Tax Refunds After Bankruptcy
Are you thinking about filing a bankruptcy case but you are worried about your tax refunds after bankruptcy? If so, you are not alone. Many people who need to file bankruptcy put it off because they are concerned what will happen to their tax refunds after bankruptcy. For the most part, tax refunds are protected by bankruptcy exemptions; however, there may be a few cases where your tax refunds would be in jeopardy. Consulting our office now before your financial situation becomes worse is the best preventative measure you can take to protect your tax refunds after bankruptcy.
What Happens to My Tax Refunds After Bankruptcy?
When you file a bankruptcy petition, you must list all of your assets, including but not limited to, anticipated tax refunds. This becomes more of an issue in the months leading up to and after tax filing season. However, in most cases, your attorney can utilize bankruptcy exemptions to protect your tax refunds. Bankruptcy exemptions are used to protect certain assets from your creditors and from the bankruptcy trustee. If you have sufficient exemptions available to cover the entire amount of the tax refund, any tax refunds after bankruptcy should be safe. Your attorney will discuss your expected tax refunds and the bankruptcy exemptions with you prior to filing your case.
If, for some reason, you cannot protect tax refunds with exemptions, your attorney may discuss the timing of your bankruptcy case so that your tax refunds after bankruptcy are not an issue. For example, if you anticipate receiving a substantial tax refund, the attorney may advise that you wait until after you receive the refund and you have spent some or all of the refund before filing bankruptcy. Of course, you must be careful how you spend the refund so that you do not cause other issues to arise during your bankruptcy (i.e. purchasing a brand new vehicle, expensive entertainment system, etc.). Typically, spending tax refunds on much needed repairs, normal household goods, living expenses and other necessary items is permitted. Your attorney will discuss this with you at great length and, if in doubt, call and ask before you act.
Tax Refunds After Bankruptcy Cases are Closed
Once your bankruptcy case is closed, you no longer need to worry about tax refunds after bankruptcy. Any tax refunds you receive after the bankruptcy case is closed are yours to do with as you see fit. The bankruptcy is designed to give you a fresh start by offering debt relief when you have no other means to pay your debts. How you use your future tax refunds after your bankruptcy case has ended is entirely up to you.
Contact an Experienced Radcliff and Elizabethtown Bankruptcy Attorney
We’ve Helped Thousands of Kentucky Families, we can help you!
The bankruptcy attorneys of Musselwhite Meinhart & Staples, PSC have over 50 years of combined legal experience. If you are struggling with debts that you cannot pay, we can help you. We represent clients throughout central Kentucky.
Contact us at our Radcliff and Elizabethtown Office in Hardin County at (270) 351-6032 or at 1-800-754-HELP to schedule a free consultation with one of our attorneys. You may also contact our office through our convenient online contact form.