December 15, 2016
Tax season is often a good time to consider and review your bankruptcy options because many people use some of their tax refunds to pay for the bankruptcy, which can then allow you to discharge and eliminate most debts.
The question that might arise during this time of the year is whether you can keep your tax refunds if you do file a bankruptcy. Determining if you can keep your tax refunds is an important part of deciding if bankruptcy is an option for you. The answer in most chapter 7 bankruptcy cases is yes. However, this does depend on the total amount of the refund, the timing of the filing, and when it is received. The timing of a bankruptcy becomes a very important issue if you typically receive a larger refund. Another issue that can arise is if you get a refund and use it to pay back certain debts, or friends or family, and then want to file a bankruptcy. This can potentially create issues. For all of these reasons, it is advisable that you meet with an attorney prior to receiving your refund to determine what is allowable and what can create problems.