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End of Year Considerations for Tax Returns in Bankruptcy cases


October 30, 2008
Topic: Bankruptcy

With the end of the year coming, those filing bankruptcy have to consider and factor in their tax refunds in making decisions about when and how to file bankruptcy. Tax returns, present and future, in amounts known and not known, are potential assets of the estate. This is a two edged sword. On the one hand, the future income may be protected under personal property exemptions allowed in Chapter 7. However, they also can be considered to be income or assets in a Chapter 7 or Chapter 13.

Persons get into trouble when they take loans or get rapid refunds at sites such as these hyperlinked here on these future assets which can be ignored by the Trustee. Sometimes it pays to wait until the person receives the refund to pay for things such as tax liens, secured debts, or their attorney's fees. Some clients decide to wait till they have realized their return to file in order to save this money.


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