Results 1 to 7 of 7
  1. #1
    Join Date
    Mar 2011
    Posts
    3

    Default 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?

  2. #2
    Join Date
    Apr 2009
    Location
    Somewhere near Canada
    Posts
    35,894

    Default 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.

  3. #3
    Join Date
    Sep 2010
    Posts
    478

    Default 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.

  4. #4
    Join Date
    Apr 2009
    Location
    Somewhere near Canada
    Posts
    35,894

    Default 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

  5. #5
    Join Date
    Mar 2011
    Posts
    3

    Default Re: Violation of Automatic Stay in Chapter 13

    Thanks for the info.

  6. #6
    Join Date
    Mar 2011
    Posts
    3

    Default 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?

  7. #7
    Join Date
    Sep 2010
    Posts
    478

    Default 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.

    1. Sponsored Links
       

Similar Threads

  1. Chapter 13: Chapter 13 Dismissed - Is There an Automatic Stay If I Appeal
    By ProSeWAState in forum Bankruptcy Law
    Replies: 3
    Last Post: 10-15-2010, 08:39 AM
  2. Chapter 7: Suggestion vs Automatic Stay
    By outdone in forum Bankruptcy Law
    Replies: 1
    Last Post: 07-16-2010, 09:18 PM
  3. Chapter 7: Automatic Stay With A Pending Appeal
    By non sequitur in forum Bankruptcy Law
    Replies: 2
    Last Post: 08-19-2007, 10:42 AM
  4. Chapter 13: Automatic Stay and Disclosure of Information
    By Zippo_007 in forum Bankruptcy Law
    Replies: 2
    Last Post: 04-22-2007, 11:25 AM
  5. Post-Discharge Issues: Automatic Stay and Contempt of Court by a Creditor
    By 341Nov21 in forum Bankruptcy Law
    Replies: 3
    Last Post: 11-26-2005, 11:37 PM
 
 
Sponsored Links

Legal Help, Information and Resources