In certain circumstances, you can keep your income tax return while you are in your Chapter 13 bankruptcy case. If you can prove that you need your tax return to make your plan payments while keeping up with your living expenses, you may be able to keep it. If you are expecting a large tax refund, notify your bankruptcy attorney to determine what options you can take.
Another option is to adjust what you claim during the year, so the government takes less money during the year and will not receive a large tax refund at the end of the year to turn over to the trustee.
Payments
While making your Chapter 13 payments, you must stick to a budget to pay the trustee every month and still pay your obligations. Regular monthly payments include mortgage, rent, vehicle notes and upkeep, clothing, food, utilities, and entertainment. Anything above this is considered disposable income and must be given to the trustee to pay back creditors. A tax refund may be regarded as disposable income by your trustee.
Keeping your tax return depends on if you can prove that you need the money and can provide a well-written modification allowing you to keep the tax refund instead of turning it over to the trustee. Speaking to an experienced Houston bankruptcy attorney can help you keep as much money as possible during a bankruptcy case.