Filed Ch 7 / Tax Refund ~ Prorated ???

[karenbruner]

undefinedWhat is the name of your state? Indiana

My dear friend, single mother of 3, had to file Chapter 7 bankruptcy in Sept 2004, losing her home. She normally gets approx $4K federal tax refund (EIC, child credit, etc) and was anticipating this refund to help get back on her feet (and her 3 kids!) . She was told she had to turn it into her lawyer upon receipt, which she did. (VERY sad.....)
I have now heard that the refund she gave the treasurer should have been "prorated", only up to the date she filed. (e.g. 9/12 of refund due...NOT the full refund!) We need to know FOR SURE so she can request partial refund BACK.... AND ....are they really allowed to keep the EIC and child credit???

 

[djohnson]

Because this money is 'income' for lack of a better term, and she had debtors that lost 'income'. They asked to keep it. It's perfectly normal. A lot of what can happen depends on what type you file and what your debt is. Like usually in a 13 if you pay back 20% instead of 1%, you get to keep you refund.

 

[Diane143]

exempting

Your friend may have been able to exempt her refund. Not sure. If she lost her home she may have used up all the Wild card/Homestead exemptions in her state. Perhaps she is not in a state that allows for Federal exemptions. I used the Unused homestead exemption on "Any Property" to exempt ours which was around $4,000. I filed pro se. Some attorneys miss the 522 (d)(5).

 

[Ladynred]

Federal exemptions are NOT allowed in IN.

In general, a debtor may claim exemption of his homestead and certain personal property from attachment and execution of a judgment, or in a bankruptcy proceeding. Indiana permits every judgment debtor domiciled in the state exemption of real and personal property constituting:

* the personal or family residence an amount up to $7,500.00 in value.
* Some other exemptions may include other real or tangible personal property up to $4,000.00,
* intangible personal property up to $100.00,
* professionally prescribed health aids, interest in retirement plan and medical care savings accounts. (Indiana Code 34-2-28-1.)

Doesn't appear there's any wildcard or use of unused portion of homestead.