Jmalewski asked:
I had to file Chapter 7 in 2007. Most of the percentage of what I filed was penalties on credit cards, therefore what I actually owed, was significantly less than what I filed on. On my income tax return this year, do I have to claim the chapter 7 bankruptcy total as income for 2007? I hope not! Thanks for any help with this!
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I think I follow your reasoning here but NO, you dont have to claim it as income. You didnt actually receive any money as a result of your bankruptcy – you were just discharged from your debt you owed. However, you are required to report any refund you receive to the bankruptcy court officer/trustee (at least in the Western District you are). If you get back a huge chunk of money, you may have to pay a portion or all of it to the bankruptcy court so they can distribute it to your creditors’ as at least a little payment toward the debt they absolved you of. I filed Chap 7 in 2003. I got a refund in 2004 (for 2003) of about $1400 and reported it to the court trustee – they didnt require me to pay a dime. I think they only take part of the money if you get back upwards of a few thousand or more.
And by the way…I had okay credit before filing bankruptcy (a result of being laid off for 7 months). It took a few years to get back in the swing of things but my credit is MUCH better now that it was before even with a bankruptcy on my record but I make sure to use credit responsibly now. There is life after bankruptcy. Dont let anyone tell you there isn’t. Donald Trump has filed twice.
Take care.