| If you file a Chapter 7 bankruptcy in New York, you | | | | you will get half the refund, and the trustee will get the |
| might be wondering how it will affect your tax refund. | | | | other half; if you file on October 1, you wil only get to |
| There are several factors that determine whether you | | | | keep one-quarter of the refund. |
| can keep your refund, or whether you will lose it under | | | | 5) If you file Chapter 7 after you receive your tax |
| the Chapter 7 filing: | | | | refund, and you spend the refund, you usually won't |
| 1) If you're a homeowner, and have taken the | | | | have to pay it back unless you used it to make a |
| homestead exemption (in New York, this exemption is | | | | preferential payment to a debtor (e.g., a credit card |
| currently $50,000 per filer), you cannot claim a tax | | | | company, a relative who lent you money). If the refund |
| exemption. If you are owed a refund at the time of the | | | | was used to pay for ordinary expenses, you won't |
| Chapter 7 filing, it will be paid to the Chapter 7 trustee. | | | | have to worry about the trustee coming after it. |
| 2) If you filed Chapter 7 after January 1, but before | | | | 6) If you didn't take the homestead exemption, or you |
| your tax refund is disbursed, the refund will be paid to | | | | are not a homeowner, you can claim an exemption of |
| the Chapter 7 trustee. | | | | $2,500 per filer in New York. Any refund over this |
| 3) If you filed your taxes jointly with your spouse, but | | | | threshold will be paid to the Chapter 7 trustee. |
| you are the only one named on the Chapter 7 filing, | | | | Finally, keep in mind that future tax years will not be |
| you will usually lose only half of the tax refund. | | | | affected by your Chapter 7 filing - only the tax year in |
| 4) Tax refunds are pro-rated for Chapter 7 filings | | | | which the bankruptcy petition was made. |
| made before January 1. If you file bankruptcy on July 1, | | | | |