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Do I go to jail if I decide to keep my tax refund instead of giving it to my Chapter 13 trustee?

Chesapeake, VA |

I need my refund and I told my lawyer I needed it when I filed in the middle of the year. He said when I filed he could save it under the wildcard exemption but now he says I'll get about 10% of it. I need this money to move and I wouldn't have waited to file if I knew he couldn't save it. I'm thinking about telling the trustee I'm keeping my refund when it comes time or thinking about dismissing my case and then refiling a Ch7. I'm stuck it seems. I have to wait until July because I have a previous Ch7 filed on 7/2005. The creditor on my car was granted a relief of automatic stay but I have been complying with the order and only have two months to go before I have caught up my arrears. Will I lose my car if I dismiss before I'm caught up or can I just continue on the arrears schedule?

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Attorney answers 2


I don't think that you understand. If the Trustee says that your Chapter 13 Plan requires the payment of your tax refund, you do not get the option of ignoring your plan or the Trustee. Failure to follow the plan or the Trustee's request will result in the eventual dismissal of of your plan. The judge may add a restriction on refiling ANY bankruptcy at all for up to 2 years. Defying the Trustee is never a good idea.

The only thing that you can do is tell your attorney to file a motion asking for permission to use the tax refund or skip a few payments, so that you can finance a necessary move. If your attorney is reluctant to file such a motion, it may be that they have good reason. Be sure to ask and take notes on what they say. Then you can consider calling the trustee and asking someone in the Trustee's office to discuss filing such a motion with you. You may consider getting a second opinion about whether such a motion is possible or advisable. Good luck.

This answer is not intended to create an attorney-client relationship and may not be relied upon as legal advice. A careful examination of the facts is necessary before a legal answer may be relied on. You should consult your own attorney before taking or refraining from any legal action.

Charles Ross Smith III

Charles Ross Smith III


But no, you will not go to jail for contempt. You will just get dismissed and left to eaten by creditors. The lender on the car may not repossess the car, especially if it is low value, high mileage and poor condition. The lender may think it's a better dealer to continue to take payments on the car.


You won't go to jail for failing to turn over your tax refund to the trustee, but your Chapter 13 can & probably will be able to have your Chapter 13 dismissed for failing to comply with the terms of the Plan. Try to work this out by repaying the money to the Trustee as soon as you can, unless your Chapter 13 is no longer important to you. Whether you will lose your car or not will depend on the terms of your plan. Hope this perspective helps!

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