Legal Question in Bankruptcy in Illinois

Income Tax refund and court settlement payoff

Will income tax refunds be confiscated by the government to pay off creditors if refund is filed after bankruptcy? What if income tax refund is filed and received, used to pay off creditors then bankruptcy filed? Will be obligated to pay back the refund to the courts?

My husband is expecting a settlement. When is the big question. Do we put the agreed amount down as an asset (even if we don't have it)? Is this settlement also subject to forfeiture?


Asked on 12/29/98, 7:34 pm

1 Answer from Attorneys
Charles Dobra Charles Wm. Dobra, Ltd.

Re: Income Tax refund and court settlement payoff

It is obvious that you don't have a Bankruptcy Attorney representing you. The income tax refund may be or totally or partially exempted. Whether the personal injury settlement will be "subject to forfeiture" is a better question. First, at the instant of the bankruptcy filing, ALL of your property becomes the property of the Trustee. That person MAY release his or her interest in the personal injury settlement, or not. It depends. No "value" has to be placed in the petition, but it does have to be listed in the Statement of Affairs.

Charles Dobra

Charles Wm. Dobra, Ltd.

675 East Irving Park Road - Suite 100


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Answered on 1/25/99, 3:47 pm


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