Q: What happens if I do not pay my chapter 7 trustee tax refund and they file an adversary proceeding?
A:
You lose your discharge (the whole reason you are filing for bankruptcy protection), the court could determine that all your current debts cannot be discharged in a future bankruptcy and other sanctions, the trustee will get a judgment against you which they can collect by garnishing wages or bank accounts. This judgment cannot be discharged in any future bankruptcy.
Bankruptcy is not a game. You should never file bankruptcy without first understanding your obligations and the consequences. Before filing any bankruptcy my clients know they will lose all or a portion of their tax refunds.
Work out something with the trustee because you are not in a position of power. If needed, you might talk to an experienced chapter 13 attorney about converting your case from 7 to 13 and paying the tax refunds over time. But, you will lose your future tax refunds while in the three to five year chapter 13, plus the attorney fees are significant so this may be a waste of your hard earned money.
Check out my website for lots of additional information.
A: They will dismiss your case and could sanction you. I highly recommend you comply with your plan as you agreed.
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