Tax Returns and Bankruptcy

[longridr]

A quick and hopefully easy bankruptcy question...When filing bankruptcy, are your next years tax refund forfeited? In the past I've had decent tax refunds...I expect another good refund this year. Will I have to forfeit this? I am currently in the bankruptcy process.

 

[Ladynred]

Depends on where you are in the BK process when you get your refund. If you get it before the discharge, and the amount is substantial, the Trustee may take it. However, if you get it AFTER your discharge, it should be safe. You may want to time the filing of your tax return so that your refund comes in well after your discharge.

 

[getalifebud]

thanks

Ladynred,

Thank you for answering that question. We have been considering filing bk and we were having a hard time trying to figure out when to file our taxes when the time comes. Will it be safe to file our taxes after we file bankruptcy or after it is discharged?

 

[dorenephilpot]

File your taxes, get your refund, spend your refund on necessities, then file your bk later.

 

[getalifebud]

thanks

Thank you for the reply. We have a personal line of credit that we want to get paid off with our tax refund. The place where we have the line of credit has been very good to us and we don't want to file on them, just some other bills that we can't pay. Again, thanks

 

[dorenephilpot]

If you pay off one preferential creditor and then immediately file, you might also have a problem.

Again, as I said in my earlier post, spend the money on necessities, and you won't have any problem.