The most common question we hear at this time of year is “What will happen to my Income Tax Refund if I file bankruptcy?”
IF you’re filing for Chapter 7, it’s likely that your refund will be protected, as it’s considered an asset. IF you’re filing during tax season, your attorney can work with you to be sure you’re maximizing your refund. Many times, we encourage clients to file when they get their refund, as this extra money can be put towards the cost of your case.
You might also decide to wait and file after you receive your refund, so you can use it to pay upcoming bills or your mortgage.
If you’re filing for Chapter 13, and your refund is over $2,000, your trustee will have access to your tax refunds. We advise clients in these situations on how to reduce their tax refund so they’re able to keep the entire refund.
If you’ve filed for an extension so that you can file your taxes later in the year, you have several options available to protect your refund. If you reduce the amount that you withhold from your paycheck, your refund will be lower when you file.
If you contribute to an IRA or a 401k plan, you could increase your contributions to your retirement plan.
If you’ve got questions about your income tax refund and filing bankruptcy, please give us a call at 214-760-7777. We’ll walk you through all of your options and help get you the most out of your refund, so you can get the fresh start you deserve.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]