Tax Refunds and Bankruptcy
Tax Refunds and Bankruptcy
This time of year I often advise clients to wait to file Chapter 7 bankruptcy until you file your taxes, receive your tax refund, and spend it on necessary and reasonable expenses. Depending upon when you file, the bankruptcy trustee is going to take some or all of your tax refund to pay your creditors. With that said, sometimes clients come into my office facing an imminent collection activity such as wage garnishment or foreclosure. In these situations you must weigh the amount you will lose by not filing (wages garnished until filing, loss of home) versus the portion of…
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