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Tax Refunds and Chapter 7 Bankruptcy

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Can I Keep My Tax Refund in Chapter 7 Bankruptcy?

With some simple planning, you can either keep or use your tax refund to rid your debt by filing Chapter 7 bankruptcy.

If you’re expecting to receive or have already received a tax refund but are considering filing for Chapter 7 bankruptcy, you probably want to know if you can keep your refund. The answer is yes!

A tax refund is part of your bankruptcy estate

When a debtor files for Chapter 7 bankruptcy, all their assets become part of the bankruptcy estate. In order to protect these assets, we need to claim an exemption or use that assets prior to filing.

In Pennsylvania, we utilize the Federal Exemptions, which allows for an $11,850 wildcard exemption. What does that mean? As long as your refund is less than that amount you can keep it. If it’s more, we can plan to utilize the refund to retain the value it provides.

Conclusion 

If you are thinking of using your tax refund to pay off some of your debts, give the Debt Doctors a call. We will be able to see if we can protect your tax refund and eliminate all of your debt with a Chapter 7 bankruptcy. Any firm can file your bankruptcy paperwork, but we believe our job doesn’t end there. A lot of our work focuses on counseling you through the stress and uncertainty that goes along with being in debt. If you’d rather inquire online, click here.

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