Bankruptcy Q&A

The IRS does not intercept a tax refund due to bankruptcy.

The court may ask about any refund. My tax attorney (a bankruptcy practicioner) did not prepare my taxes, just filed an extension, and submitted a letter advising the circumstances of my tax status that year and his opinion was I would not be receiving a refund. That satisfied the court.

Most people need their refund and spend the money on necessities. If asked you can report you needed to get your car repaired in order to get to work, or tires for the car, or your children needed clothing (the court is made up of people: Moms and Dad who know full well children outgrow clothing and shoes and needs constantly change) or you had to bring your utilities current before your electricity/gas/water/phone was cut off, or the family went to the dentist, or whatever it is that was necessary. Whatever you do, do NOT buy down debt. Any money you pay to a creditor would be considered a preference and the court can seize that money from the creditor.

Carolyn

Hello- I thought I might put in my 2 cents. About 5 years ago we filled chapter 7 and tax check issue has never came up. We have never had to give up our tax check. With chapter 7 you owe no more money, so I don't see how they could have a right to your tax check anyways.

Last year we filed chapter 13 on a repo car and now the tax check issue has come up. They might take it this year because we owe a balnce to the trustee. We asked our lawyer and he wasn't for sure, he told us when we get it, hold it and dont spend it, and to call him. I hope we get to keep it, we really need it.

Hope this helps.