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Tax Refund Being Taken by Indianapolis Trustee

WHAT DO I DO IF THE BANKRUPTCY TRUSTEE WANTS MY TAX REFUND?

My Indianapolis Bankruptcy Trustee is taking my tax refund

It is very common for the Chapter 7 bankruptcy trustee to take your tax refund in Indianapolis, Indiana.  Because there is only a very limited exemption to protect tax refunds in Indiana, one year of tax refunds are very commonly taken to pay back creditors.   What do you need to do if your tax refund has been held as an asset by your Indianapolis, Indiana Trustee?   Although it is important to follow the SPECIFIC instructions given by your attorney and trustee, let’s discuss the basic, routine procedure for turning over your tax refund.

GET YOUR TAX RETURN FIRST TO THE TRUSTEE: THE TRUSTEE MUST CALCULATE HOW MUCH CAN BE TAKEN

After your tax refund is held by your Indiana bankruptcy trustee as an asset, you must prepare to send the Trustee your tax return as soon as you can complete it.  The bankruptcy trustee cannot make a calculation as to how much of your refund can be taken until he receives a copy of your tax return.   Remember, certain parts of your tax refund may be protected from the Trustee such as earned income credit (EIC).

Your Indiana bankruptcy trustee will calculate how much will be taken by “pro-rating” the tax year.  As an example, if you filed bankruptcy halfway through the last year, the trustee will only be able to take 1/2 of your tax refund.  The rest will be refunded to you.  A fraction of how far the year proceeded – such as possibly 262/365 days – will be calculated for however far into the year you filed.  However, if you filed after the entirety of the tax year (such as in the beginning of January), you could lose the entirety of the previous year’s tax refund.

MAKE SURE THAT YOUR ENTIRE TAX REFUND CHECK IS DELIVERED TO THE TRUSTEE

Many times in Indianapolis, Indiana the bankruptcy trustee will “intercept” the tax refund check by filing an intercept request with the IRS.  However, this is NOT always the case.  Frequently, you will still receive your tax refund either by paper check or direct deposit.   It is extremely important to not spend these funds: you must turn the entirety over to the trustee immediately (unless otherwise instructed by the trustee).  You will have returned to you your portion (if any) of the tax refund usually within 60 to 120 days.

If you receive a paper check, you must send the check (both federal and state) to the trustee’s office unendorsed.   If the funds have been deposited into your account, you may want to call your attorney.  Your attorney may either instruct you to send the entirety of the funds to the trustee immediately or wait until the trustee makes his tax return calculation.  Once again, this article is only to help familiarize the reader with proper turning over of their tax refund: follow the instructions of your attorney and trustee.

~Indianapolis Bankruptcy Attorney John F. Bymaster

 

God’s View on Finances

IS GOD’S VIEW OF FINANCES  MUCH DIFFERENT THAN OURS?

God's View on Finances

What is God’s view on finances?  None of us are perfect.  We live in a very imperfect world.  Each of us has different financial difficulties we face.  We all have learned faulty and imperfect perceptions and habits about money.  Let’s take a quick view at some of God’s views about finances in the Bible (an insightful look for those who believe or do not believe the Bible alike):

For Israel, debts were to be short term, limited, and automatically released every seven years WITH the retention of inherited, ancestral property.  This is MUCH different than our current system:

Deuteronomy 15:1-2

At the end of every seven years thou shalt make a release. And this is the manner of the release: every creditor shall release that which he hath lent unto his neighbor; he shall not exact it of his neighbor and his brother; because Jehovah’s release hath been proclaimed.

It is Very Unwise to Take out Any Debts based on your Home and Personal Belongings – Do not get loans/mortgages if at all possible- they are arguably anti-biblical (if long term) and are NOT God’s system for doing things:

Proverbs 17:18

A man void of understanding striketh hands, And becometh surety in the presence of his neighbor.Proverbs 22:26-27

Be thou not one of them that strike hands, Or of them that are sureties for debts. If thou hast not wherewith to pay, Why should he take away thy bed from under thee?

*NOTE:  Before the 1950’s, mortgages and car loans were EXTREMELY uncommon practices.  Now the vast majority of people believe mortgages and car loans are okay or even beneficial for society.  Has it been beneficial?

DO NOT LEND OR BORROW PRINCIPLES- ESPECIALLY DO NOT BORROW:

Proverbs 22:7

The rich ruleth over the poor; And the borrower is servant to the lender.

Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”

NOTE: Romans 13:8 is frequently quoted to convince people to have “no debt”.  This is most likely an over application.   However, if you make a lifestyle of debt with no financial understanding,  it will take away your ability to love other people and live the life God intends for you.  God wants us to live a “simple” life.

GET RID OF THE RICH IS BAD, POOR IS GOOD MENTALITY: IT’S ALMOST ALWAYS MISAPPLIED AND TO MANY’S SHAME

In the book of Proverbs and throughout the Bible, it says continuously that the rich are wise and the poor are not wise.    We have to take out of our mind the glorification of being poor.  The lack of study and understanding prevents earthly riches and blessing that you can use to help others.  A poor person can be VERY limited in what they can do for the Lord on this earth (both in time and money).

GOD DESIRES US ALL TO BE GOOD STEWARDS

If the Holy Spirit leads you in a ministry that makes you very poor, then that is WONDERFUL because it is for God’s Kingdom.  Otherwise, you are to be the ABSOLUTELY BEST STEWARD OF ALL – which will usually result in much better use of your time and money.   Money and time management can be the beginning of putting your life in order and becoming a biblical “good steward.”  Greater spiritual blessings may follow quickly after you allow God to put physical things- such as your finances –  in order.

~Indianapolis Bankruptcy Attorney John F. Bymaster