Can Your Tax Return Benefit Your Bankruptcy Efforts?

: Reese Baker & Associates

  Filed under: Taxes

NavigateOne thing that you can count on is that your tax refund is going to be something of interest to your bankruptcy trustee. Each state has their own specific rulings when it comes to asset exemptions, and usually its cash that falls into this category. Naturally you don’t get your tax refund by way of cash, it’s in a check form and can be fair game for the trustee. It is one of the most hassle free resources for the trustee to go after.

As soon as your bankruptcy is filed your assets now become part of the bankruptcy estate. The trustee assigned to your bankruptcy is in essence the representative for your creditors. It’s his job to determine what your assets are, and your tax return in many cases becomes part of this. It becomes more of an issue when the tax refund is substantial, because normally in Chapter 7 bankruptcies there usually isn’t enough by way of assets or cash to accommodate paying any of the creditors.

An experienced Bryan bankruptcy attorney will be able to advise you on potential ways that your tax return will not end up in the trustee’s hands. Your tax return is just one reason why you should seek out legal advice before filing your bankruptcy. What you do leading up to your bankruptcy filing can be taken into account, and you want to be sure that your actions are going to work in your favor.