“Tax Day” is April 15th, so if you are considering filing a Chapter 7 case, you may be curious about what will happen to your tax refund. It is important to understand that your refund is considered an asset of your bankruptcy estate and the trustee will investigate all of your non-exempt assets. Fortunately, the law provides numerous exemptions which protect the majority of your assets.
The trustee will need to make a determination whether to seize your refund or not. A variety of factors will be considered, but the primary factor is the amount of the refund. If it is an insignificant amount, the trustee will probably decide it is not cost-effective to seize the funds and distribute it among your creditors. However, if the refund is large, the trustee will need to determine if it is exempt and protected by law. Thus, in most cases the debtor is allowed to keep their tax refund.
Your bankruptcy lawyer will be able to predict whether or not the trustee will seize your refund, but the trustee typically states his/her decision at your meeting of creditors. Many debtors receive their refund and spend it before they file their case. In this scenario, the trustee will usually not seize the money if it was spent on permissible uses such as to pay for basic living expenses (and not luxury items).
Contact The “Milwaukee Bankruptcy Attorneys,” DeLadurantey Law Office. LLC. DeLadurantey Law Office focuses on Chapter 7 and 13 bankruptcy, debtor’s rights, debt negotiations, debt relief, mortgage loan modifications, and foreclosure defense. A “defender of the little guy, “DeLadurantey Law Office serves the following location – Milwaukee, South Milwaukee, West Milwaukee, Waukesha City, Waukesha Town, Kenosha, Racine, and all other municipalities in Milwaukee County, Waukesha County, Kenosha County, and Racine County. We can be contacted by phone: (414) 377-0518 and can be found on the Internet and on Facebook.