Will I lose my tax refund if I file for Chapter 7 bankruptcy? 30 Answers as of December 10, 2013

My husband and I are considering filing bankruptcy due to old business debt that carries a personal guarantee. If I were to start my bankruptcy case in January, will I lose my tax return that I plan to file for and receive in February or March? I plan to use our entire tax return to catch up on our mortgage that we foresee we will be behind on due to my husband's upcoming lay-off period at work.

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Weinberg & Ziegler | Morgan Ziegler
We may be able to protect your income tax return in the bankruptcy filing.
Answer Applies to: Washington
Replied: 12/10/2013
David R. Fondren, Attorney at Law
David R. Fondren, Attorney at Law | David R. Fondren
The tax refund owed to you will become part of your estate and the trustee can demand turnover of the non-exempt amount. Talk to your attorney about timing your bankruptcy filing.
Answer Applies to: Missouri
Replied: 12/10/2013
Law Offices of Daniel J Winter
Law Offices of Daniel J Winter | Daniel J Winter
The answer is that it depends on how much it is, and your whole situation. You should contact an experienced bankruptcy attorney to discuss your financial solutions right away. You may be able to come up with a plan to keep the refund, and plan for the future. But, you need to plan for this now. Call an attorney now.
Answer Applies to: Illinois
Replied: 12/10/2013
Hayward, Parker, O'Leary & Pinsky, Esqs.
Hayward, Parker, O'Leary & Pinsky, Esqs. | Michael O'Leary
Whether you would lose your tax refund depends upon whether or not you will be able to exempt the amount that you are expecting to receive. There are many factors that play into this question, and it should be discussed with competent, local bankruptcy counsel. If it appears that some or all of the refund would be at risk, you can simply wait and file your bankruptcy after the tax refund has been received and spent down.
Answer Applies to: New York
Replied: 12/10/2013
Bird & VanDyke, Inc.
Bird & VanDyke, Inc. | David VanDyke
A tax refund is merely an asset. One of many different types of assets or property that a person could own that needs to file for bankruptcy. Whether you lose any asset when you file for bankruptcy depends on how much other property you have and whether you can exempt that property. I will tell you that most people do not lose any property/assets when they file. If you understand how the exemptions work or you hire a bankruptcy attorney all this can be sorted out prior to you risking any property.
Answer Applies to: California
Replied: 12/10/2013
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    If you don't have any exemptions then you can, but if you file under the federal exemptions, you and your husband will have over $20,000 in exemptions to use for cash and tax returns
    Answer Applies to: New York
    Replied: 12/10/2013
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    Depending on how much it is, you can exempt it under the wild card exemption and depending on your other assets, generally get to keep it all. Don't guess, go see an experienced bankruptcy lawyer before you do anything.
    Answer Applies to: Michigan
    Replied: 12/10/2013
    The Law Office of M Grater LLC
    The Law Office of M Grater LLC | Mark O. Grater
    Bankruptcy allows you to often keep everything you own. For example, under the Federal system, you can keep about $12,000.00 worth of property as a wild card in addition to specific exemptions for specific property. If you were able to use the Federal system, depending on what other things you might have to apply the exemption to, there is a good chance you will be able to keep your tax refund.
    Answer Applies to: Connecticut
    Replied: 12/10/2013
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    You may lose it. depends on what the refund is for. if eic it will be protected you may want to file taxes quickly get your return then wait a couple of months then file,
    Answer Applies to: Florida
    Replied: 12/10/2013
    Eranthe Law Firm
    Eranthe Law Firm | Cate Eranthe
    That depends on what exemptions you have available for your use. What exemptions you have depends on your situation, whether you have home equity and other factors. You need to discuss this with a knowledgeable local bankruptcy attorney who can help you with prefiling planning. If you have no available exemptions or fail to list the tax refund on your Schedules, the Trustee will take it for the benefit of your creditors. If you fail to list it there could be other more serious consequences such as losing your discharge or being found guilty of fraud. The Trustee will definately be looking for tax refunds and expect to see them listed. They will also ask about it at your 341 hearing.
