that purpose. If in doubt, check with your bankruptcy attorney for more clarification.


Can you get refund anticipation loan if you have a chapter 7 bankruptcy?

If you are in a C. 7 or within 6 months after the close of your case, any tax refund is property of the bankruptcy estate and must be turned over to the trustee. You may not get a loan against an asset (tax refund) without the court's permission.


Will you get your tax refund if you file for bankruptcy?

Whether you are entitled to your tax refund will depend on what type of Chapter of bankruptcy you are filing and whether the bankruptcy exemptions can be used to protect the tax refund. If you are filing for Chapter 7 bankruptcy then you can generally keep the refund if the available state bankruptcy exemptions provide protection for it. If you are in a Chapter 13 bankruptcy you are typically required to turn over the tax refunds during the life of the Chapter 13 case.


Will the bankruptcy trustee take all of your tax return refund?

I think it depends on when the bankruptcy is discharged, but it would be discussed at your meeting with the creditors and the trustee. If it wasn't discussed, then the refund is yours.


Can you receive a tax refund this year if you filed bankruptcy last year?

You need to discuss this with your attorney. Once you receive your tax refund, it's part of your personal assets that could be seized to pay creditors. If you file bankruptcy before you get your taxes then the government will keep your tax refund and put it towards your debt. The bankruptcy court has 1 year to go back and open your case even after your bankruptcy has been discharged. If you can prove that the money is needed/used for catching up rent or other nessacery bills they will not take it.


If you file bankruptcy for your business will they take your personal tax refund?

If your business is a separate corporation or entity, no.


Can a creditor take your income tax refund if you file Chapter 7 Bankruptcy?

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.


Why can a trustee take your income tax return if you are filing a chapter 7 bankruptcy which relieves you of your debt and does the trustee give the money to the creditors?

The trustee may take the refund and distribute it to creditors because a tax refund is not considered an exempted asset under bankruptcy laws.


Why does the court sometimes take the tax refund when a person files a chapter 7 bankruptcy?

A tax refund is considered income/asset belonging to the BK petitioner and is therefore subject to seizure for the repayment of debt. Whether or not the refund can be included in the BK depends upon the time frame of the BK filing vs. the tax refund date and amount, the status of the refund (joint, subject to child support action, etc.) and so forth.


Can bankruptcy court take taxes after dismisal?

Most taxes are not discharged in bankruptcy.If the amount of your tax liabilities is not clear, the bankruptcy court cam decide how much you owe; you need not go to tax court for that.