What to do about a tax refund and a bankruptcy?

I have filed a Chapter 7 bankruptcy. The trustee has asked to see 2 paystubs prior to filing, and 1 since the filing date. Additionally, she asked if I had received a tax refund and wants my federal tax refund. However, that refund was spent on living expenses a long time ago, as I already knew that my job was ending and that I would need the refund to cover a period of no other income. Do I volunteer this information, or just say nothing and hope it’s a non-issue, with the tax refund covered under the wildcard exemption?

Asked on October 9, 2013 under Bankruptcy Law, California


Terence Fenelon / Law Offices of Terence Fenelon

Answered 7 years ago | Contributor

You actually answered your own question.  The tax refund is probably covered by the "wild card" exemption if you properly listed the refund on Schedule C of your schedules.  Inform your attorney to file an amendment.  If you didn't have an attorney, your costs, depending upon the amount of the refund, could cost you more than you would have spent.  An exemption does does not exist unless it is declared and utilized.  Did you list the tax return on your schedules?

You might want to speak to the local bar association to get a referral for an attorney to guide you.

You have an obligation under the Code to provide pre-petition pay advices to the trustee.  Failure to do so could result in a dismissal of your case. Post-petition. is over reaching in my opinion.

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