    Answer Applies to: California
    Replied: 12/10/2013
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    Tax returns are part of a bankrupt's estate. Confer with an attorney now!
    Answer Applies to: Michigan
    Replied: 12/10/2013
    The Salas Firm
    The Salas Firm | Ron Salas
    Probably. You need to speak to an attorney to be sure.
    Answer Applies to: Colorado
    Replied: 12/10/2013
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    This requires exemption planning. Is there equity in the house? If no, you can use the "703" set of exemptions and protect the tax refund. If there is equity in the house, see a lawyer. This is where in pro pers make mistakes.
    Answer Applies to: California
    Replied: 12/10/2013
    Stuart P Gelberg
    Stuart P Gelberg | Stuart P Gelberg
    Unless you can exempt it, you lose the refund. Wait till you get it and after paying the mtge file bkry
    Answer Applies to: New York
    Replied: 12/10/2013
    Tokarska Law Center
    Tokarska Law Center | Kathryn U. Tokarska
    The answer will depend on what assets you have, which will dictate which set of exemptions you will use and maybe even what type of bankruptcy you would be best to file and when. If the tax refund fits into an exemption you have available then you can keep the tax refund. Without actually knowing more about your situation I cannot give you a definitive answer. This may sound more "lawyerly" than you were hoping but really how a case progresses depends on the facts of the case. BTW, you can stop foreclosure and bring a mortgage current in a chapter 13, maybe even get rid of a second mortgage altogether if the circumstances are right. Whether this is a better route than chapter 7 again depends on more details about your situation including the types and amount of debts you have, your "current monthly income", your reasonable and necessary living expenses, and transactions you may have done in the past. A consultation with a bankruptcy attorney should answer this and more. It will likely also create new questions, considerations you may not have yet thought about.
    Answer Applies to: California
    Replied: 12/10/2013
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Unless you have exemptions available to you to use to protect your upcoming tax refund, such as a wildcard exemption or exemption due to the EIC, the refund will not belong to you upon filing bankruptcy and in fact will probably be sent directly to your bankruptcy trustee to be used to pay your debts.
    Answer Applies to: Nevada
    Replied: 12/10/2013
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    If you file bk before you get your tax refund the trustee will take it. If you file after you receive it and use it to pay your mtg arrears keep in mind that it counts as income if obtained during the 6 months prior to filing.
    Answer Applies to: Nevada
    Replied: 12/10/2013
    Law Offices of Linda Rose Fessler | Linda Fessler
    Yes. Your tax refund can be taken by the trustee.
    Answer Applies to: California
    Replied: 12/10/2013
    OlsenDaines | Rex Daines
    It depends on the value of your other assets and where you lived 2 years ago. If you have lived in Oregon for more than 2 years and you do not have other assets with significant value, then you will not lose the tax refund due to filing the bankruptcy.
    Answer Applies to: Oregon
    Replied: 12/10/2013
    Michael B. McFarland, P.A. | Michael B. McFarland
    Generally, any tax refund you receive, or have in your possession on or after the day you file bankruptcy is subject to turnover to the trustee. Many people wait to receive their refunds, and spend the money on necessities BEFORE they file the bankruptcy. However, one must be careful not to make voidable, preferential payments, which could backfire. It would be best to consult with an experienced bankruptcy attorney PRIOR to spending the refund, and PRIOR to filing bankruptcy, in order to minimize the potential for a problem.
    Answer Applies to: Idaho
    Replied: 12/10/2013
    Law Office of David T Egli | David T. Egli
    You will not lose the tax refund to the extent that you can claim an exemption for it. California has two sets of exemptions. Which you will need to use depends upon the equity in your house. If you have little or no equity in your residence, then you can use the exemptions under Code of Civil Procedure section 703. One of the exemptions under that section, commonly known as the wild card exemption, That exemption, about $25,000, can be applied to any type of property, including a tax refund. If you have a lot of equity in your residence, then you will need to use the exemptions under section 704. There are no exemptions for tax refunds under this section and the exemption for equity in your residence does not allow the unused portion of it to be applied to other property. So if you have substantial equity in your residence, you may want to wait until after you get your tax refund before filing. When you get your refund, use it to catch up on your mortgage payments.
