Suppose you're because filing for bankruptcy but y'all're nigh to receive a tax refund. Y'all might need that coin to take hold of up on bills or brand repairs to your car. Whether y'all go to keep your tax refund after filing for Affiliate 7 bankruptcy depends on when y'all received it, the timing of your bankruptcy instance, and whether you can protect your refund with a bankruptcy exemption. The practiced news is if your tax refund equals upwardly to thousands of dollars, yous're eligible to keep it.

Bankruptcy and Tax Refunds

When filing bankruptcy in Tennessee, at that place are some chapter seven tax refund requirements. Each person is immune to exempt (protect) up to $10,000.00 of personal property. If yous're filing as a married couple, you get to keep $20,000.00 of personal property. This would include your piece of furniture, jewelry, cars, household items, greenbacks, and tax refund.

If your tax refund is upward to $ten,000, you tin can use the unabridged $10,000 exemption to keep the full taxation refund. If your tax refund is $2,000, you tin can go along information technology all and still have $8,000 left for your piece of furniture, television, etc. You can protect or continue your clothing under another exemption in add-on to the $x,000 personal holding exemption.

Protect Your Tax Return with Exemptions

Your tax refund is your holding. However, until you receive the refund, it'south in the possession of the United States Treasury. Before they send you your refund, the IRS checks to see if you owe any coin to a federal bureau or if y'all have whatsoever kid support obligations.

In many cases, the IRS will deed as the "collection amanuensis" for themselves, other federal agencies, or state child support agencies. The IRS may seize some or all of your tax refund through the federal intercept program.

You tin can protect your tax refund under your Chapter 7 bankruptcy estate if it's protected by an exemption. If you lot're eligible, you use a wildcard exemption to protect any holding. A wildcard exemption is typically express to a sure dollar amount and can exist increased in some cases. Some states have wildcard exemptions that are unremarkably plenty to protect your revenue enhancement refund.

In most cases, people will use the wildcard exemptions to protect their taxation refund first, but you lot can also employ it to protect other personal belongings, including a vehicle or electronics. If you're not eligible for federal bankruptcy exemptions, many states take a lower value wildcard exemption that protects a portion of your tax return. Information technology'due south essential to thoroughly cheque all of your options on bankruptcy and tax refunds before making a conclusion.

Chapter 13 bankruptcy might be an alternate solution to permit you to keep your tax refund while paying back the federal agency, IRS, or past due kid support at a more affordable rate.

What to Know Before Spending Your Tax Return

When yous go your tax refund, you should talk to your chaser virtually your plans for spending information technology. You lot might be tempted to pay dorsum friends or family members who loaned you money during difficult times. However, these repayments can have negative consequences for you and your loved ones if you file for bankruptcy.

The Defalcation Trustee could deem these payments as "preferential payments". The Trustee could sue your family fellow member or friend for a return of those payments. Check out this video from Nashville Defalcation Attorney, Dan Castagna, explaining how to keep and correctly spend your revenue enhancement refund and then you don't lose information technology when y'all file Affiliate seven bankruptcy.

Centre Tennessee'due south Top Bankruptcy Attorneys

It's critical that you lot speak with an attorney earlier spending or transferring any portion of your bankruptcy tax return. Oftentimes, the simplest solution is to hang onto it until afterward you file for bankruptcy. A trusted attorney can aid you empathise all of your options and help you avoid any pitfalls in the procedure.

Flexer Constabulary has been serving the legal needs of Middle Tennessee residents since 1981. Our experienced bankruptcy attorneys volition work diligently on your behalf to provide the best fiscal outcome for y'all.

We have iii role locations throughout Middle Tennessee to arrange your legal needs. Contact united states to schedule a consultation, and we'll find the best solution to become your financial life back on rail.

Flexer Law Office Locations

  • Nashville, TN
  • Murfreesboro, TN
  • Columbia, TN

Attorneys at Flexer Law sit around a table while discussing a bankruptcy case in Nashville, TN.

Contact Flexer Police at 615-255-2893 for a confidential, gratis consultation.