Bankruptcy – Can I Keep My Tax Refund If I File?
When I meet with potential clients from the North Georgia area, one of the first questions I usually get between January and April is, “Can I keep my tax refund if I file bankruptcy?”
For some, the answer is yes, and for others, the answer is no. Most people have plans for how they are going to spend those tax refunds long before they receive them from the IRS . For some, its clothes for the kids. For others, its car repairs, house repairs, catching up past utility bills and on and on.
So can you keep the tax refund if you file bankruptcy?
The answer to this question is maybe.
Personally, I hate the word maybe. During my single days, I always cringed when I asked a girl out on a date and the answer was “maybe.” Maybe meant I have to wait to see if I get a better offer.
But seriously, every bankruptcy case is different. Here is a part of my analysis. First, whether or not you get to keep your tax refund depends on what type of bankruptcy case you are filing. If you are filing a Chapter 13 bankruptcy that is paying all of the creditors 100 percent of what is owed to creditors, you get to keep all of your tax refund.
Second, it depends
on the size of your refund and the amount of Georgia wildcard exemption you have in your case. All Chapter 13 filers will keep tax refunds that are less than $1,500.00.
Lets say you file a Chapter 7 bankruptcy. If you have a tax refund that you anticipate receiving before your case will be discharged, the tax refund must be exempted as an asset in your case. Every case is different.
As a general rule in Georgia, if your tax refund is less than $5,000.00, we should not have a problem. The Georgia wildcard exemption is $5,000.00. If you need the exemption on a different asset, you might have an issue in your case. However, you must remember that every case is different.
Your bankruptcy attorney will be able to tell if you have a tax refund issue before the case is filed.
If you file a Chapter 13, if you live in the Rome Division, you generally get to keep all of your tax refund. If you live in the Atlanta Division you most likely will have to pay any tax refund over $1,500.00 to the trustee.
It is important that you disclose all of your tax refund information to your bankruptcy attorney in order for him to protect it.
If you have questions, don’t hesitate to call us at 770-881-8449.Source: www.kellycanhelp.com