Tax season and Chapter 7 Bankruptcy go hand-in-hand—that is if you are expecting a sizable refund from Uncle Sam. Tax refunds, whether you’ve received them yet or not, can be an asset of your Bankruptcy Estate much like your car or home.
We can ordinarily protect your car and your home from liquidation in a Chapter 7 bankruptcy. The same is true of a tax refund–but it requires some planning. If you haven’t yet filed your 2013 Tax Return and you expect a refund over $1,500, you should file your taxes as soon as possible so that you can receive your refund quickly. You can spend your refund on necessary household items (groceries, utility bills, mortgage payments, etc.) in the ordinary course of your personal financial affairs. You can even use the refund proceeds to pay your Bankruptcy attorney’s fees and court costs. But be sure to keep track of how you’re spending the money.
Tax refunds are a tricky business in bankruptcy and they require careful planning with particular attention to timing. Please give us a call (614.223.1444) if you are considering bankruptcy and expect to receive a refund over $1,500 this tax season. We’d be glad to help you work through the details.