I filed chapter 7 bk in April 2012, how much of my refund will I loose? I filed my taxes Feb,6th refund amount is 7,021.00

Asked about 1 year ago - Chandler, AZ

I have received contradicting responses from the web , I read that they can legal only take what you were taxed on before your filing date , Please ? Some one give me a real legal answer

Attorney answers (6)

  1. Ryan Hardy

    Contributor Level 15

    6

    Lawyers agree

    Answered . In Arizona, it is quite common for the Trustee to seek the estate's pro-rata share of the tax return. The Trustee can only take the pro-rata share of what you earned prior to the filing date, so you are correct in that assumption. Even if your case is closed, I have seen Trustees in Arizona re-open the case to go after a large tax return (I would not be surprised if they go after yours). There are a lot of answers above that give some good insight; however, it is best to speak with an Arizona attorney about this who is familiar with the trends here. I suggest you call a local attorney to get further clarification if needed.

    This answer is provided for general information only and is not to be construed as legal advice. This response is... more
  2. Scott Benjamin Riddle

    Contributor Level 19

    5

    Lawyers agree

    Answered . You need to discuss with your lawyer. If the case has been closed, the asset (if disclosed) has been abandoned BUT a trustee could reopen the case. As far as whether a Trustee would want it, in my district, most would not touch a refund of less than $2500 (one third of your total refund) unless there were more assets in the estate for creditors. It costs more than that in time and expenses just to keep a case open for a small amount, and little would actually go to creditors.

  3. Matthew Scott Berkus

    Contributor Level 19

    4

    Lawyers agree

    Answered . Is your bankruptcy even still open? Has your trustee even requested your 2012 tax return?

    It would be "very unusual" for a trustee to request a tax refund for a bankruptcy filed in April of the prior year. However, if push comes to shove, and assuming no exemption, I suppose the trustee could request a pro-rated amount.

    For the sake of example, let's assume you filed your case April 30 and your tax refund is $1,200. Since you filed on April 30, you have accrued 4 months worth of your tax refund...which in this case is $400. So, arguably, the trustee would be entitled to the pro-rated share that is $400.

  4. Paula Brown Sinclair

    Contributor Level 20

    4

    Lawyers agree

    Answered . I respectfully disagree with your first responder. I don't know a Trustee that wouldn't be licking his chops at a tax refund of $7,021 on a bankruptcy filed in April. A Trustee may be able to claim almost one-third of it for the estate. The exact method of calculating the Trustee's share varied from one district to another. In Idaho we count the number of days, and the refund is presumed to have accrued evenly through the year.

    The reason you can't get the "real legal answer" you want is that you haven't provided all the relevant information. Or, we could say that the "real legal answer" is that the Trustee will be entitled to that portion of your tax return that is prorated to the portion of the year that had elapsed before the filing of your bankruptcy petition subject to any valid claim(s) of exemption.

    Be aware that the Avvo Q&A is effective at providing pubic information law and legal procedure with exceptional accuracy, but with regard to the application of the law to the facts of an individual case, it's usually not possible. Exemption laws vary dramatically from state to state, so it is not possible to be more definite about the portion of your refund that must be surrendered.

    Best wishes for an outcome you can accept, and please remember to designate a best answer.

    This answer is offered as a public service for general information only and may not be relied upon as legal advice.
  5. Lucy Magness Hebron

    Contributor Level 10

    4

    Lawyers agree

    Answered . If your case is closed and you got your discharge already you are out of bankruptcy and the refund is yours to keep. If your case is still open and you have an attorney you need to let your attorney know and he and the trustee will coordinate how much of the refund is the trustee's and how much you get to keep.
    I would be interested to know what you find out. Let us know if your case is closed (and you get to keep that large refund).

    This answer is for informational purposes only and may not be relied upon as legal advice.
  6. Steven W Zachary

    Contributor Level 17

    2

    Lawyers agree

    Answered . As you can see, there are a number of differing opinions. You should talk with an Arizona attorney who know the different trustee and what they might be inclined to do.

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