A Tax Refund Can Affect a Chapter 7 Bankruptcy

If you have filed or will file for chapter 7 bankruptcy in Arizona this year, you will want to discuss any tax refund with your bankruptcy attorney. The size of the refund and the timing of the bankruptcy filing should be considered. Radix Law, in Phoenix and Scottsdale, AZ, has experienced bankruptcy attorneys helping clients make decisions throughout the bankruptcy process, including considering the implications of tax refunds.

Can I Keep My Tax Refund if I File for Bankruptcy?
In Arizona chapter 7 bankruptcy your right to a tax refund is considered an asset. Just like a savings account, investment account, or other personal property, the right to a tax refund must be listed as an asset because it is part of your bankruptcy estate. Your assets must be listed and asset exemptions can be asserted for some of those. It is best to consult with an experienced bankruptcy attorney to determine which assets are at risk.

What if I Got the Refund Before I Filed for Bankruptcy?
If you have already received a tax refund, the money may be used to pay for the costs of chapter 7 bankruptcy as well as for any reasonable and necessary expenses such as food and housing. Before you purchase an asset, a luxury item, or use the refund to pay creditors, discuss your circumstances with your bankruptcy lawyer. Many transactions prior to the bankruptcy filing can be scrutinized by the bankruptcy trustee.

Most individual bankruptcy cases filed in Arizona are chapter 7 cases. It is best to speak with an experienced bankruptcy law firm to determine which chapter of bankruptcy is right for your situation. You will also receive legal advice about your tax refund before or after the bankruptcy filing.

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