Tax refunds are heavily disputed in bankruptcy cases and it isn’t hard to understand why that is. However, for most people they don’t know whether or not a trustee in their case will look to seize the refund. It can be a worrying time so what will happen? Read on and find out more.
Why Are Tax Refunds In Dispute?
Most refunds are considered payable income even though you haven’t as yet received the money but it will become a part of your estate during a bankruptcy. If you already have received the money and has been spent before bankruptcy then technically it is no longer a part of the bankruptcy estate. However, if the money has yet to be received into your bank account or is still within your account then it may be classed as part of your estate and it will need to be disputed. If you would like to find out more, please check out taxreturn247.com.au.
There Are Several Deciding Factors over Whether a Trustee Will Take A Refund
Tax refunds are more than likely going to be taken by the trustee in order to cover certain debts outstanding but there may be one or two omitting factors. For instance if the refund amount is considerably small then it may not be seized.view more information at http://economictimes.indiatimes.com/wealth/tax/missed-the-tax-return-filing-deadline-heres-what-to-do/articleshow/53597715.cms
However whether the refund amount can be exempted from being taken it will come down to a variety of things such as the amount of the refund, what the local authorities have to say and the trustee’s thoughts. Most will find their refunds are gone but there may be some allowances in some cases.
Trustees Will Make a Decision
Usually it is the bankruptcy trustee that makes the final decision over your refund. If the trustee believes the size of the refund is large enough to pay back all of your creditors then he or she will make the decision to take the money and use it to pay back the necessary people. However, let’s say you owed over ten thousand dollars and your refund was two hundred dollars, the trustee may decide not to take the refund as it isn’t worth their efforts. Again, this will vary depending on the trustee and what they believe is right for your case. To find out more, go to taxreturn247.com.au.
There May Be Exceptions
While the trustee does essentially have the final say there are potential exceptions as to whether or not they will take your refund. As mentioned above if the amount of money isn’t worth their time or efforts then they will probably not take the refund. However, this isn’t the only exception available. Your personal circumstances could play a vital part in determining whether the trustee will take the tax refunds. Of course if you happen to spend the money before the bankruptcy that is another story or if you spend the refund on a car or mortgage payment then usually there isn’t much a trustee can do.
At the end of the day it is your personal circumstances in which will determine whether or not your refunds are taken from you. Yes you may be lucky to find the refund isn’t taken but you can’t always be sure. It will be important to talk to the trustee and inquire about this so that it isn’t dragged out. If the money isn’t taken then it can be used for a necessary mortgage or rent payment. High tax refunds are more than likely to be taken but smaller ones probably won’t be.