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cortrightlaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 513
Experience:  Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
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A debtor filed his 2011 federal and state tax return on 2/14/12,

Resolved Question:

A debtor filed his 2011 federal and state tax return on 2/14/12, and his property tax return on 4/30/12. The refund received on each was $8,456, $1,150, and $1,143, respectively. The debtor filed a Chapter 7 bankruptcy petition on 3/13/12. With the time period between the tax returns filed and the petition filing date in mind, is the trustee entitled to 20 percent of all the tax refunds in this scenario (is there some sort of "penalty" for the close proximity of the filing dates, etc.)?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  cortrightlaw replied 5 years ago.

cortrightlaw : Some trustees claim that the refund drives from money owed I
cortrightlaw : To the debtor for the year 2011 that just has not been claimed or received prior to the filing of the bankruptcy. So attorneys use the bankruptcy exemptions to protect any potential refunds if possible. I do not know we're you are getting the 20 percent number but if it is unprotected the trustee can make a claim to the unprotected amount.

The sum of the tax refunds ($10,749) is under the 522(d)(5) exemption limit, and the attorney did list the refunds as exempt under the exemption on Schedule C. However, the trustee warned that she was entitled to 20 percent of the debtor's tax refund. She said she based her entitlement on "the date debtor filed in 2012." Any idea what the trustee is getting at?

cortrightlaw :

I have honestly never heard of this or experienced this in any of my cases, which there have been thousands, it seems if you exempted them properly then they would be exempt, if the trustee pursues this any further request the code or case law they are referring to in regards XXXXX XXXXX 20%.

cortrightlaw :

Also I did a quick through my bankruptcy guides and codes and found no mention of this.

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