Expert: Mark J. Markus- California Bankruptcy Attorney - 11/24/2011

Question
We recently received a chapter 7 discharge, my question when we file taxes will our return be taken? If so how long do they take tax returns?

Answer
I assume you mean refund, not return.  Tax returns are documents and you are required to provide the Trustee in your case with a copy of your return for the most recent tax year prior to filing your case.  I assume if you've received your discharge that you've already gotten past that point.

If you are owed a refund for any tax years prior to filing your bankruptcy case, you should have listed that as an asset in Schedule "B" and hopefully exempted it.  If you did not, then it belongs to your case trustee.  If you are owed a refund for the tax year in which your bankruptcy case was filed (for example, you filed in 2011), then the Trustee could demand a portion of the refund that can be allocated to wages/income you earned for the portion of the year prior to filing your bankruptcy case (again, unless you exempted it under applicable law).  

Exemptions are "protections" for value you have in certain assets such that they are "exempt" from collections.  Every state has different exemptions amounts available. Exemption laws are based on the state where you resided for the 2 years prior to filing your bankruptcy case or, if you lived in more than 1 state during that period, in the state where you resided for the greater part of the 180 days prior to that 2 year period.


Is your case still open, or was it closed after entry of your discharge?  If closed, then that means the Trustee isn't looking to "take" any further assets, including your tax refunds.

Mark J. Markus, Attorney at Law
Handling exclusively bankruptcy law cases in California since 1991.
http://www.bklaw.com/
bankruptcy blog: http://bklaw.com/bankruptcy-blog/
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