Chapter 7 and Tax Refund

[Anonymous]

I filed for Chapter 7 bankruptcy in 12/31/14. I have a no assets case and the bankruptcy trustee said that I filed at the right time so he will let me keep my tax refund. The problem is I owe previous federal taxes which aren't dischargable. I previously had a payment arrangement with the IRS before filing bankruptcy. Once I filed, I spoke to an agent and she said they couldn't collect from me while I was in bankruptcy. Will the IRS seize my tax refund or hold my tax refund during the automatic stay? I have read conflicting answers from various attorneys on the internet. If someone has experienced this please let me know.

[Anonymous]

You will probably be discharged before April 15th, so if you are pro se I suggest you just wait to file for the time being. That way you never have to worry about tax drama. You can continue to pay the IRS during the automatic stay and they should continue to accept your payments - they just can't try to force you to pay up during the automatic stay.

Oh dang, I just saw you already filed. Ok. I think (IANAL) the answer is no, they will not seize your refund or hold your return, as I think that would violate the automatic stay preventing them from taking collection actions. They may well come after you for it once your case is discharged, though, so be mindful of that.

[bstone]

Whatever you do, work with them to get this resolved.  We had a nearly $18K tax debt from 2006, never tried to work with them.  Even though they offset my taxes, because we never tried to work with them, they put filed a judgment against us, which goes on your credit.

You don't want the judgment after you clean things up with the BK, so just continue to work with them to resolve the debt.

[tallin32]

I filed back in 2013 with around $14k in tax debt ($13.7k was dischargeable) and had my case discharged on April 23, 2014.  I received my full tax refund, as collection actions were frozen during my case.

So ... my guess is that whether you get your full refund depends on whether your bankruptcy is discharged before the IRS issues the refund.  If the bankruptcy hasn't yet been discharged, then my guess would be that you get the full refund.  If your case has been discharged and collections are resumed on the nondischargeable tax debt, then your refund would be affected.  That said, I'm not an attorney--I've just been there before.

[Anonymous]

Thanks everyone for your responses. I will know this week if I get it. It's supposed to be in my account on the 12th. I still have about 50 days to go for my discharge