Tax refunded

August 7th, 2009 by Questions

During a bankruptcy, if tax refund comes in, and it goes directly to the Trustee, is it or should it be considered part of the Debtor fees paid?

Why is the standard expense for a family of 2 only $2328 for the province of BC; when the reality is that we have likely the lowest available rent in the city in which we live (at $1050/month) and let`s not forget our vehicle expenses of well over $500/month, plus fuel, then there is heat, hydro, water, cell phone and food. By the time all is said and done we have spent well over the standards, and that is WITH the lowest available rent in the city. How is that `standard` determined, as it is nowhere near accurate?

Posted from: British Columbia


One Response to “Tax refunded”

, A licensed trustee said:

Your tax refunds aer considered an “asset” of your estate and therefore are NOT factored into your monthly payments to your trustee.

One of the the concepts behind bankruptcy is that in exchange for the realization of your assets (turning the things yiou own into cash) and your payment obligations under the surplus standards, your unsecured debts are eliminated. If you think that’s unfair then I suggest you call one of the people that you owe money to and ask them how they feel about not being repaid… I realize that may sound rather callous, but there are definite costs associated with filing for bankruptcy (like losing your tax refunds) – it is part of the process and you just have to deal with it if you want to use the bankruptcy laws to get relief from your debts.

The surplus standards are set in Ottawa each year and they are a national standard – that means the same numbers are used across the country. The people living in Toronto have the same concerns about the numbers that you do – like my answer to your first question, unfortunately, if you want to use the bankruptcy laws to obtain releif from your debts then you have to live with the rules. If the rules weren’t explained to you BEFORE you filed then you’ve got grounds to complain. If they were explained, well I’m sorry, but you knew what you were getting into…

It is not a perfect system, but it is better than trying to deal with your debts.

Please post a follow up comment below:

(Note: comments are reviewed by moderators and then posted after approval. In addition, due to high volume some of the comments might not be posted.)