In general, tax refunds aren't protected during a Chapter 7 bankruptcy. However, there are sometimes additional options for keeping it safe.
Missouri has a couple of exemptions that might help. Wildcard exemptions let you set aside a portion of certain property that usually would be included in a bankruptcy. While it may not protect all of your refund, it could save some of it.
Under the head of household exemption, if you're the head of a household that depends on your income you can often set aside a particular asset (along with an exemption for each child), which could include your tax refund.
In a Chapter 13, whether a trustee can take your refund depends on when you receive the refund during the bankruptcy process and other particulars of your unique case.
If you're considering bankruptcy and are worried what might happen to your tax refund, keep in mind you can use a tax refund to pay for bankruptcy. That protects the funds from being taken by the trustee. A lot of our clients choose to do cover their bankruptcy costs using a tax refund, and find it works well for them.
Castle Law Office has been handling bankruptcies for Kansas City clients from more than 14 years. If you need the fresh start bankruptcy can provide, call us today at 816-842-6200 to speak with an attorney. Or click here to email us and schedule your free consultation.