Trustee Blog

Tax Refund Time

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Riverside Chapter 7 Bankruptcy Trustee Robert Whitmore, as we have noted in the previous posts, is the master of the small asset case. That means the small property in a debtor’s schedules that cannot be exempted on Schedule “C” and subject to the Trustee taking the property and selling it. In previous posts we have talked about taking cars or business equipment and selling them. In other posts we talked the Trustee taking houses and selling them as the house prices have been rising. Today we talk about the Debtor’s tax refund.

December is the time of year to start thinking about protecting the debtor’s tax refund she will receive in the Spring. If she comes to your office in December and you file in December, her meeting of creditors will not be until January or February. So when the Trustee, like Mr. Whitmore examines your client, it will be in the new year and your client may be receiving a tax refund. This is an asset of the debtor and should be protected.

However, the tax refund may not be able to be protected. It depends which CCP code section you choose–See Below

What if the client does not know what her tax refund will be?

Ask your client what she received as a tax refund last year, or look for yourself on her tax return. This amount is a good indication of what the next tax refund will be.

Practice Pointer:

List the potential tax refund on schedule B and exempt the potential tax refund on schedule C, if you are using the California Code of Civil Procedure 703.

Remeber There is no exemption to protect tax refund under CCP704. If have to use CCP704 to protect a house you cannot protect the tax refund and it may have to turned over to the Trustee. Be sure to warn your client about that action.


Tune in tomorrow as we talk about the statutory fees the Trustee receives from selling property for the benefit of the bankruptcy estate.


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