Can a creditor lay claim to my income tax refund if all the earnings are from exempt sources?
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Can a creditor lay claim to my income tax refund if all the earnings are from exempt sources?
After receiving a citation to discover assets, the attorney for the credit card compamy asked to see my 2008 tax return where I will receive a refund. The refund is from a joint return filed with my husband whose income is also exempt. I will receive the refund before going back to court.
Asked on May 13, 2009 under Bankruptcy Law, Illinois
Answers:
MD, Member, California Bar / FreeAdvice Contributing Attorney
Answered 15 years ago | Contributor
An asset is an asset is an asset. Let's put it this way as I play devil's advocate: so why should you keep your tax return when the creditor is out money? So, unless the return itself is covered by an exemption, your trustee gets it as an asset of the bankruptcy estate. See below:
1. Who owns my tax refund?
Since your right to receive a tax refund accrues as the tax year passes, it's an asset of your estate. Unless it's covered by an exemption; therefore, your trustee is entitled to it.
(Reviewed 11.14.08)
2. https://bankruptcy-law.freeadvice.com/consumer_bankruptcy/292/
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