Here's what my attorney instructed me to do about tax refund [Ohio]

[mcwjjm]

Called my attorney today about my tax refund. During the 341 hearing the trustee asked me if I expected to get a "similiar refund in 2005" I said "yes, about $1200.00". He said, "keep it". Fine. Well, I told my attorney today that wasn't correct. I was thinking about my 2003 refund, which was $1100.00, not the $2,500.00 I received in 2004. Last year I'd claimed one dependant in 2004 that I wasn't expecting to claim on my 2005 taxes. Well, after our 341 hearing my children's mother tells me to claim BOTH kids because she didn't work enough to file. So now my 2005 refund is $5,600.00! When I asked my attorney what to do he said, "do not cash / spend either state or federal refund" [it'll be direct deposited in my checking] just sit on it till we hear from the trustee that my case is "closed" which should be sometime after my discharge. Is this a prudent course of action [or non-action]?

 

[Who's Liable?]

Your lawyer is correct...

You informed the trustee that you were to get 1200... 5600 can make a BIG difference to the trustee... You have to remember that you have NO right to your tax refund until the trustee says it is OK for you to have it... That money will go back to the creditors that YOU failed to repay...

Your lawyer should also be informing the trustee of the difference... It will than be up to the trustee to determine if and how much of the tax refund to keep...

Failure to report could end up in the trustee dismissing your case due to fraud, and your creditors will be right back on you...

 

[Ladynred]

What worries me about that response is that IF for some reason the Trustee is NOT told of the difference, and just keeping quiet until your case is closed, could get you in BIG trouble. The law says that money that comes to you, like inheritances, tax refunds, and a few other sources CAN be take by the Trustee for 6 months after you filed. So, even if you get the money and don't touch it and wait for your case to be closed, the Trustee can still take it. NOT disclosing it to the Trustee would be a very bad idea and if he/she finds out about it later, he could go as far as revoking your discharge.

I think you need to know exactly what your lawyer is going to do here.

 

[mcwjjm]

I know the trustee can take the money so he suggested to just sit on it till the case is indeed closed. Should he find out then I would turn it over and as I explained in my 1st post it was an honest mistake that is supported by previous tax returns. Once the case is closed by the trustee my attorney said he's never heard of a case being re-opened in all the banckrupcy cases he's handled. So you're saying just by not offering the information about the larger tax refund will get me in trouble should he find out? I would think that should he discover that I received a larger return and ask for it I would just hand it over and wouldn't be at risk of having my Chapter 7 revoked. If that was even a remote possibility I'd believe my attorney would strongly suggest I be forthcoming. Thanks.

 

[Ladynred]

Once the case is closed by the trustee my attorney said he's never heard of a case being re-opened in all the banckrupcy cases he's handled.

Maybe it's never happened in one of HIS cases, but I know of many where it HAS happened, and some have been posted on this board.

So you're saying just by not offering the information about the larger tax refund will get me in trouble should he find out?

Yes, it surely would. You are obligated to give this information to the Trustee.

I would think that should he discover that I received a larger return and ask for it I would just hand it over and wouldn't be at risk of having my Chapter 7 revoked.

That would most certainly be the best course of action.

If that was even a remote possibility I'd believe my attorney would strongly suggest I be forthcoming.

I'd say is more than remote, it IS possible and I would surely hope your lawyer would do the right thing.

 

[Who's Liable?]

I know the trustee can take the money so he suggested to just sit on it till the case is indeed closed. Should he find out then I would turn it over and as I explained in my 1st post it was an honest mistake that is supported by previous tax returns. Once the case is closed by the trustee my attorney said he's never heard of a case being re-opened in all the banckrupcy cases he's handled. So you're saying just by not offering the information about the larger tax refund will get me in trouble should he find out? I would think that should he discover that I received a larger return and ask for it I would just hand it over and wouldn't be at risk of having my Chapter 7 revoked. If that was even a remote possibility I'd believe my attorney would strongly suggest I be forthcoming. Thanks.

As Lady stated, just becuase your lawyer hsa not had one of his cases be re-opened, does NOT mean that it doesn't happen... It DOES happen, and the people who've had it done are in a much WORSE position than before...

Why, because once your creditors find out that your case has been revoked, they will come right back at you knowing that it WILL be difficult for you to re-file due to having a case revoked due to fraud... They will sue you, file for judgements, put a lien on your house, your credit score WILL tank, and you will have a difficult time if not impossible time getting house loans, car loans, credit cards, or ANY type of credit...

The bottom line: is it worth losing ALL protection that BK offers you just to keep $4400?

I'd say NOT this year... Do things the right lawful way, and get your refund next year... Remember, the trustee will ONLY take the first years tax refund if they see fit...

 

[bnkruptintexas]

Okay, now I am a little confused. My situation is a little different than that of the original person who posted this thread. We have always received around $4000 back from our income taxes. Nothing was ever mentioned about it int he 341 meeting and we never received anything stating that the trustee wanted it. Our case was discharged and closed in January. I called my attorney at end of the month and was advised to go ahead and file since the case was closed. So, I did. Now should I worry that my attorney had me do the wrong thing-since it was mentioned that they can take that money for up to 6 months after filing?

 

[HomeGuru]

Okay, now I am a little confused. My situation is a little different than that of the original person who posted this thread. We have always received around $4000 back from our income taxes. Nothing was ever mentioned about it int he 341 meeting and we never received anything stating that the trustee wanted it. Our case was discharged and closed in January. I called my attorney at end of the month and was advised to go ahead and file since the case was closed. So, I did. Now should I worry that my attorney had me do the wrong thing-since it was mentioned that they can take that money for up to 6 months after filing?

**A: please start your own thread. Do not hijack someone else's thread.

 

[mcwjjm]

I appreciate the advice and I agree the safest action would be to inform the trustee of the unexpected larger refund I'll receive. But what am I paying my attorney for? He suggested I do nothing and wait and see what the trustee does. And that once he closes the case I should be "ok". And should I get to keep the return I'm going to apply it to any debts that weren't discharged. I'm thinking worst case scenario is that the trustee wants all or a portion of the larger refund and I hand it over.