Podcast on Tax Refunds and Bankruptcy

This podcast focuses on the issue of tax refunds based on state exemptions and how it can affect a bankruptcy case. The issue of tax returns is usually ignored by bankruptcy attorneys, yet it could cost you thousands of dollars unnecessary if the bankruptcy trustee claims an interest. Here’s a summary of what to expect with this podcast.

Click above to listen in on the podcast.

With tax refunds, there’s always the possibility that the bankruptcy trustee will seize it. This can be a significant loss of money, especially if you have been making plans with your tax refund to help out with your finances.

Remember that exemptions are what protect debtors in bankruptcy. Generally, tax refunds are non-exempt property, which allows the trustee to keep the refund to pay back creditors. This applies to both Chapter 7 and Chapter 13 bankruptcy. Note that each state has different exemptions. Some states exempt partially tax refunds, while other states consider personal property.

A simple and common tactic to protect a tax refund is by simply timing your bankruptcy filing. Thus, in some cases, the bankruptcy filing should be delayed. While this could serve as an effective strategy to help you keep your tax refund, it’s also important to know for how long the filing is delayed. This podcast explains how to apply that strategy.

It’s important to tell your bankruptcy lawyer you expect a tax refund. Some lawyers don’t discuss this at the initial consultation, but the consequences could be thousands of dollars lost unnecessarily to the bankruptcy trustee. So make sure to discuss this with your bankruptcy attorney to weigh the pros and cons. Sometimes, losing a tax refund is better than continuing with a wage garnishment.

Questions Your Bankruptcy Lawyer Should Ask

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• Bankruptcy
• Your Wallet

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Remember the information provided by Bankruptcy.Blog should be considered for informational purposes only and does not constitute legal advice.