Expert: Norma Duenas - California Bankruptcy Attorney - 7/20/2011

Question
I had an SBA guaranteed loan that just got discharged in a chapter 7.  I know that the US Treasury was trying to collect on the loan and they could take my tax refund.  However, now that the debt has been discharged, will I still lose my tax refund.  I have not filed 2010 taxes and was waiting for my discharge in order to avoid the US Dept of Treasury taking my refund.  The expected refund amount was exempted in my bankruptcy filing.  Will I still lose my 2010 refund to the US Treasury even thought the debt was discharged?

Answer
If the SBA guaranteed loan was discharged as part of your bankruptcy then the U.S. Treasury should not be taking any further action to collect on the loan. This would include collecting on the debt using your tax refund. The U.S. Treasury should have no ability to take action to collect on the SBA loan once it has been discharged in your bankruptcy case. Your discharged places a permanent injunction that prohibits discharged creditors from any collection efforts. These collection efforts would include collecting the debt through your tax refund.

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