Hire A Chicago Bankruptcy Attorney to Exempt Tax Refund While Filing Bankruptcy

You may be searching for different ways to increase the size of your tax refund. So, can a Bankruptcy attorney in Chicago help you?

The day you file bankruptcy, all of your assets become part of the Bankruptcy estate including your tax refund even if you have not filed your return yet. In Chapter 7 cases, a trustee is appointed to analyze your assets and liquidate those assets to pay back your creditors. Unfortunately, a trustee will be mindful of a large tax refund during the liquidation process.

Is it possible to keep a tax refund and still file bankruptcy?

The bankruptcy process is rarely a pleasurable experience. Stressful financial situations and confusing rules of process can make it hard to proceed further without the help of a Bankruptcy attorney in Chicago. If your financial situation has deteriorated and you are considering bankruptcy, you should consider consulting with an attorney to get an insight into the issues that affect you. While bankruptcy is federal law, your ability to exempt your assets differs from state to state and only by learning what your state provides can you protect your tax refund.

Here are some useful tips that you should be award of if you’re considering filing bankruptcy-

•  A refund is treated as an asset just like cash in your bank account. Don’t forget to include it in your schedule of assets even if you haven’t filed the tax return yet. Listing a tax refund helps you because you can use your exemptions to protect all or a portion of the refund. 

•  To maximize the dollars that stay with you, and not your creditors, you should wait to file for bankruptcy until sometime after you have received your tax refund. To find out how long you should wait before filing, please consult a bankruptcy lawyer.

•  Never spend the refund on purchasing new assets that may become subject to the bankruptcy estate. You can pay necessary expenses, but acquiring assets, like property, is not suggested.  You should also never use your tax refund to pay any creditors, including relatives, other than a mortgage or car payment. 

Understanding how you can protect your tax refund is important in determining when to file and what to do with the refund. Keep a record of how the refund was spent. Most important, do not rely on this article for legal advice as every person’s situation is different. If you are considering bankruptcy as an option, seek the help of a Bankruptcy Attorney in Chicago.