Skip to main content

How is a tax reund applied to the chapter 13 plan

Marietta, GA |

How is a tax refund applied to my chapter 13 plan. Does the return go toward plan payments?

Attorney Answers 6


  1. The money you pay to the Chapter 13 trustee will be distributed pro rata pursuant to the terms of your Chapter 13 plan. Did you know that in the Northern District of Georgia, you can track how your chapter 13 payments are being distributed by the Trustee? I've listed a link below on how to do it.

    In the Northern District of Georgia, the chapter 13 trustee requires that you pay all future tax refunds to the chapter 13 trustee.

    However, if you receive the earned income credit, you can keep that money but it must be listed on schedule I as income and on the B22. Any person with earned income credit should consult with their bankruptcy attorney.

    If you need to use the tax refund money for emergencies, you must file a motion with the court a get permission. The trustee will want to know where every dime is being spent.


  2. It depends how you draft the Plan and what the practice is locally of the chapter 13 trustee. E.g., our Trustee allows a couple to keep the first $1,500.00 of the refund. Anything over that goes to the Plan unless you have already anticipated the refund in schedule I and incorporated it into disposable income.


  3. Jeffrey is correct unless you have an unusual plan, as the practice in every case in this district is the same. YOur attorney should have discussed this with you.


  4. The Trustee will take it and divide it among your creditors.

    THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. Answering this question does not create an attorney-client relationship or otherwise require further consultation.


  5. The trustee will take the money and divide it among your creditors according to your plan. You can have your attorney file a motion to keep the refund if you have a good reason to keep it and have documentation to prove what you need it for


  6. In this jurisdiction, the answer depends on how you schedule the refund. Typically, attorneys will either prorate the refund throughout the year and add it back into income OR subtract that from your withholding. This way, you keep the refund and the creditors are not harmed from your overwitholding.

    [This communication is intended as general information and not specific legal advice, and this communication does not create an attorney-client relationship.]

Bankruptcy and debt topics

Top tips from attorneys

What others are asking

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer

Browse all legal topics