Legal Question in Bankruptcy in Minnesota

Tax refund--do I get it?

Hi, I filed for Chapter 7 bankruptcy in Dec. 2006, but my wife did not file because she has good credit. All my debt was some medical bills, but mostly credit cards. We are doing our taxes now and see that we for the first time are getting a sizeable refund. Are we, or at least my wife still entitled to this money or does it get taken by the trustee? What if we wait until months after our bankruptcy has been settled, can we file then and keep our refund?

Any advice is much appreciated. Thanks!


Asked on 1/30/07, 11:16 am

1 Answer from Attorneys
David Kelly-952-544-6356 Kelly Law Office

Re: Tax refund--do I get it?

This is a basic question that should have been covered by your wife's lawyer before she ever filed the bankruptcy.

The bankruptcy trustee is entitled to a portion of her share of the refund based on the number of days of 2006 that had elapsed by the time the bankruptcy was filed. In other words, if the bankruptcy was filed on the 300th day of the year, the trustee gets 300/365ths of your wife's share of the refund.

The only way to avoid this is to claim the refund as exempt. This can only be done if your wife used the federal exemptions and claimed the refund as exempt under the catch - all exemption.

As I said, this should have been covered by her attorney.

Take a quick look at her bankruptcy petition. Look at Schedule C. That's where the exemption claims are made. If it does not mention anything about a tax refund, there may be a problem.

Having said all that, it should also be kept in mind that usually if the trustee wants it, he or she will be letting your wife know.

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Answered on 1/30/07, 4:09 pm


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