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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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I am 2 1/2 years into a 5 year Chapter 13 Bankruptcy in the

Customer Question

I am 2 1/2 years into a 5 year Chapter 13 Bankruptcy in the Western District of Michigan. It is once again time to file my income taxes and of course turn over any amount I might get to the Trustee. Last year I received an additional $2500 due to some "Making Education Affordable" part of the tax return. I only had approx. $500 coming back without including that special $2500. This year I have $350 coming back if I don't put in for that Education thing. This "extra" $2500 is something I wouldn't be getting if my son wasn't in college getting student loans. Since this money is coming from my fellow taxpayers, I don't feel I should even apply for it if its going to go to creditors from my past. They can have the amount I would be getting anyway (the $350), but why should I take that money from the government to pay my old creditors? It just doesn't seem right! Would I get in trouble for NOT applying for that extra $2500?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  cortrightlaw replied 5 years ago.

cortrightlaw : The trustee is not going to recalculate your taxes so I do not think they would notice but why risk it? You should file your returns as appropriate and turn over the return. I see your point as which is the worst of two evils but you should not do something that could jeopardize your chapter 13 that is over 1/2 over.

This bankruptcy stuff is hard to accept that's for sure! Last month I was to receive a Profit Sharing check from GM for the first time in my career, and TWO days before the check arrived I got a letter telling me to turn it all over to the Trustee. We gave up our yearly 3% raise (which the Trustee would not of been entitled to) for that Profit Sharing provision. It was painful to send in that $7000. As far as this 4 years of $2500 a year goes, I think I would rather not send it to them and file three years of amended tax returns after my bankruptcy is discharged. Then I can give the money to my son to help with his burdensome student loans.

cortrightlaw : I understand your frustration and you can do what you want but I just have to tell you what you should do based upon the bankruptcy code. Try to think about it in a more positive light, think of the amount of debt that will be discharged when you complete your plan and you will be debt free.
cortrightlaw :

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Customer: replied 5 years ago.
Just to let you know...I did not apply for the education money and sent my tax forms in as I have for the last two years. I would be getting $358.00 from the Feds (which is being turned over). I owe the State $2.00, and the City a whopping $3.00. My taxes are rather simplistic compared to most folks. I have no investments, profits, losses, etc. Since I sat there and did them myself in an effort to save money, I can always plead ignorance about that credit. I figure the trustee would probably allow me to send in an amended return and surrender the funds at that time. If you are interested at all, I will let you know the results. Thanks again for your time and expertise.
Expert:  cortrightlaw replied 5 years ago.
Thanks for the update, I am sure it will work out just fine for you, I highly doubt the trustee will audit your tax returns.