Will I lose My Tax Refund If I File for Bankruptcy?

tax refunds

After filing for bankruptcy most people still expect to receive tax refunds however this isn’t always as straightforward as it appears. While some people are able to keep refunds, many others will find they lose them. It is a strange and very tough process to understand because there are many forms of bankruptcy which is important to remember. The following may help clear up concerns about losing a refund after filing for bankruptcy.checkout latest article posted at http://www.baublesandjewels.com/large-tax-refunds-not-always-good-thing/

You May Be Able To Keep Your Refund with Chapter 7 Bankruptcy

If you were to file for chapter 7 bankruptcy you may find there are actually several protections put into place that could help protect your refunds from being lost. Now, having said that, it really depends on your circumstances but usually the refunds can be exempt from the bankruptcy. Of course while most people will find the exemptions to be wonderful in allowing you your refund you can’t always count on these. You really need to speak to a professional before your file for bankruptcy about what will happen to your refunds. You may have already filed your tax return but if you were to also file for bankruptcy the refund may be delayed at this time until the matter is cleared up.

You Will Lose Refunds with Chapter 13 Bankruptcy

There are no real protections or exemptions available when filing for chapter 13 bankruptcy as most trustees overseeing the bankruptcy will look at paying any creditors with the refund amount. However, that doesn’t mean to say the trustee can’t offer some discretion over the refund. Those filing for bankruptcy may be able to plea for the refund not to be seized but again this does vary. Unfortunately most people will find they lose their tax refunds and this can of course add to the worries but it will be important to talk to an advisor over this exactly. You never know the advisor may be able to offer some real advice over whether or not your circumstances warrant the refund.

There May Be Exceptions to Refund Losses

tax refunds

It is so hard to say whether or not you will lose part or all of your tax return refund. There will be occasions when certain protections can be put into place so that no losses are occurred however this may not always be the case. Every individual has different circumstances and while an exemption can be put into place so that the trustee overseeing the bankruptcy allows you to keep the refund, some trustees will pay creditors with the refund. Again, refunds and bankruptcy differ and it really comes down to everyone’s personal circumstances. Some exemptions may not kick in if you file just after the refund is given but may be given when file before submitting the yearly return.

Get Advice from a Professional before You Panic

It is so easy to say those with Chapter 13 bankruptcy will lose their refunds but the truth is every bankruptcy varies. Yes in most cases you will end up losing a refund however you cannot be sure until your case has been looked at carefully by a professional who knows about refunds and bankruptcies. You may be entitled to tax refunds and you won’t know for sure until your case is looked over.