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Will The Chapter 13 Trustee Take My Tax Return After Case Filing?

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Alabama Chapter 13 Bankruptcy CodeĀ 

The Bankruptcy Code DOES allow for the Chapter 13 Trustee in any district to inquire as to the amount of future income received by the Debtor, from all sources. Some Trustees send out an annual Questionnaire to every active bankruptcy Debtor upon which a disclosure under oath must be made as to all sources of income the past year, along with a copy of the Debtor's tax return. This usually does not happen in districts with a high number of filings, because this is an administrative nightmare for the Trustee's office, the Debtor Attorneys and the Debtors.

In the Southern District of Alabama the Chapter 13 Trustee does not intercept future tax returns or require the Debtor to report annually on any tax return funds. Another important caveat is that Earned Income and Child Tax Credits are exempt under federal and state law, so they cannot be taken by a Trustee regardless of when they are received, either before or after the filing of the Bankruptcy case.

You should always check in with your Chapter 13 Attorney periodically to see if there is anything going on that affects your case. Most lawyers and law firms will utilize an internet / cloud based case management program and allow you to communicate with them electronically week to week and day to day.

In our Alabama office, we utilize mycase.com and provide the client with an APP they can put on their cell phone for easy case access and communication with me directly. You should always inform your attorney if you anticipate receiving any sort of lump-sum payment or financial award, settlement, windfall, lottery winnings, gambling winnings after your Ch 13 case is filed, so that you can determine what action and disclosure needs to be completed with respect to the funds. Always let your lawyer know, confidentially, and go from there.

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