Expert: LEE HORNER - 1/23/2012

Question
Mr. Horner,

I understand that you many not necessarily be able to comment specifically with regard to my case, so I'll attempt to ask my question in more general terms.

In Arizona when a debtor is discharged from chapter 7 as a no asset case, the trustee is released, and the matter is closed with the court, is there a significant risk that the trustee will subsequently confiscate any due by unpaid tax return?

I practiced (though only in poverty law) as a paralegal, and believe that because he has been discharged from duty and the matter was closed with the court, the trustee is unlikely to come for the return, and that even if he did, there would be no estate or creditors to which it could be distributed.  Could you please verify or correct my conclusion?

Thanks,

Brian

Answer
Most trustees will keep the case open to see if there's a refund or not.  If the debtor lies on the schedules and says "I have no refund coming", trustee believes him and closes it out, and the debtor gets a big fat refund, the debtor risks jail, revocation of the discharge of all scheduled debts making them non-dischargeable for life, and the case being reopened to administer this hidden asset.

The best course of action is always disclosure.  It might not be enough for a trustee to fool with, but that's totally the trustee's call.  

Lee