As a Chicago bankruptcy attorney, I am currently getting a plethora of motions to dismiss for the failure of my clients to send in a copy of their 2010 tax return to the trustee. Further, it seems that a lot of Chapter 13 bankruptcies are getting dismissed for failure to provide copies of the tax returns after filing and for failure to turnover their tax refunds to the trustee. In a Chapter 13 bankruptcy the Debtor is required to pay all disposable income into the plan.

Present case law provides that a tax refund is disposible income within the meaning of a Chapter 13 Chicago bankruptcy unless the case is a 100% dividend the trustees are requiring payment of the tax refund into the plan. The Chapter 13 trustees in most cases require that the plan have a provision regarding tax refunds and submit a copy of the return to the trustee before May of that year and turnover or pay in the amount of the refund as an extra dividend to the unsecured creditors. The bankruptcy court even added this information to the model retention agreement for all Chapter 13 to advise debtors of the requirement.

In a Chapter 7 Chicago bankruptcy, a tax refund is only property of the estate when the Debtor is eligible to recieve that tax refund acccording to the trustee's Chapter 7 practice. In practical terms the issue arises from January 1 of each year to April 15 approximately with the trustee asking an additional questions at the meeting of whether or not the debtor filed there return for that year and what did they do with the money and how much was the refund or do you expect a refund?

Experience matters when you choose a Chicago bankruptcy lawyer! You should beware of any cutrate attorney who dabbles in bankruptcy as it usually will cost you more in the end! I have represent debtors just like you for a number of years now and I am happy to answer questions and advise you on the ramifications of filing a bankruptcy in Chicago. Please call my office for a free consulation (312-489-8182) or email me at mgwagman@gmail.com! I want you to lose your debt and keep your dignity!

Marc Wagman

Attorney at Law