Tax Refunds During Bankruptcy
In filing a Chapter 13 bankruptcy many clients have a concern about their tax refund and what happens to it when they are in an active Chapter 13 bankruptcy case. Many Debtors want to know how long does it take for their tax refund to get to them. There really is not a simple answer or a definite time frame we can put on it, just all approximate. Once the tax refund is received by the Chapter 13 trustee there is a process. When they first receive it, they will look to determine if the case is new law or old law. This will soon be old news in a few more years; because there will no longer be any old law cases. In general, if it is an old law case and the refund is more than $2,000, the refund is held and reviewed by the staff attorney who will determine to release the funds or distribute the funds to the unsecured creditors. If the amount is less than $2,000, the Chapter 13 trustee will send it out to the Debtor when disbursements occur on the fourth Friday of each month. If the refund is less than $2,000 and the case was filed after the laws changed, the Chapter 13 trustee will do the same as the old law and send the refund to the Debtor as soon as possible to reach the Debtor when the Chapter 13 trustee has their disbursement on the fourth Friday of each month. Of course there are other variables that take place that Debtors are unaware, which could cause the refund to take more time.
If you have any questions about your tax return, contact your bankruptcy attorney and they will be able to discuss and help you find out what is going on with your return.
For further research you may visit the following site related to bankruptcy:
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