Income Tax Refunds and Utah Bankruptcy

Some people come to see their income tax refunds as a yearly bonus. In reality these refunds are usually caused by a taxpayer having paid too much in taxes during the past year. Sometimes people have even come to rely upon these refunds for planned yearly spending to catch up on bills, go on vacation, buy necessities, etc. Because of this reliance upon income tax refunds, those looking at filing for bankruptcy are often dismayed to find that the bankruptcy court may seize part or all of their refunds. How might this be avoided?

The first thing someone looking to file bankruptcy must understand is the idea of the “bankruptcy estate.” Every asset they have, or have the right to receive, at the time they file their bankruptcy is filed is considered a part of the bankruptcy estate. Every asset, to the extent not considered exempt, is subject to being taken by the bankruptcy trustee to distribute to the debtor’s creditors. Avoiding this taking of assets is one of the goals the person looking to file for bankruptcy, and should be the goal for an experienced bankruptcy attorney.

The best way to avoid loss of the refund is to work with an experienced bankruptcy attorney. At the Law Office of Douglas Barrett, LLC we can help you determine when to file your tax return and when to file for bankruptcy protection. There are a many, many, many possible pitfalls for the unsuspecting bankruptcy filer in Utah. Visit us at www.utahbk.info for more information

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CAN I FILE A CHAPTER 13 BANKRUPTCY AFTER I FILE A CHAPTER 7?

If you’ve filed for bankruptcy under Chapter 7 and received a discharge and are still struggling with debt, you may be able to file again under Chapter 13. The catch, however, is that you will probably have to wait a few years before re-filing.

In theory, individuals can file for bankruptcy as many times as they want, but there are some time limits and debt limits that apply to anyone trying to file again.

For complete answers on filing Chapter 13 after Chapter 7, speak with a Utah bankruptcy lawyer at 801-221-9911 or at www.dlblaw.com.

Can I change from a Chapter 13 Bankruptcy to a Chapter 7 Bankruptcy or vice versa at a later date?

Yes, It can be done after you’ve filed for either chapter, also note that the trustee can also request a conversion.
For instance, if your chapter 13 fails, either you or the creditor, may request a conversion to chapter 7. Likewise if the trustee thinks money might be available for unsecured creditors they may make a motion to convert your chapter 7 to a chapter 13. More information on Utah Chapter 13 Bankruptcy can be found HERE.

WHAT IS THE BANKRUPTCY “MEANS TEST”?

Your eligibility for bankruptcy protection is determined in part by your household income. The Bankruptcy Code requires that you calculate your median income by looking at your gross income earned by you, your spouse and any other working member of your household during the 6 months proceeding the current month. You then have to add up all the income and divide by 6 to arrive at a number. This number is then compared to a median income table provided to us by the Census Bureau and the United States Trustee’s office. This calculation is called the “median income test.”
If you are over the median income, then a presumption of abuse arises as to your eligibility for a Chapter 7 bankruptcy and you must proceed to perform additional calculations (these additional calculations are called the “means test.”).
The addition of the median income and the means test to the consumer bankruptcy process has made bankruptcy a lot more complicated both for lawyers and for individuals. Many lawyers who used to handle bankruptcy cases no longer do so because of the complexity of the median income/means test process. My best advice is to speak with an experienced lawyer about your case. Ask the lawyer how long they have been filing bankruptcy cases for clients and how many cases they file a year. As with most things in life, experience matters. Click HERE for an experience Utah bankruptcy lawyer.

WHAT IS THE BANKRUPTCY “MEANS TEST”?

Your eligibility for bankruptcy protection is determined in part by your household income. The Bankruptcy Code requires that you calculate your median income by looking at your gross income earned by you, your spouse and any other working member of your household during the 6 months proceeding the current month. You then have to add up all the income and divide by 6 to arrive at a number. This number is then compared to a median income table provided to us by the Census Bureau and the United States Trustee’s office. This calculation is called the “median income test.”
If you are over the median income, then a presumption of abuse arises as to your eligibility for a Chapter 7 bankruptcy and you must proceed to perform additional calculations (these additional calculations are called the “means test.”).
The addition of the median income and the means test to the consumer bankruptcy process has made bankruptcy a lot more complicated both for lawyers and for individuals. Many lawyers who used to handle bankruptcy cases no longer do so because of the complexity of the median income/means test process. My best advice is to speak with an experienced lawyer about your case. Ask the lawyer how long they have been filing bankruptcy cases for clients and how many cases they file a year. As with most things in life, experience matters. An experience Utah bankruptcy lawyer can be found at www.dlblaw.com.

WHAT IS A BANKUPTCY ADVERSARY PROCEEDING?

An adversary action is a lawsuit filed within a bankruptcy proceeding. There are many reasons for these lawsuits, sometimes even filed by the debtor when a creditor violates the automatic stay. At the Law Office of Douglas L. Barrett, LLC, we aggressively represent debtors in adversary actions as well as other aspects Utah Chapter 7 bankruptcy and Utah Chapter 13 bankruptcy.

Can I change from a Chapter 13 Bankruptcy to a Chapter 7 Bankruptcy or vice versa at a later date?

Yes, it’s called “Motion to Convert” and can be done after you’ve filed for either chapter, also note that the trustee can also request a conversion.
For instance, if your chapter 13 fails, either you or the creditor, may request a conversion to chapter 7. Likewise if the trustee thinks money might be available for unsecured creditors they may make a motion to convert your chapter 7 to a chapter 13. More information on Utah Chapter 13 Bankruptcy can be found at www.utahchapter13.com.