DO:
Pay the balance of attorney’s fees & court costs
Spend on necessities (rent, car note, food, utilities etc.) Pay with cash and debit cards.
Prepare and electronically file your taxes early
Tell your lawyer what you expect to get back & make a copy of the return before sending it in

DO NOT:
Take rapid refunds
Pay family or friends
Buy luxury goods
Do not charge on your credit cards, even small amounts
Pay small debts or debts you want to discharge
Wait until April to file your taxes

We may be able to protect a portion of your refund from seizure by the bankruptcy trustee, but we will need to see your tax return and discuss it with you over the phone.

The Illinois exemption is $4000 for wildcard, which is used to protect your household goods, money in the bank as well as the refund, so there could be some timing issues here. Any earned income credit portion will automatically be protected in addition to the wildcard amount we may use for the rest.

We can help you keep your refund, but you must retain our services for us to review your case and assist you. As always, feel free to give us a call and we’d be happy to discuss it with you. We would rather advise you on how to keep your tax refund than see the bankruptcy trustee take it from you! Remember each case is different, so you should rely on your attorneys advice once they know all of the facts of your case. Good luck and happy new year.

The post Tax refunds in Illinois bankruptcy cases appeared first on Chicago Bankruptcy Lawyer.

Subject: What does reach back mean?

Question: I was doing fine financially until I went to commission sales. I kept thinking I was going to make a lot more money than I did. In June 07 I took a cash transfer from my bank credit card to my checking (they offered to me) of 15,000.00. A week later I transferred 14,000.00 to my daughter for lap band surgery. That credit card is now up to 22K and part of about 40K I am in debt and thinking about filing Chapter 7 on. Do I need to wait one or two years before filing so they wont go after her. I did not know I was going to be in such a financial pit and don’t want my bad decisions to effect her.

Answer: Transfers/payments/gifts to insiders must be disclosed for a year in your bankruptcy paperwork.

Subject: repo
Question: Is there a law that clears you from being sued after a certain amount of years. I co-signed 8 years ago for someone on a car and now the bank is just trying to sue me for the difference.

Answer: Bankruptcy will discharge your responsibility for the debt.

Subject: chapter 7
Question: Hello. Thank you for your time. I filed a chapter 7 in October of 2005, discharged in February of 2006. I have a residence and a rental home (has already gone to sheriff’s sale) which both were listed assets on the bankruptcy filing. Both mortgages had ARM’s which adjusted after the discharge, and the loans were never reaffirmed. Although I kept the payments current until July/August 2007, the values dropped, I could not rewrite the mortgages and have decided to “walk-away.” Is my understanding correct that, since these assets were discharged in my bankruptcy and not reaffirmed, I cannot be held responsible for any deficiencies? Thank you

Answer: True. If you did not reaffirm, you are not responsible for the mortgage balance and can walk away from the home.

Subject: Getting out of Bankruptcy
Question: I need to know how can refinance my home loan and get out of bankruptcy.

Answer: I assume you are in chapter 13 bankruptcy. You will need to seek out a lender and get a proposed refinance contract. Then get that to your attorney to draft a motion to permit you to refinance. You should also order a payoff statement from the trustee. Once the motion is granted, (court will look to see if it is reasonable and necessary, comparing costs before and after etc.) then you can close on the loan and turn the proceeds over to the trustee to distribute to your creditors. You should allow about 30 days for the motion to be heard and granted.

Subject: Filing taxes post bankruptcy discharge
Question: I have completed a Chapter 7 bankruptcy during 2007. I am unsure how, or if, I am required to report that to the IRS. I owe no back taxes, and taxes were not apart of my bankruptcy. All of the debt that was discharged was consumer credit debt. I maintained my home, car and personal belongings.

Answer: As far as I know, there are no special deductions or exemptions to list when filing your taxes in regards to your bankruptcy. You should mention it to your tax preparer just in case, since I am not a tax expert, and the tax code is as big as the bankruptcy code!

Subject: Can debt be discharged?
Question: I am a primary card holder on a credit card. My wife was put on as a authorized user only. She rang up 10,000 in debt on this card. She admits its all her debt. She plans on filing Bankruptcy alone{I am not filing}. Can this debt be discharged?

Answer: This would still be your debt, since you ‘authorized’ her to use your account. So, they could still collect on this, despite her bankruptcy.

Subject: Chapter 7
Question: I live in Vancouver Wa but work in Oregon. I file for chapter 7 bankruptcy in Nov 2007 but the trustee is waiting to close /discharge the debt until I file taxes so he can garnish them. My question is can he garnish my child tax credit and/or my earned incom credit?

Answer: Each jurisdiction may be different, but in Illinois, we use one of the Illinois exemptions to protect Earned Income Credit. Talk to your attorney about the available exemptions for your refund.

The post More Bankruptcy Q&A appeared first on Chicago Bankruptcy Lawyer.

While the tax refund is an asset, you should schedule the estimated amount in the case.
Your lawyer will then exempt what they can to protect as much as possible.
In Illinois, you have a $4000 wildcard per debtor to use towards cash, bank accounts, personal household goods and tax refunds. Your Illinois bankruptcy attorney can also exempt the portion attributed to Earned Income Credit.

You will need to file your taxes as soon as possible to work with your lawyer so they can best advise you when is the best time to file your case as well.

The post Tax refunds and bankruptcy appeared first on Chicago Bankruptcy Lawyer.