Taxes in Chapter 13

During the duration of your Chapter 13 bankruptcy case you may be required to provide information about your taxes.  This may simply involve forwarding a copy of your completed return to your trustee.  Your trustee will know whether or not your tax refund will need to be collected.

There are a few factors to consider when it comes to your tax refund in Chapter 13.  For the most part it depends on your state.  Some states allow Chapter 13 debtors to keep a portion of their refund with the remaining amount to be forwarded to the trustee.  A similar situation may be true for debtors who are married but filed bankruptcy as an individual.  If you and your spouse filed a joint return, the spouse who filed bankruptcy could be required to forward half of their portion of the refund to the trustee.  The other half would belong to your spouse.

Sometimes it depends on the structure of your repayment plan and if you are required to pay back unsecured creditors in full.  Some debtors may be required to repay up to 100 percent to creditors.  In some cases, your tax refund could reduce the length of your bankruptcy, especially if it has been 3 years since you filed your case.  Yet, there are exemptions that may allow you to keep your refund, but it depends on the state you reside in.  Contact your bankruptcy trustee to discuss questions or concerns.

Reference:  http://www.bankruptcylawnetwork.com/do-i-have-to-turn-in-my-income-tax-refund-to-the-chapter-13-trustee-every-year-that-i-am-in-bankruptcy/

Call to speak to a bankruptcy attorney