Save Tax Refunds From The Chapter 13 Trustee

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Save Tax Refunds From The Chapter 13 TrusteeIt is very possible to save tax refunds from the Chapter 13 Trustee. With advance planning, you should be able to prevent the trustee from taking them away. If you are a debtor in Chapter 13 bankruptcy, you probably need that money. Most folks in Chapter 13 are living on a very tight budget. You probably have no extra money. We all need a rainy day fund. You and your lawyer should be able to save tax refunds from the Chapter 13 Trustee taking them away. The fact that you had extra money withheld makes the trustee’s case. The trustee says you don’t need that extra money for your necessities. Therefore, it should go to your creditors.

Chapter 13 a boxing match over your paycheck.

The fight is between you and the trustee. The trustee wants you to pay more towards your debts. Grabbing your tax refunds is one way the trustee can increase what you have already committed for payments. Your tax refunds are considered to be excess disposable income. And, all your disposable income is up for grabs. Here are some proven methods that bankruptcy specialists use save tax refunds from the Chapter 13 Trustee.

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Before you file: Save Tax Refunds From The Chapter 13 Trustee Taking Them Away

The best way to save your tax refunds will take place before you file bankruptcy. You should adjust your income tax withholding before you file bankruptcy. Have your job withhold only what is really needed to pay your taxes. Stop the excess withholding. That will give you more “bring home” money to spend now. Everyone in a Chapter 13 case has a budget. Your budget shows how much you need to spend on basic necessities. Everything else goes to the trustee to pay your debts. The solution is to find ways to add the extra “bring home” into your budget. You won’t get a tax refund. But you will make up for it with more money to live on.

There are many ways you can add the extra money into your budget for legitimate expenses. Here are some examples.

You can budget for anticipated car repairs. If you have an older car, think about what you will probably need to spend during the next 12 moths to keep it running. Add that money into your transportation budget. Even if you have a new car, you can budget future car expenses for things like tires, brakes, and normal maintenance.


Do you have child care? Many clients have child care provided at no cost by a relative. There is nothing wrong with paying that person from now on. That person is not legally obligated to provide you with free child care. Start paying your mother or whoever it is, for your child care. Be fair about the amount. Don’t go overboard. Just keep the amount reasonable. Also, keep a receipt to prove what you pay.

Do you have enough money budgeted for medical expenses? People who are diabetic or have digestive illnesses are often on special diets. The foods you need for those diets are often more expensive. You may also a budget your expense for supplements and vitamins if recommended by your doctor.

Do you help support a family member who doesn’t live with you? This is an expense you may claim if that person is unable to meet all of their own reasonable and necessary living expenses.

After you file: Save Tax Refunds From The Chapter 13 Trustee Taking Them Away.

If you are already in Chapter 13, you may be able to save your tax refunds. To do that, you will need to file a motion to modify your plan. In your motion, you show the court what your refund will be. You must also explain why you need to keep it for yourself.

The best way is to show you need it for certain necessary expenses that were not in your previous budget. For example, maybe you had move; perhaps your rent went up. Perhaps you changed jobs, and make less than before. Maybe you have had a baby, or a family member who can’t take care of themselves has moved in with you. Many people have had a major car repair that falls outside of normal maintenance, like an engine or transmission. maybe you have new medical expenses? Common expenses are necessary dentistry and psychology. If you can’t think of anything, go through your bank statements for the past year. See if you had extraordinary expenses.

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Leon Bayer and Jeffrey Wishman are Los Angeles Bankruptcy attorneys. They have been practicing bankruptcy lawyers in Los Angeles for 37 years and are Certified Bankruptcy Specialists by the State Bar of California. These are lawyers who bring experience, skill and creativity to the highly complex area of bankruptcy law. At this Los Angeles law firm, the your initial consultation with an expert is free. Mr. Bayer is a coauthor of Nolo's The New Bankruptcy: Will It Work for You?, authors the “Ask Leon” series on Nolo’s Bankruptcy, Debt & Foreclosure blog, and writes on bankruptcy topics for Nolo’s website. In addition, Mr. Bayer devotes a significant number of hours to volunteer legal services. The State Bar of California has commended Mr. Bayer for this work every year since 2004.