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  1. #1
    Join Date
    Jan 2008
    Posts
    11

    Default Re: Tax Refund

    The letter says we are required to fund our confirmed plan with all our disposable income. Since the trustee deems the refund as disposable income and above the net monthly income on our schedules, he says he will distribute the money to our unsecured creditors. He also states, the refund cannot be used against our monthly payment, it is in addition to our monthly payment.

    This is direct from Doug Neway, the new trustee in Jacksonville, FL. Mamie Davis the previous trustee never asked for our tax return or refund. According to our attorney, this has been the law, but we were never told when filing our b/k that our refund would be required to be turned over, if so, we would have claimed more dependents. We only have a return this year because our business lost money.

  2. #2
    Almosthome Guest

    Default Re: Tax Refund

    Quote Quoting grandmadebb
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    The letter says we are required to fund our confirmed plan with all our disposable income. Since the trustee deems the refund as disposable income and above the net monthly income on our schedules, he says he will distribute the money to our unsecured creditors. He also states, the refund cannot be used against our monthly payment, it is in addition to our monthly payment.

    This is direct from Doug Neway, the new trustee in Jacksonville, FL. Mamie Davis the previous trustee never asked for our tax return or refund. According to our attorney, this has been the law, but we were never told when filing our b/k that our refund would be required to be turned over, if so, we would have claimed more dependents. We only have a return this year because our business lost money.
    Okay I see. And I think the trustee is right (and maybe that is why there's a new trustee) but I would have to research what "disposable income" is under the BK code. Sounds like it was the law but never enforced by the prior trustee - again, I would have to look at the BK code and the cases under it. It may be worth while to do so yourself. There could be a basis to fight it.

    If you look at it from his perspective - that refund is money that was withheld from your paychecks in anticipation of what your tax would be. If you did not get a big refund, you would have received that money every 2 weeks over the year rather than all at once now which would have been disposable income. Had you claimed more allowances on your W-4 (I think that's what you mean), less would have been withheld and that would have been paid to you in your paycheck. Of course, when you get it in a paycheck it spends a lot quicker than if you save it up via a overwithheld tax payment. Oh well. Up your allowances this year.
    Keep in mind the trustee's job is to get as much for the creditors as he reasonably possible can AND he gets commission on what he pays out so you can see where his motivations are.

  3. #3
    Join Date
    Jan 2008
    Posts
    11

    Default Re: Tax Refund During Bankrutpcy

    Thanks I'll look up disposable income, so........with all this being said, if we choose to not turn over our refund, by the way the letter came regular mail, not certified, can we go to jail?

  4. #4
    Almosthome Guest

    Default Re: Tax Refund During Bankrutpcy

    Quote Quoting grandmadebb
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    Thanks I'll look up disposable income, so........with all this being said, if we choose to not turn over our refund, by the way the letter came regular mail, not certified, can we go to jail?
    Yes, you can go to jail.

    But seriously, the trustee would either move to turn over the funds to him or to dismiss your case. If your case is dismissed it's as if the case was never filed (with the exception of the tolling of the statutes of limitation for your debts) so you do not want that to happen.

    As for no certified mail - so what? Certified schmertified. I have seen many people ignore things because there was not some certified letter sent only to later regret it. Guess what? The law presumes that mail sent is mail delivered. Your address is filed under oath with the court when you filed your bankruptcy petition. If it's mailed there, unless you filed a notice of change of address, it is presumed that you received it and read it.

    I looked at a few cases regarding tax-refunds and whether they are property of the estate. The answer is not clear and again, the plan or confirming order must be the first place to look. If it is not addressed there, then further inquiry should be made. There are two cases from Ga which are not controlling in Florida but are in the same federal district (11th) both of which suggest that the tax refund belongs to you and not the trustee/creditors. The cases are: In re McCray, 172 B.R. 154 (BK S.D. Ga, 1994), and Matter of Gonzalez, 42 B.R. 401 (BK NDGA, 1984).

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