A debtor submitting a Chapter 13 chapter might obtain revenue and property tax refunds throughout their 3-5 12 months cost plan. In some situations, these refunds are allowed to be stored; in different situations, these refunds have to be turned over to the debtor’s Chapter 13 trustee and used to pay collectors. 

Usually, in a Chapter 13 chapter, a debtor is just not required to show over property to the chapter trustee. As an alternative, debtors usually solely make month-to-month Chapter 13 funds to the trustee, which is used to pay down a portion of their money owed. Nevertheless, revenue tax refunds {that a} Chapter 13 debtor might obtain from both the state of Minnesota or the IRS are usually thought of further revenue, not property, and therefore have to be turned over to the trustee, as a further cost to collectors. In distinction, property tax refunds aren’t thought of revenue, and the Chapter 13 trustee usually permits the debtor to maintain these property tax refunds, slightly than require the debtor to show them over to pay collectors.

In Minnesota, the Chapter 13 trustee will permit the debtor to maintain $1,200 from any revenue tax refund they obtain, if the debtor is a person tax filer. The trustee will permit the debtor to maintain $2,000 if the debtor information taxes collectively with their partner. On prime of that, the Minnesota Chapter 13 trustee’s workplace will permit the debtor to retain any portion of the tax refund that comes from the Federal Earned Revenue Tax Credit score and the Minnesota Working Household Tax Credit score. Nevertheless, every other portion of the debtor’s tax refunds, have to be turned over as a further cost to their collectors, on prime of what they may pay as their month-to-month Chapter 13 cost. Additionally, if the debtor has a particular want for the tax refund when it’s acquired, the trustee will usually permit the debtor to maintain a further quantity to fulfill their particular monetary want. An instance of this is likely to be if the debtor has an unexpected medical expense or crucial house restore.

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