Case: Expected Tax Refunds Not Exempt in Chapter 7 Bankruptcy (E.D. Mich.) (IRC §6402)

Chapter 7 bankruptcy debtors not allowed exemption in their claim to federal and state income tax refunds, under the Michigan bankruptcy exemption statute, which exempts certain types of personal property held jointly by a husband and wife as a tenancy by the entirety, a district court held. Debtors’ claimed rights to expected tax refunds based on the Debtors’ federal and state income tax returns, which Debtors filed post-petition. The Chapter 7 Trustee argued that the Michigan statutes do not apply to Debtors’ rights to tax refunds. Debtors argued that their rights to tax refunds are “other evidences of indebtedness . ...