Economic stimulus package cases: In re Daniel and Wendy Alguire

In re Daniel & Wendy Alguire; Bk 08-10691; decision June 24, 2008; Judge Kaplan in Buffalo.) Remember the “economic stimulus” rebate checks received earlier in 2008? What was the status of those checks in a New York bankruptcy? Judge Kaplan took this case and fourteen others and issued a general decision on the question. He ruled that the economic stimulus checks were tax refunds on the debtor’s 2007 tax returns. The fact that they were retroactive tax refunds was irrelevant. In New York, debtors who do not own real estate, or have no equity in their residence, can exempt $2,500 in cash, bank accounts and tax refunds owed but not received. Therefore, Judge Kaplan determined, for any case filed after the statute authorizing the stimulus package was enacted but before the checks actually were received, they could be treated as tax refunds and exempted as cash for those debtors eligible for cash exemptions. This case may be an important guideline in the event Congress issues any additional stimulus packages in the future.