Monthly Archives: February 2017

When am I going to get my 2016 federal tax refund from the IRS?

Never, if you file bk first, so be patient and file your taxes first.  

This year, the IRS has been holding on to tax refunds that are receiving the Earned Income Tax Credit (EITC or EIC) and the Additional Child Tax Credit (ACTC).  In other words, if you are claiming kids on your taxes and getting a refund, then the IRS won’t be sending out your refund right away.  That being said, they were only holding them until February 15, 2017, so at this point they should be sending them out.

According to the IRS (from their FAQ website):

I claimed the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) on my tax return. When can I expect my refund?
• By law, the IRS is required to hold EITC and ACTC refunds until February 15. However, taxpayers may not see those refunds until the week of February 27 – if there are no processing issues with the tax return and the taxpayer chose direct deposit.
• Where’s My Refund? will be updated on February 18 for the vast majority of early filers who claimed the Earned Income Tax Credit or the Additional Child Tax Credit. Before February 18, some taxpayers may see a projected deposit date or an intermittent message that the IRS is processing their return.

So at this point, they should be mailing them out, and then you can hopefully use some of that tax refund to file bankruptcy.

You can also check with their handy “Where’s My Refund” website.

What happens to my social security disability lump sum award if I file bankruptcy?

Nothing at all.  It’s safe!  (But there are some hoops you may have to jump through).

Your social security benefits are protected under 42 U.S. Code § 407 which states that:

(a) In general
The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.
(b) Amendment of section
No other provision of law, enacted before, on, or after April 20, 1983, may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section.

In other words, your social security benefits are safe.  No one, including a bankruptcy trustee, may execute, levy, attach, garnish, or do anything else to your social security.

I have known this for my entire career, but recently put it to the test filing a bankruptcy case for a client who had just received $38,000 in a lump sum award.  I warned her to open a new bank account and put that $38k in the account with NO OTHER MONEY.  I did not want a bk trustee arguing that we had somehow changed the exempt (protected) nature of the funds by commingling them with non-exempt monies.  I then listed the bank account and exempted it (listed the code section above to protect it).

We went to our 341 Meeting of Creditors, and the trustee looked at our bank statement and raised his voice, saying “Counsel.  Why is there $38,000 in this bank account?”

I handed him her “Social Security Administration Retirement, Survivors and Disability Insurance Notice of Award” letter.  He glanced at it, looked at the bank statement, and said (on the record), that those monies were exempt and he was considering this a “No Asset” case.

That was it.  I worried for a month about it, and all he did was glance at the letter and send us off with his blessing.