Your Tax Refund: How to Protect It In Chapter 7 Bankruptcy

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If you watched the video above, you know that your tax refund can be taken if you file for chapter 7 bankruptcy. I would not be a good Florida debt relief lawyer if I didn’t also explain what you can do to protect that refund.

The method is not complicated: Wait to file for bankruptcy. That’s it.

Speak with an experienced Florida attorney at our firm today.
Call 855-Kramer-Now (855-572-6376)

How Waiting Can Help You Keep Your Tax Refund

Before explaining any further, please understand that this might not be the best idea for everyone. Sometimes you might end up saving more money by declaring bankruptcy earlier; sometimes not. Bankruptcy legal advice depends on your personal situation. That is why it is so important to work out the details with a bankruptcy attorney who knows the law fully. That being said, here is why you might be able to keep your tax refund just by waiting.

When you file for chapter 7 bankruptcy, one of the questions you will be asked is whether you have any expected assets coming in. A tax refund is an example of an expected asset, so once you receive it, creditors are allowed to claim it if you have already exceeded all of your Florida bankruptcy exemptions.

However, if you instead get your tax refund and spend it before filing for bankruptcy, there is nothing for your creditors to take. But be smart about it. Remember, creditors will take any assets they can once you file, so if you spend that refund on a giant flat screen TV, creditors may be able to claim it. Instead, use the refund on practical items like food and utility bills.

A Debt Relief Lawyer Can Help You Determine the Best Course

Keep in mind that trying to protect a tax refund may not always be the best option for you. It may seem right to keep that money out of the hands of your creditors, but if you have to hold off on declaring bankruptcy for several months—or longer—what might you lose in the process?

Do not make this decision blindly. Talk to an experienced bankruptcy lawyer in Florida and really dig into your financial situation to learn the smartest way to go.

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