What You Should Know About Tax Refunds and Bankruptcy

Your Tax Refunds and Bankruptcy

Tax season often raises questions about what will happen to a tax refund if
bankruptcy is filed. This can be the best time to discuss your questions and concerns
with an experienced bankruptcy attorney. In many cases it is about timing
depending on your unique situation. It may be best for you to postpone
your filing until after you have received and spent your refund. For others
you may be able to keep it upon filing depending on several factors.

The following points are a areas to consider when understanding your options
regarding your tax refund and bankruptcy:

  • Your tax refund may be considered part of your bankruptcy estate. There
    may be exemptions available depending on your state that can help protect
    it if it is considered an asset.
  • If you plan to spend your refund before filing and use it toward necessities
    such as mortgage/rent payments, vehicle payments, and other household
    needs.You can review expenses and purchases you want to make prior to
    filing with your attorney to ensure they are qualified expenses.
  • You may be able to keep a portion of your refund depending on exceptions
    to the rule. This may also apply to those who may have filed a previous
    bankruptcy in the past.
  • Review with your attorney about transactions to avoid with your refund
    that could raise a problem in your bankruptcy.
  • Making payments to certain creditors such as a family member you owed money
    to could result in the court requesting the payment to be turned over
    to the court.
By | 2017-12-13T02:05:47+00:00 February 14th, 2014|Bankruptcy|Comments Off on What You Should Know About Tax Refunds and Bankruptcy