While it may not be something many of us think about, choosing the right time to file bankruptcy can affect many other areas in your life, such as your tax refund. Depending on whether or not your expecting a large refund, can impact your decision on when to file. As bankruptcy lawyers in Port Charlotte, we are always looking for ways to provide the most advantageous assistance for our clients when they do decide to file. Below you’ll find more information about how certain factors, such as timing, can allow you to keep your tax refund when you file Chapter 7 bankruptcy.
This is a surprisingly frequent question that many bankruptcy clients will ask when discussing their tax and bankruptcy options. The reason for this is that once you file bankruptcy all of your assets (including tax refunds) become property of the bankruptcy estate.The answer to the question of if your tax refund is exempt, is not a simple yes or no. The eligibility of your tax refund being exempt is determined by the following factors:
One of the easiest ways to ensure that you have a fighting chance to protect your tax refund is by filing Chapter 7, rather than Chapter 13. Though it is possible to keep your refund if you file Chapter 13, it’s a much more difficult process.
If you file for Chapter 7 bankruptcy, all of your assets, including your expected tax refund for the year are considered the property of the bankruptcy estate, unless they are exempt. In Florida, under Chapter 7 bankruptcy, tax refunds can be exempt, unless debt is owed for spousal or child support. In addition to this exemption, there is an exemption referred to as the Wild Card Exemption, which allows the filer to keep up to $4,000 in property of their choice as long as they don’t use the homestead exemption.
Both bankruptcy and tax law are complex and confusing legal systems, in order to completely understand what you are exempt from when you file for bankruptcy in Florida, you will need to discuss your case with skilled bankruptcy lawyers in Port Charlotte. If for some reason you are unable to keep your tax refund from becoming part of the bankruptcy estate, your attorney may even suggest waiting for the “right time” to file.
Making a preemptive solution to keep your refund is really only necessary in the event of you not being able to file an exemption for your tax refund, which is unlikely, but possible, when working with Port Charlotte bankruptcy lawyers. If you find yourself in the situation where you will be unable to make your tax refund either a full or partial exemption, the following suggestions may allow you keep your refund:
Bankruptcy laws can be confusing at best. Add tax law on top of that and you have a recipe for disaster if not placed in the right hands. For this reason, hiring experienced Port Charlotte bankruptcy lawyers is your best bet in order to keep important assets, including your tax refund out of the trustee’s reach. If you’re planning on filing bankruptcy or have already started the process, let us help. We have helped hundreds of people in Florida, turn their lives around and become debt free by providing individual legal advice for their path towards financial wellness. Call us today, to schedule your free, initial consultation at our bankruptcy law firm in Port Charlotte.