Stipulations Regarding Tax Refunds
If you are in a Chapter 7 or Chapter 13 bankruptcy, there may be stipulations regarding your tax refund if you are receiving one. As tax time nears, it is good to know the ins and outs of legal requirements in all types of bankruptcy.
At this time of year chapter 7 trustees are paying close attention to whether a debtor is expecting a tax refund. A trustee will demand that tax refunds that exceed the debtor's exemption - or are not properly exempted - be turned-over and distributed to creditors.
In chapter 13 cases tax refunds are not turned-over to the trustee, but the IRS can still set-off any amount owed for delinquent taxes against the refund. When it comes to tax refunds and bankruptcy, my advice is to speak to a bankruptcy attorney and don't spend the money before it is in your hands.
Give a Scura, Wigfield, Heyer & Stevens bankruptcy lawyer in New Jersey a call or fill out our form for a free bankruptcy consultation today.
