Tax Refunds and Bankruptcy
As a Bankruptcy attorney, I often get a number of questions from clients relating to filing their bankruptcy and their tax refunds. The most common question is “Will I be able to keep my tax refund?” There is no simple "yes" or "no" answer.
When a bankruptcy is filed, all of the Debtor’s assets become property of the bankruptcy estate which is then administered by the Trustee assigned to the case. Even if you have not yet filed the bankruptcy, should you still have some or all of your tax refund at the time of filing, that money may be used to satisfy some or all of your creditors’ claims. Determining whether you can retain the entire refund depends on the amount of the refund and your other assets.
It is best to schedule a free consultation so I can look at all of your assets to determine whether you can protect your tax refund. In many cases, my clients are able to keep most, if not all of their refunds.