New! Can I Keep My Tax Refunds When Filing Bankruptcy? Part 1
Can I keep my tax refunds? People always ask me if they can keep their tax refund when they file bankruptcy.
Usually the best answer that I can give is – Maybe!
When it comes to keeping your tax refund when you file for bankruptcy in Arizona there are so many different factors to consider. BEWARE of any attorney that says that you get to keep your tax refund. That attorney should be able to explain why you get to keep your tax refund.
Let me give you an example of the confusion…
Lets say I just moved to AZ six months ago from a state that allows you to take federal bankruptcy exemptions. I lived in that state for the last 5 years prior to moving to Arizona. Because I just moved to AZ I will be required to use federal exemptions when I file bankruptcy here in Arizona. Assuming I have not purchased a home in Arizona I will then be allowed to take advantage of a federal bankruptcy wild card exemption that would give me a twelve thousand dollar wild card. I can then take that wild card and apply to my tax refund that I have not yet received.
Fast forward to your bankruptcy creditor meeting…
The trustee will be taking all of the tax refunds of the people whom have resided in Arizona for the last two years. When they get to your case they will not require your refund be turned over so long as you have protected with a valid exemption. If you are confused by this example you should be. There are many things in the bankruptcy laws that are nonsensical.
Chapter 13 also requires you to turn over your tax refund. However, there are even some ways to get around this rule. Come see me and I can help you navigate bankruptcy. I can help you get the answer to the question “Can I keep my tax refunds“. I can also advise you on the best way to protect your tax refund.