    Answer Applies to: California
    Replied: 12/10/2013
    Garner Law Office
    Garner Law Office | Daniel Garner
    As of last July, Oregon residents are allowed a choice to use the federal bankruptcy exemptions or the state exemptions, whatever is best for you. The federal exemptions are far more generous in most cases, and it is quite likely that you would be able to use them to exempt your entire tax refund. The primary issue is how much equity you have in your home, since the homestead exemptions work differently in the state and federal rules. Only a lawyer can explain how the different rules would apply in your case.
    Answer Applies to: Oregon
    Replied: 12/10/2013
    Law Offices of J. L. Haddock, PLLC
    Law Offices of J. L. Haddock, PLLC | Jared L. Haddock
    It will depend on whether you can properly exempt the income tax refund amounts. As with any asset, anticipated tax refunds must be properly exempted in order to be retained or they are subject to liquidation in Chapter 7. Please consult with a qualified and reputable bankruptcy attorney and disclose all of your assets, including the anticipated tax refunds. Your attorney will be able to apply your exemptions and determine how much of the refunds can be protected. In most cases, my clients are able to exempt and retain everything. Keep in mind that you should exempt not only your anticipated tax refunds for the 2013 tax year, but also any anticipated amounts accrued as of the filing date of your case for the tax year in which you actually file (2014, in your case). Many people (including less experienced attorneys, for that matter) overlook this detail and it can lead to problems later.
    Answer Applies to: Michigan
    Replied: 12/10/2013
    Danville Law Group | Scott Jordan
    No, not necessarily. You can exempt the return up to the full allowable exemptions. In California, you have up to $27,000 in exemptions available to you.
    Answer Applies to: California
    Replied: 12/10/2013
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    The likelihood is that you would be able to keep your tax refund, BUT that depends on a number of factors and there's simply not enough information here to see, for instance, how much is the refund likely to be, do you have equity in a home, do you have other assets, what are they worth, etc.
    Answer Applies to: California
    Replied: 12/10/2013
    Portland Bankruptcy Law Group
    Portland Bankruptcy Law Group | Christopher J. Kane
    The answer to this question depends on the dollar amount of the refund(s). You are entitled to exemptions under state and federal law that protect your assets, including future tax refunds, up to certain dollar amounts. You should consult an experienced bankruptcy attorney to determine what exemptions would apply to your assets.
    Answer Applies to: Oregon
    Replied: 12/10/2013
    Law Office of Erik Severino | Erik Severino
    It is possible that you could lose your upcoming tax refund in a potential bankruptcy filing. Generally, a tax refund is deemed a non-exempt asset. However, Nevada allows a debtor to exempt any refund money derived from the Earned Income Credit. Also, Nevada offers a sort of "wild card" exemption, that a debtor can exempt up to $1000 (married up to $2000). Most debtors utilize the wildcard exemption towards an upcoming tax refund. But, I suggest waiting to file your bankruptcy until after you receive your refund and catch up on your mortgage arrearages.
    Answer Applies to: Nevada
    Replied: 12/10/2013
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    It depends upon where you live and what other assets you own. Even though you have not yet received the funds, the refund is an asset in your case. Unless you can find and properly claim an appropriate exemption that will protect it, your tax refund will likely become an asset of your bankruptcy estate.
    Answer Applies to: Colorado
    Replied: 12/10/2013
    Law Offices of A. J. Mitchell, LLC
    Law Offices of A. J. Mitchell, LLC | A. J. Mitchell
    If you qualify for and file a Chapter 7 bankruptcy you will not lose a tax refund that you receive after the date of filing. Such funds would not be considered property of the estate.
    Answer Applies to: Georgia
    Replied: 12/10/2013
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