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On the other hand, in a Chapter 13 bankruptcy, an expected tax refund is, here in the Eastern District of Michigan, Detroit Division, generally considered to be a form of income that must be devoted to your Chapter 13 payment plan. As mentioned above, tax refunds, or the right to receive a tax refund, are assets that must be disclosed and valued in bankruptcy, right along with your couch, your wardrobe, your car, your comic book collection, and everything else that you own. Thus, if you file a Chapter 7 bankruptcy in Michigan on December 1st, and you are fairly sure that you will receive a Federal tax refund of $1,200 in the coming year, your bankruptcy petition should list the expected tax refund prorated as of the date of filing. Further, if you are married and your spouse is not part of your bankruptcy, you further need only list as your owned percentage of the expected refund either 50% of the total, or your proportion of the refund that derives from the percentage of your income contributing to the household taxable income the refund is based upon relative to your non-filing spouse’s.
Whatever the net amount listed as an asset on your bankruptcy petition schedules, however, it must then be protected from possible liquidation by the Trustee.
In Michigan, we may elect to utilize a set of Federal bankruptcy exemptions or a set of exemptions under Michigan law. The issue of tax refunds you’ve already received and Chapter 7 bankruptcy arise generally in the first quarter or two of the year when you may have only recently received your tax refund.
The reason for this question is, again, related to the Trustee’s power to liquidate assets of the bankrutpcy estate for the benefit of your creditors, whose debts are otherwise to be totally discharged by the Chapter 7.
The Chapter 7 Trustee can also avoid (or un-do) fraudulent transfers of bankruptcy estate property. If you have made such a transfer and are considering filing for bankrutpcy, it is imperative that you consult an experienced Michigan bankruptcy attorney such as John M. Although Chapter 13 bankruptcy is a more complicated process than Chapter 7 bankruptcy, the issue of tax refunds and bankruptcy are actually a little more straightforward. Instead, depending upon where you file your Chapter 13 bankruptcy case and the policies of the Chapter 13 Trustees in your area of Michigan or elsewhere, you may or may  not be required to turn your tax refunds as they come in over the life of a 3-5-year Chapter 13 payment plan over to the Chapter 13 Trustee as a form of your income along with your monthly payments. Thus, depending on where you live and how much you are repaying to your unsecured creditors in your plan, you may or may not need to plan on turning over your tax refunds for the life of your Chapter 13 bankruptcy to the Trustee. If you are a Michigan resident considering filing for bankruptcy, contact the Michigan bankruptcy attorneys of The Hilla Law Firm, PLLC to schedule a free initial consultation by calling (866) 674-2317 or clicking the button below.


This year I was more busy with work, so I didn’t make quite as much freelance income, and ended up getting a refund.
So, a few of you have noticed that my posting schedule has been a little bit off over the past week or so. I started doing link love posts every other week, because it’s so time consuming and I have so much on my plate. I also find that my wife and I don’t spend as much time together as I would like and so we try to make sure we spend at least 1 to 2 nights a week doing something together (normally on weekends).
One one hand, an expected tax refund is an asset that must be listed and exempted in either a Chapter 7 or a Chapter 13 bankruptcy. Even if you only expect to receive a refund, and even if the actual date on which you will receive the refund is still several months away.
You would not list the whole $1,200 because you still have 1 month of the current year to go before the year ends, and, thus, income taxes are not paid and not owed for the month that has not yet occurred. Hilla is experienced and skilled at applying exemptions and protecting assets and providing the clients of The Hilla Law Firm, PLLC the maximum protection available for their assets. Thus, if you got your tax refund and gave half of it as a gift to your great-great-grandmother, this is bad news for your grandmother. In particular, this varies greatly on the east side of Michigan, where the Detroit Division Trustees will always want your refunds committed unless you are repaying 100% of your unsecured debts in your Chapter 13 payment plan, while the Flint and Bay City Trustees may not.
Again, if there is a non-filing spouse involved, the exact amount required to turn over to the Trustee will be proportional. I love thanking the folks who have mentioned me, and giving a shout-out to my favorite bloggers, but I dislike that I always seem to wait until the last minute to write them (and then I spend several hours in front of the computer, instead of spending quality time with the bf). In other words, the part of the year that falls after the date you file your petition in which your employment results in further taxes paid above what you owe and thus generate a right to a refund is not part of the legal bankruptcy estate that is automatically created upon the filing of a bankruptcy petition. Exemptions are bits of either the Federal Bankruptcy Code statute or Michigan state statute that allow certain types of property up to certain dollar-value limits to be exempted, or removed, from the legal bankruptcy estate.


That is, they all have to get an even-Steven split of whatever your bankruptcy estate has to offer. The Trustee will sue your grandmother for the funds and potentially raise issues of bad faith in your own bankruptcy filing, endangering your discharge and raising the possibility, even, of criminal penalties depending upon the intent with which you made the transfer. Although an expected tax refund must still be listed and exempted as there is always the possibility of converting to a Chapter 7 later on, bringing the Chapter 7 Trustee back into the picture, and non-exempt assets may have an impact on the size of your monthly Chapter 13 plan payment, no one will take your assets in a Chapter 13.
I clearly didn’t do a very good job figuring out how much to have taken out of my check each month, because I got back slightly over $1000. I also forgot to schedule my Friday post, so my apologies (I know everyone was sitting on the edge of their seat waiting for one-wink). The Chapter 7 Trustee only has the right to liquidate property that is part of the bankruptcy estate. If an asset is not in the bankruptcy estate, it is not subject to the administration, or liquidation power, of the Chapter 7 Trustee. The Chapter 7 Trustee will sue the preferred creditor for the funds, whether it is American Express or your great-great-grandmother.
The information presented is not legal advice, and your use of it does not create an attorney-client relationship.
Long story, short, I had changed my deductions last year because I was making a fair bit of money freelance writing and didn’t want to owe anything to the government.
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