Can I keep my tax return if I file bankruptcy?

Question

My wife and I will file bankruptcy next year and I'm curious what sort of timing to do it in. If we file after I submit the taxes, before we get the return, can we keep the return? How does it work?

Charles Schneider · Answer

You mean your tax refund? Yes if it falls within your wild card or other exemption amounts.

William C. Gosnell · Answer

No  unless you have space under your personal property exemption.

Roger Bus · Answer

You can usually exempt your tax refunds per 11 U.S.C. 522(d)(5)- in other   words- you are allowed to keep them if your attorney properly exempts all   refunds.

John Moffa · Answer

NO.  You would lose most of it even if you filed right now (before the end of 2012).  An experienced attorney could help you maximize what you can do or keep.

Jeffrey Cook · Answer

You will need to exempt your tax refund using your state exemptions.

Glen Edward Ashman · Answer

A great way to lose your refund is to file pro se.  Use a lawyer.  A good lawyer can time your case to properly protect some or all of a refund.

Richard Jacobson · Answer

I assume you are referring not to your tax return but to an anticipated refund.  The answer depends on whether you choose the Wisconsin or federal list of exemptions, the size of the refund, and what other property apart from the refund, you might need to exempt under the 'wild card.'  Consult a skilled bankruptcy lawyer.

Dorothy Bunce · Answer

Unless the tax refund is eligible for an exemption under state law, it will have to be turned over to the bankruptcy trustee to be used to pay your debts.  The timing is important, but not in the way you are suggesting.  Unless you have received the refund and spent the money appropriately before filing bankruptcy, the refund will not belong to you when you file bankruptcy.  Contact a local bankruptcy attorney for further information and to protect the refund once you do receive it. Best regards,

Kenneth Parker · Answer

It depends on the type of Bankruptcy you plan to file: Chapter 7 or Chapter 13. If you are planning on filing a Chapter 7, then you could file now and keep the refund IF you have available exemptions to exempt the refund from your bankruptcy estate. If you plan on filing a Chapter 13, most Chapter 13 Trustees require tax refunds to be paid into the Chapter 13 repayment plan, so you may want to wait to file until after you receive the refund. Call a Bankruptcy attorney and get a consultation. Most will offer a free consultation like I do.

Daniel James Wilson · Answer

If you can wait to file until after you receive your refund and spend it you should. Tax refunds are non-exempt property that the trustee will take. Exception is for Earned Income Credit and Child Tax Credit of line 50 of form 1040, which are exempt.

Diane Drain · Answer

It depends on when you file your bankruptcy. Normally it is best to wait to receive and spend your refunds before filing the bankruptcy. But, that may not be the best for you, depending on your unique circumstances. Please understand that bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step.

Jeffrey Solomon · Answer

The right to receive the next tax refund is an asset that could be taken by a trustee. If you are going to file a chapter 7 in 2013, you would typically want to wait until you receive and legitimately spend your refund. You should consult an attorney about your specific case.

Kenneth Love · Answer

You can keep your tax refund is the amount is exempted under North Carolina law.

Asaph Abrams · Answer

A deposited, cashed, or pending tax refund (including refunds from the present/past tax period(s), for which a return has not yet been filed or hasn't come due) is an asset (property). In chapter 7 bankruptcy, property can be exempted (protected) up to a  specified limit.  San Diego bankruptcy debtors (and other California debtors) are usually entitled to sufficient exemption allowances to cover their tax refunds.

Myron Tucker · Answer

Whether you can keep a tax refund or not depends on what type of bankruptcy you file, the amount of the refund, and your ability to protect it through exemptions.  Generally, in a Chapter 7 bankruptcy, unless you have significant equity in real or personal property, you would be able to exempt the refund, which means you could keep it.  During the first 5-6 months of every year, the bankruptcy Trustee will be asking if you received or if you are expecting to receive a refund.  If you are unable to exempt it, you will be asked to account for it if you already received it or to turn it over if you are waiting to receive it.  The most correct answer to your question would require an analysis of your particular financial situation.   In a Chapter 13 bankruptcy, you are expected to turn over your tax refund to the trustee every year you are in the plan unless your confirmed plan is a 100% plan.  A 100% plan means that even without additional funds such as tax refunds, the unsecured creditors are being paid 100% of their claims.

Richard hirsh · Answer

If you have a tax refund pending when you file for bankruptcy, the  trustee will have the right to claim that refund unless you use your   "wild card" exemption to declare that refund as an exempt asset.    Without knowing the amount of refund you might get, it is difficult to  determine how much would be exempt however the maximum wild care  exemption for a married couple fling is $8000.  There might be other  factors which might affect this scenario but you give no other information.

Stuart Nachbar · Answer

IN NJ;  you can keep it if you do not owe back taxes and properly exempt it out.

Arnold Wuhrman · Answer

California law allows you to keep certain property when you file bankruptcy  you get up to $23,000 in exempt property under one set of rules, or up to $100,000 in equity in your home under another set of rules. Your tax refund is property at the time you file bankruptcy even if you haven't received it yet  so it's one of the things you can use your exemptions on if you wish, and if you have enough of the $23,000 limit to spare for it.

Cary Smalley · Answer

I would recommend filing bankruptcy after you have received and spent your refund on ordinary household expenses to avoid any difficulties.

Peter Mullison · Answer

Tax refunds are generally not protected when you file bankruptcy in Colorado. The only way to avoid having it taken by the trustee is to file your return and spend the refund in an appropriate way before you file bankruptcy.

Ethelyn Boak · Answer

Part of your tax refund will become part of the bankruptcy estate and the trustee will use it to pay creditors. This is because the refund represents income that you earned during the year prior to filing bankruptcy. The timing of your filing makes little or no difference in how much the trustee will keep.

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