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With tax season upon us, many are looking forward to a tax refund. However, if you’re filing for bankruptcy, that could be a problem. Depending on the amount of your tax refund, you may lose all of it, some of it, or none of it. Keep reading to learn what you need to know.
Your tax refund is an asset, and unless protected by a bankruptcy exemption, the bankruptcy trustee is entitled to it. That money is then used to pay back your creditors.
However, exemptions are different from state to state, but in Florida, your bankruptcy exemption is $1,000 for personal property and assets if you own a home and $4,000 if you don’t own a home. Depending on how much your assets are worth and how much is your tax refund, will determine if you get to keep it or not.
For example, say you don’t own a home and your personal assets listed in the bankruptcy petition amounts to $3,000. Your tax refund is $2,000, so you now have a total of $5,000. You have $1,000 not exempt or protected in bankruptcy.
What to Look Out For With Your Bankruptcy Attorney
Unfortunately, many attorneys don’t focus on tax refunds and in this could cost you thousands of dollars. By November, I’m already asking clients if they expect a tax refund and how much. Sometimes because of the amount, I advise the client that the best thing to do is file for bankruptcy a few months after they have received their refund.
Therefore, if you know you are getting a large tax refund, make sure your bankruptcy attorney doesn’t proceed to file your case.
To schedule an appointment with bankruptcy attorney Alex Hernandez, call or text now. Saturday appointments available.
Representing clients in the areas of Chapter 7 Bankruptcy, Family Law/Divorce, and car and motorcycle accidents for 20 years.
(904) 712-5565 or (305)-688-LAWS (5297).
*Se Habla Español