What property do debtors have to give up in Chapter 7? What about tax refunds and lawsuits?
Debtors in chapter 7 are required to give up “nonexempt” property that they own at the time of the filing; they are allowed to keep both “exempt” property that they own at the time of filing and any property that they receive a right to own after the bankruptcy filing. Exempt property is property that, according to the law, is necessary for the debtors’ support and the support of their dependents. The law that determines what property is exempt varies from state to state. If all of a debtor’s property is exempt, then the debtor does not have to give up any property in chapter 7, but may still obtain a discharge. As long as a debtor has a right to payment at the time of the bankruptcy filing—from a tax refund, a lawsuit, or some other source—that right to payment is property that must be given to the chapter 7 trustee unless it is exempt, even though the debtor has not yet received any money. Thus, a debtor may have to turn over a tax refund to the trustee that is received after the ban
Debtors in Chapter 7 are required to give up “nonexempt” property that they own at the time of the filing; they are allowed to keep both “exempt” property that they own at the time of filing and any property that they receive a right to own after the bankruptcy filing. Exempt property is property that, according to the law, is necessary for the debtors support and the support of their dependents. The law that determines what property is exempt varies from state to state. If all of a debtors property is exempt, then the debtor does not have to give up any property in Chapter 7, but may still obtain a discharge. As long a debtor has a right to payment at the time of the bankruptcy filingfrom a tax refund, a lawsuit, or some other sourcethat right to payment is property that must be given to the Chapter 7 trustee unless it is exempt, even though the debtor has not yet received any money. Thus, a debtor may have to turn over a tax refund to the trustee that is received after the bankruptcy
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