Anne-Marie L. Bowen, P.A.

Can I Keep My Tax Refund in Chapter 13 Bankruptcy?

If you are filing a Chapter 13 Bankruptcy, usually you cannot keep your tax refund. But It depends.

If you have not yet filed your Chapter 13 Bankruptcy and you have already spent it before filing Bankruptcy, then the Trustee can't take what you don't have. This is how a lot of clients pay attorney's fees the first part of the year.

If you have a necessity, such as medical bills incurred after you file Bankruptcy, or a car or home repair, usually you can keep the tax refund. However, and here is the big catch, we have a new procedure in the Middle District of Florida and now we have to get a court order to keep the tax refund. It used to be that 99% of the time you could ask the Ch. 13 Trustee and she decided. That is no longer the case. We now have to go to the Judge with each request.

So, before you ask to keep the tax refund, check with your attorney about what your "necessity" is. Do you really want to stand before the Judge to explain why you need your $2,000 refund to send your 5 year old to modeling camp this summer?

On the other hand, if that same child had an emergency surgery to remove his appendix and you unexpectedly received hospital bills, of course you should be able to keep the refund to help with these unexpected medical bills.

Bottom line: talk to an attorney about keeping your tax refund before you spend it!

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