When it comes to making the decision to go bankrupt, you need to be aware of just what the benefits will be. If wiping your financial slate clean means that you will lose your house, savings, and assets, perhaps it would be best to consider other options. When it comes to tax refunds and bankruptcy, here are some tips to protect the money owed to you by the government.
First of all, you should be aware that your tax refund can be a part of your bankruptcy estate, meaning that the court-appointed trustee has access to it and can part or all of it to pay off your creditors. It is the part of the refund that was accrued the date of petition that belongs to the bankruptcy estate, therefore, the time of the year that you file bankruptcy makes a big difference to the amount of money you are due to receive. If you submitted a joint married tax filing but only one of you is claiming bankruptcy, the joint tax refund may be at risk.
• Change your exemptions – if you usually receive a large tax refund and are thinking about filing bankruptcy in the future, increase you exemptions to reduce the amount of money to be refunded.
• Delay your petition – unless you are facing an immediate foreclosure, lien, or garnishment, delay filing for bankruptcy until you have received your refund then use it to buy necessities.
• Submit a W-5 – Your Advanced Earned Income credit can be transferred to you on a weekly, monthly, or quarterly basis. This ensures that you can receive it and spend it without losing it during bankruptcy.
Dealing with tax refunds and bankruptcy can be especially stressful as you obviously don’t want to lose any more than absolutely necessary. Consult a qualified bankruptcy attorney to discuss options of how to hold onto your tax return.
For more information about filing personal bankruptcy, please visit claimingbankruptcy.net.
- How to Choose the Right Bankruptcy Lawyer (debt-consolidation-2u.com)
Tax Refunds and Bankruptcy by Steve