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Violation of Automatic Stay in Chapter 13

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  • 03-28-2011, 10:16 PM
    ayubu50
    Violation of Automatic Stay in Chapter 13
    My question involves bankruptcy in the state of: New Jersey
    My chapter 13 was filed Jan.11,2011. I file my tax return Jan.30,2011. March 2,2011 IRS confiscated refund for back taxes owed from 2006. My attorney sent IRS a letter informing them that they had violated automatic stay, and that they should return my funds to me. He also requested that they send proof of claim. After 2 weeks my attorney told me he spoke with the IRS and they told him my refund was applied to my 2006 tax debt, he then said this was something he could not object to, since the IRS has the right to off set a tax refund against past due taxes. Can they do that without filing some type of papers being filed with the court?
  • 03-28-2011, 10:29 PM
    Dogmatique
    Re: Violation of Automatic Stay in Chapter 13
    Quote:

    Quoting ayubu50
    View Post
    My question involves bankruptcy in the state of: New Jersey
    My chapter 13 was filed Jan.11,2011. I file my tax return Jan.30,2011. March 2,2011 IRS confiscated refund for back taxes owed from 2006. My attorney sent IRS a letter informing them that they had violated automatic stay, and that they should return my funds to me. He also requested that they send proof of claim. After 2 weeks my attorney told me he spoke with the IRS and they told him my refund was applied to my 2006 tax debt, he then said this was something he could not object to, since the IRS has the right to off set a tax refund against past due taxes. Can they do that without filing some type of papers being filed with the court?



    Did you ever receive a notice of intent to levy?

    Ever?

    If you did - that's all IRS needs to do before they intercept your refund. Your attorney should know this.
  • 03-29-2011, 06:08 AM
    despritfreya
    Re: Violation of Automatic Stay in Chapter 13
    Your attorney should have known the answer from day one. The taxing agency had the absolute right to keep your 2010 tax refund and apply it to whatever tax year you owe. As your attorney found out, it is the right of offset and no notice is required. The 2010 refund was a pre petition asset in your 2011 case. The government will not be able to do an offset with post petition tax refunds.

    Des.
  • 03-29-2011, 01:48 PM
    Dogmatique
    Re: Violation of Automatic Stay in Chapter 13
    Quote:

    Quoting despritfreya
    View Post
    Your attorney should have known the answer from day one. The taxing agency had the absolute right to keep your 2010 tax refund and apply it to whatever tax year you owe. As your attorney found out, it is the right of offset and no notice is required. The 2010 refund was a pre petition asset in your 2011 case. The government will not be able to do an offset with post petition tax refunds.

    Des.



    Thank you for clarifying that :)
  • 03-29-2011, 08:52 PM
    ayubu50
    Re: Violation of Automatic Stay in Chapter 13
    Thanks for the info.
  • 04-06-2011, 09:54 PM
    ayubu50
    Re: Violation of Automatic Stay in Chapter 13
    I have one more question concerning my earlier post. If the IRS honored the automatic stay in that they stopped taking a portion of my wife's Social Security Check yet still took the refund, is that common?
  • 04-07-2011, 05:23 AM
    despritfreya
    Re: Violation of Automatic Stay in Chapter 13
    Collecting from payments that are deemed post petition would be a violation therefore, if the SS check was issued after you filed it was "compensation" that was due post petition and would not be subject to "garnishment". This is no different from a creditor who has a judgment and is garnishing wages. The moment the bk is filed the garnishment of future wages must stop.

    I did want to mention that you are “safe” so long as you remain in the Chapter 13 and fulfill your obligations under the Plan. If the case gets dismissed collections may resume. If you are unable to complete the 13 and end up in a Chapter 7, upon entry of the discharge the IRS will resume collections for any tax that was not discharged. I liken the 13 to a “forced repayment plan” upon the Government that stops interest on income taxes from accruing and allows my client up to 5 years to pay it.

    Des.
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