Q: Can taxes be intercepted after filing Chapter 128 in Wisconsin?
I recently filed a Chapter 128 repayment plan, which includes repayment of unemployment benefits. The plan was filed 4 days ago, and I haven't started making payments yet. Before I filed, I received notice of potential tax refund interception. I've communicated with the unemployment office, and they mentioned they would still intercept my federal tax refund. I've also received an acknowledgment of my Chapter 128 filing from the court. Can they still intercept my state and federal taxes after this filing?
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A:
Your Wisconsin Chapter 128 filing creates a unique legal situation regarding tax refund interception. While Chapter 128 provides some protection from creditors, it differs significantly from federal bankruptcy protections. The unemployment office's statement about intercepting your federal tax refund is likely accurate, as federal agencies often aren't bound by state proceedings like Chapter 128.
For your state tax refund, you might have more protection under Wisconsin law, but this depends on the specific language in your repayment plan and court orders. Since you've only recently filed and haven't begun payments, the timing complicates matters further. It would be worth discussing this specific issue with the trustee assigned to your case, as they can provide guidance based on your exact situation.
I recommend bringing both your Chapter 128 documentation and the tax interception notice to a legal aid organization or an attorney familiar with Wisconsin debt laws. They can review these documents together and potentially help you file additional motions with the court if needed. While waiting for this consultation, keep all communication with both the unemployment office and the court documented, as this paper trail may prove valuable if you need to contest the interception.
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