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