August 3, 2022 By:
Absolutely. In fact, with filings done within the first 4-6 months of the year, bankruptcy trustees tend to be on the lookout for tax refunds, as they are an easy way to obtain cash to satisfy creditors.
The best answer is “maybe.” There are two ways that you can have access to the full amount of your tax refund check:
When you file for protection under Chapter 7, you’ll have to relinquish any property not protected by exemptions to the trustee. That includes any funds in bank or similar financial accounts. If you have received a tax refund, but haven’t spent it, it may be taken by the bankruptcy trustee, unless you can protect it with an available exemption.
If you receive a refund before you file, you must spend it on “necessary” items in order to keep it out of the bankruptcy estate. That includes rent, mortgage payments, utilities, car, food, clothing, medical care and education. If, however, you spend your refund on luxury goods or to pay off preferred creditors, your petition may be denied because of bad faith.
At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filingsin Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.