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Will your tax refund be taken to pay back your debt if you file for bankruptcy?
Wiki User
∙ 12y ago
Tax Refunds and Returns
There is no specific protection for tax refunds in bankruptcy. As such, the "wild card" exemption* is used to try to protect these funds as much as possible. Further, any portion of your tax refund that pertains to the "earned income credit" is also fully protect and yours to keep.
In a Chapter 7 Bankruptcy, you may lose all or part of your tax refund due for the tax year in which you filed your bankruptcy. For example, if you file for bankruptcy in 2009, your Trustee may be entitled to all or part of your 2009 refund, which is due from the tax return that you will be file in 2010.
If you file for bankruptcy today, you must provide copies of your tax returns for the years 2008, 2007, 2006, 2005, and you may have to provide a copy of your 2009 tax return when it is filed, to the Trustee. In a Chapter 13 Bankruptcy, you must also provide copies of your tax returns to your Trustee during the term of your Chapter 13 Bankruptcy. You will generally lose tax refunds during the entire term of your Chapter 13, not including any amount that can be protected by the "wild card".
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* The wildcard exemption is $1,000 per person. It allows you to retain up to $1,000 of assets (cash, accounts, property …) that is not otherwise protected when you file for bankruptcy.
Wiki User
∙ 12y ago
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How can creditors size a tax refund check one year after filing chapter 7 bankruptcy?
The answer depends on who the creditor is and the status of the debt. If the debt was a student loan or other non-dischargable debt, then your tax refund can be taken. If the debt WAS discharged, ANY collection action of any kind on a discharged debt is a violation of the permanent injunction of the discharge and therefore illegal. If the creditor was not included on the creditor matrix, then informing them of the bankruptcy and discharge of the debt may be all that is necessary to have the refund returned to you. In other cases it may be necessary to file a Motion for Contempt against the creditor in bankruptcy court. This would require the re-opening of the bankruptcy.
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.
Can overpayment unemployment debt be taken in tax refund?
Yes. Unreturned unemployment benefits overpayments may be deducted from your federal income tax refund.
If you owe money to the VA for a gi bill debt will the govt take your tax return?
Yes. Last year, I dropped a class that I had taken after getting one payment. The VA took that money back when my refund came back. It will also slow up your refund by a week or so.
How do you know if your refund will be held for back taxes?
You can call the debt line and input you social security # and it will tell you if anything will held your refund or delay it. 1-800-304-3107
How can creditors size a tax refund check one year after filing chapter 7 bankruptcy?
The answer depends on who the creditor is and the status of the debt. If the debt was a student loan or other non-dischargable debt, then your tax refund can be taken. If the debt WAS discharged, ANY collection action of any kind on a discharged debt is a violation of the permanent injunction of the discharge and therefore illegal. If the creditor was not included on the creditor matrix, then informing them of the bankruptcy and discharge of the debt may be all that is necessary to have the refund returned to you. In other cases it may be necessary to file a Motion for Contempt against the creditor in bankruptcy court. This would require the re-opening of the bankruptcy.
Do you receive a refund if you owe one of the creditors on your bankruptcy?
No. The debt is simply discharged so you don't owe it.
Can military star card intercept your tax refund?
yes; it is considered federal debt and federal debt can be and probably will be taken from your refund (if it is in a collection status)
If you expect an income tax refund of 4000 should you file bankruptcy first or your income tax first if you need to purchase a new car?
Why not wait for the refund and buy a car for that amount. See if you have any other options because bankruptcy stays on your financial record for life now. And you do have to pay it back, they no longer they dismiss the debt.
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.
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.
Can overpayment unemployment debt be taken in tax refund?
Yes. Unreturned unemployment benefits overpayments may be deducted from your federal income tax refund.
If you owe money to the VA for a gi bill debt will the govt take your tax return?
Yes. Last year, I dropped a class that I had taken after getting one payment. The VA took that money back when my refund came back. It will also slow up your refund by a week or so.
Are you liable for debt cancelled in bankruptcy?
No you are not, If you deglared bankruptcy, that cancels your debt
How far back can legal services go back on a past debt?
Unless the debt was 'discharged' by the court in a bankruptcy action, there is no limitation on how far back they can go in order to try to collect it.
Can state withhold federal tax refund for back child support?
Yes. My husband and I filed our federal refund jointly (mind you he was behind 3K on child support) and they took it all of what he owed. BUT, I went back and filed out an 'Injured Spouse Form' to get back what i earned.
Can I get a student loan after filing chap.7 bankruptcy?
yes, you are eligible, but be careful not to get back into debt.
