Do I Lose My Tax Refund If I File Bankruptcy?
Clients often ask me if filing bankruptcy means that they will forever lose their tax refunds. The simple answer is no.
Nonetheless, it is possible that a person (or couple) will lose part or even all of one year’s tax refund.
In the Toledo, Ohio area bankruptcy court, there are many factors used to calculate what a bankruptcy filer keeps and what goes to the bankruptcy trustee. The date on which the bankruptcy is filed is a key factor. Someone who files a bankruptcy on June 30 could lose up to half of his or her refund. If that person filed on December 31, all of the refund could be lost. However, there are certain exemptions that a bankruptcy attorney claims on a client’s behalf that will allow the client to keep some of the monies.
Additionally, refund amounts that relate to the “Earned Income Credit” and the “Additional Child Care Credit” are protected.
Anyone who files bankruptcy should speak to a bankruptcy attorney who understands the ins and out of this calculation regarding what is exempt and what is lost when filing bankruptcy. That is why we offer free consultation for anyone contemplating bankruptcy. When you are advised by an experienced bankruptcy attorney you should feel confident that you understand the process and encounter no surprises.