There are so many questions that people have when they are filing for bankruptcy especially around the end of the tax year. Questions like should I file my tax refund before or after filing for bankruptcy? Should I file before or after my tax refund? Can I pay my bankruptcy with my tax refund are just a few that spin through the mind of people filing for bankruptcy.
The impact of filing for bankruptcy on your taxes
The best way to answer this question in simple terms is that it depends on what type of bankruptcy you file for. If you are filing for a chapter 13 claim then all of your income that is disposable is going to be used to pay of any creditors that you have. Although there are some limitations as a general rule of thumb your tax returns are disposable income and will be used to pay of creditors once having filed for a chapter 13 bankruptcy.
If you are filing for a chapter 7 bankruptcy then you will be required to liquidate any property that is not exempt under Utah’s exemptions. Under this type of bankruptcy tax refunds are not exempt.
Should you file your tax return before or after filing for bankruptcy?
Generally, it is best especially in the case of chapter 7 bankruptcy cases that you file your bankruptcy after the tax return and spend the money on things that will not cause issues in the return case. If you spend the money on non-exempt cases then it is very likely that you will need to return that money also. Some examples of expenditures that cause problems include: repaying family members for friends for money they’ve lent to you, family trips, and pre-paying rent.
Call a Salt Lake City Bankruptcy lawyer today
Making the decision to file for bankruptcy is not only a difficult one but also one taken after facing many hardships and financial struggles. It is a very difficult experience and decision for anybody and there are so many hurdles and rules that you need to be aware off during the process, especially when children and family are involved. If the trials and tribulations of this is something you are struggling with then a bankruptcy attorney in Salt Lake City is here to help get you your rights. A bankruptcy lawyer in the salt lake will help by understanding your needs and the emotional turmoil you are facing making sure you get the edt outcome for you. An experienced Salt Lake City Bankruptcy Attorney will help you by having all the up to date details of the law at their fingertips and be able to assess your case and give you all the options that you have available to you. For your best options call us on 1-801-505-9679.
