A common question I get this time of year is whether the trustee will take the debtor’s tax refund if he files for bankruptcy. The answer depends upon many factors. The Trustee has a duty to administer non exempt assets if those assets are worthy of administration. For a tax refund to be worthy of administration the [...]
Tax Issues In Bankruptcy
In a down market for home values, a foreclosure sale can create an entirely new creditor in the form of the IRS, collecting taxes on canceled debt. Uncle Sam is the phantom creditor. Homeowners facing foreclosure may benefit from filing bankruptcy, even if they have no bills other than the mortgage , because bankruptcy is [...]
Today, I am going to add a new chapter to the continuing saga of how your Tax Returns, and more importantly, Tax Refunds, impact your Bankruptcy. I am a firm believer in planning the bankruptcy and the future. Do you remember when you were married. The traditional marriage vows contain the language, in sickness and [...]
Bankruptcy can discharge income tax if certain conditions are met. One required condition is that returns must have been filed. Some bankruptcy courts have recently taken the position that a return filed after the statutory deadline does not qualify as a return for the purpose of bankruptcy discharge. The bankruptcy court for the northern district [...]
A bankruptcy trustee might be able to take your income tax refund whether you have filed a chapter 7 or chapter 13 bankruptcy case. Some courts say that this procedure is improper – but it happens every day in many places. How can this be? Well, income tax refunds in chapter 13 are “property [...]
If your home is foreclosed, sold at a short sale, or if you give the home back to your lender in satisfaction of your debt, IRS Tax Fact 10 tells us to watch for a 1099-C or 1099-A statement in the mail during the next calendar year. Lenders are required to send the 1099 forms [...]
