April 15th will be here before you know it, and if you are like most people you are hoping for a tax refund. If you are considering filing for bankruptcy there are a few things you should know about how your taxes and bankruptcy filing could interact.
Tax Refund Is Income
While you may be worried about tax debt problems there could be some risk to you even if you don’t owe the IRS, but receive a refund instead. Under bankruptcy law, tax refunds are considered income; which means that they are handled like any other form of your income. They go into the calculation of your total gross income, which is important for determining your eligibility for Chapter 7 or your repayment amount under a Chapter 13 plan.
If your refund is minimal it is likely to be disregarded by the court. While there are instances in which your tax refund could be liquidated as part of your Chapter 7 case, or used to become part of your Chapter 13 repayment plan; the chances of this happening are highly specific to your unique financial situation. Consult a Dallas bankruptcy attorney about any questions you have about your tax refund, or other fund accounts, in bankruptcy. They may be able to help you keep these funds under bankruptcy exemptions laws.