- When should I file my tax refund if I am also considering bankruptcy?
- Can I use my tax refund to hire a bankruptcy attorney?
- Will my bankruptcy case impact my tax refund?
- What happens to my tax refund after I file for bankruptcy?
The bankruptcy attorneys at Castle Law Office have been answering these types of questions for over 15 years, and we are dedicated to helping individuals in our community get the fresh financial start that they deserve. Your tax refund is just one of the many factors we consider when deciding if bankruptcy is right for you. The type of bankruptcy, when you file for bankruptcy, and when you file your tax returns are just a few of the factors to consider. Our bankruptcy attorneys are here to help you regain financial control and are happy to answer any questions that you may have.
Chapter 7 Bankruptcy
Chapter 7 is the most common type of bankruptcy in our nation, and it allows for an individual to eliminate debt while usually keeping most of your assets. A bankruptcy estate is created after an individual has filed for Chapter 7 bankruptcy and contains all of the assets that an individual has ownership of at the time of filing. The trustee, the party responsible for collecting information for the case, settling debts with creditors, and overseeing the entire bankruptcy process, is usually responsible for creating the bankruptcy estate.
The cash an individual receives from their tax refund is treated as an asset and can be used to pay your creditors. It is important you speak to one of our dedicated bankruptcy attorneys on how to help use your tax refund to get a fresh financial start. Some individuals who are dealing with Chapter 7 bankruptcy may have a chance to invest their refund on “necessary” products and/or services and help maximize the number of resources that are available during a bankruptcy. The courts reserve the right to decide if a product or service is deemed necessary, so it may be worth meeting with one of our bankruptcy attorneys to discuss your situation and the options that are available to help get you back on track.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy case usually takes 3 to 5 years and is designed to help individuals manage high levels of debt through a custom payment plan that helps avoid the loss of property and other valuable assets. An individual who has filed for Chapter 13 is required to submit the same 1040 individual income tax return form, and should continue to report all income from the year, and deduct the appropriate expenses. Each tax return gets reviewed on a case by case basis, and failure to file tax returns could cause the court to dismiss your bankruptcy case.
Those who file for Chapter 13 bankruptcy may use a portion of their income for any reasonable and necessary expense and the remaining disposable income is added to the bankruptcy plan. some Ch 13 cases, the trustee has the authority to renounce the refund, allowing the debtor to keep it. Many factors are considered when determining if the debtor qualifies for a refund, and may be something that you should discuss with your bankruptcy attorney.
We understand that every bankruptcy case is different, and we will work hard to help you put together a plan so that you can get back on your feet and one step closer to a debt free life. If you are thinking about filing bankruptcy, Castle Law Office provides a free consultation for Missouri and Kansas resident. You can call us at 816-842-6200 or you can email us and set an appointment with a Castle Law Office Attorney to discuss your options.