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Question
I filed chapter 7 bankruptcy on January 8 2007. I currently reside in Virginia. I am not yet discharged, nor have I had my 341 meeting. I am getting ready to file my taxes. Will I get to keep my tax return, or does the trustee take it? I think I am entitled to $5000.00 return with claiming my children. I have contacted my bankruptcy attorney, but he as not yet gotten back to me.
Dear William:
The assets you get to keep when you file bankruptcy are called "exemptions." That is because certain specified assets are "exempt" from being administered in the bankruptcy. Exemptions are usually determined under state law. In many states, it may be possible to exempt tax refunds, but then it also depends on the amount of the refund, and it may also depend on the value of other assets that are being claimed as exempt. Even though you said where you live, there is not enough information in your question to allow me to answer it, but your attorney should have no trouble answering this, especially since he knows your case.
Another consideration may be that even if the refund is exempt, the court could view the refund as disposable income. The court may count your refunds as "extra income" since it represents money that you earned, and did not spend on necessities. It is like having an extra $416 per month of income and in some cases it can affect a person's eligibility to file under Chapter 7. You should also talk about this with your attorney. Hopefully you do not have anything to worry about.
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Answers by Expert:
Los Angeles Bankruptcy Lawyer Leon D. Bayer
Expertise
Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/
Experience
Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.
Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.
Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.
Education/Credentials
B.A., J.D.
Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000
MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.
Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.
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