Expert: Mark J. Markus- California Bankruptcy Attorney - 5/11/2009

Question
QUESTION: We filed chapter 7 bankruptcy and our attorney had told us that our tax refund would be the property of the trustee to either pay creditors or give it back to us.  We received our refund check and called our attorney to ask what to do with it. He said to bring it to his office, then a week later we received letter from him and from the trustee of the court with our final bankruptcy decree, saying the case was now closed. The letter from our attorney also said that our creditors also had 60 more days to object to the final decree. We still have our refund check hanging up in the cabinet and now I am not sure what to do.  I if we turn in in now, I am worried we will never see it again.  Do we still have to give it to the court if they said the case is now closed?

ANSWER: First of all, if your creditors have 60 days to object to the discharge of debts, then you haven't received your discharge yet, and if you haven't received your discharge yet, your case isn't closed.

In any event, whether you can keep your refund or not depends on what exemptions you have under applicable laws in your case.  I have not idea which state's laws apply in your case, or what other assets you have available which need to be exempted.  You need to discuss this with your attorney.  If the refund amount is exempt under your state's laws, then you don't have to turn it over to the trustee; otherwise, you do regardless of what stage the case is at.   Was the refund amount disclosed on Schedule "B" of your petition?

For more information on exemptions please see http://www.bklaw.com/exemptions.html

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QUESTION: The refund amount was disclosed on schedule B of our petition. We filed in FL and the two letters I received from the US Bankruptcy court were the Discharge of Debtors letter and The Final Decree from the Court dated April 21,2009, where the trustee writes; "having filed a final report that the estate has been fully administered, is discharged and the case is closed." Where I found the 60 day note was in the letter from our attorney not from the court when he sent us a copy of the final decree. He wrote "per federal statue, your creditors still have an additional 60 days in which to object to this discharge.  Keep that in mind when making any financial decisions witihin the next 60 days." I have called my attorney to ask him what to do with the check, but I have not heard back from him.

Answer
OK, well they obviously do things differently procedurally in Florida, so you're going to have to rely on your attorney out there.  If you listed your refund on Schedule B and exempted it, then you don't need to turn it over to the Trustee.   If you didn't exempt it all, but exempted part of it and the Trustee filed a no -asset report, and did not object to the exemption within the 30 day time period, then you probably also do not need to turn over the refund.