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Filed bankruptcy. Was expecting a decent tax refund. Was told i will not get any refund.

Atlanta, GA |

Filed chapter 7 in December 2012. Filed taxes in Jan 2013. Told today no refund. Does bankruptcy affect tax refunds?

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Attorney answers 5


Of course it does. And I'm sure your attorney discussed this with you, as the size of your refund often affects when you should file and even IF you should file (I hope you didn't make the mistake of filing pro se or filing with a lawyer and not telling them in advance about an expected refund).

In some cases, adjustments to your exemptions can protect some or all of a refund, so discuss tyhat with your lawyer, and, if you don't have a lawyer, you need one IMMEDIATELY. Feel free to call me if you do not have one at 404-768-3509.

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Sure it can - something to discuss with your Bankruptcy lawyer before filing (and now). Otherwise, we don't know what your tax returns state, the refund to which you are entitled, whether you properly listed the expected refund as an asset on Schedule B, how you planned your exemptions, etc. Presumably, you went to your first meeting of creditors and one of the questions asked was whether you expected a refund.


The IRS is sending the refund to your trustee. Do what your attorney tells you to do so she can amend your schedules to exclude the refund from liquidation and get it back up to the exemptable amount.

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Yep, you filed smack dab in the middle of tax refund season for bankruptcy trustees (when they make their money).

A tax refund is an asset. Assets are either exempt or non-exempt in bankruptcy (or not part of the estate in the first place). Unless you state provides a catch all exemption (wild card, or cash exemption), then the chapter 7 trustee takes a pro-rata share of your tax refund.

Note, certain parts of your tax refund might be protected, Earned Income Tax Credit, Child Tax Credit etc.

Get with your attorney, or go see attorney to sort out your options. If you do nothing, sounds like the tax refund is going to the trustee.


While tax refunds go to the trustee in almost all chapter 13 cases, refunds in chapter 7 are handled differently. When filing chapter 7, you usually exempt any assets you don't want the chapter 7 trustee to liquidate and use to pay creditors. This time of year, trustee's ask about refunds and look to take them if you have not exempted it. However, the IRS will not send these to the trustee directly, and the trustee has to take steps to get the refund, so I am not sure why you say you are not getting it. If you just thought you were entitled to a refund and the filed return says you will not get one, that does not affect your bankruptcy case. If someone is taking your refund, you need to get with your attorney to see who it is and if there is any way to keep it.

The above information is general in nature. In order to obtain more specific and legal advice upon which to base your important decisions, please contact our office directly for a free phone or in person consultation. Robert M. Gardner, Jr. Hicks, Massey & Gardner, LLP 53 W. Candler St. Or 718 Oak St. Winder, Ga. 30680 Gainesville, Georgia (770) 307-4899 (770) 538-0555 serving metro Atlanta and all of Northeast Georgia Bankruptcy, Divorce, Personal Injury, Worker’s Compensation, Medical Malpractice, Adoption, Civil and Criminal Litigation

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