What Happens to Income Tax Refunds in a Bankruptcy?

Know Your Bankruptcy Options

Under a Chapter 7 bankruptcy, income tax returns received during the bankruptcy period will become part of the Bankruptcy Estate and, if not exempt, will be under care of the bankruptcy trustee. The trustee is charged with evaluating the estate, liquefying assets and repaying as many creditors as possible with available funds. Your attorney will help determine which of your assets are exempt from liquidation.

If you are due a significant tax return, you may want to speak with a qualified bankruptcy attorney about the best time to file, how much cash you will be able to keep on hand during the bankruptcy period, and how best to protect your assets.

Daley Law is available to answer your questions and offers a free 30-minute consultant. If you have extenuating tax circumstances, Daley Law may refer you to a qualified tax attorney in your area.

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