Montevallo, AL asked in Bankruptcy and Tax Law for Alabama

Q: Currently in chapter 13 bankruptcy in the middle district of Alabama, I know we have to report our taxes yearly, but do

They take our tax refund entirely? Or do we get to keep it?

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2 Lawyer Answers
W. J. Winterstein Jr.
W. J. Winterstein Jr.
  • Bankruptcy Lawyer
  • Boyertown, PA

A: In a Chapter 13 bankruptcy, while all of your assets, including any expected tax refund, must be disclosed in the Bankruptcy Schedules that must be filed in the case, a debtor retains all his property, unless he chooses to surrender it to a secured creditor, or sell it, as part of the proposed Plan.

If your Plan has been confirmed, everybody involved, indeed, the whole world, lol, is bound by the terms of the Plan.

So long as you make the payments required by either the Bankruptcy Code (e.g., taxes and adequate protection payments to secured creditors) your wages, and other income, including tax refunds, are yours to spend or save.

Timothy Denison agrees with this answer

Kevin M Ryan
Kevin M Ryan pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Bankruptcy Lawyer
  • Loxley, AL
  • Licensed in Alabama

A: The Earned Income Credit is exempt, and is not subject to being turned over to the Trustee in Chapter 13 Bankruptcy.

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