If you are concerned about your tax return or have other bankruptcy questions contact us today for a free consultation. You may also wish to see our guide to California bankruptcy or fill out this free case evaluation form.

Tax refunds are given when you are over taxed on money you have previously earned. When filing for chapter 7 bankruptcy, these refunds are considered part of the estate they are owed to. This means that a refund owed, but not yet received, at the time of bankruptcy is lost.

Chapter 13 bankruptcy, however, offers some leniency. A judge may allow you to use your refund towards a pressing expense, for example, an automotive repair needed for you to get to and from work, or replacing the roof on your house after a bad storm.

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Filing chapter 13 bankruptcy also allows you to use your refund to alter your budget. A $4800 refund could be used to turn a $200/month negative income into a $200 month positive income over a period of 12 months, with that income being used to pay back your creditors.

While different forms of bankruptcy you can file for, each with different allowances and limitations, your tax refund is more or less spoken for. The court is not likely to deny you living expenses that you can justify and document (and the court will definitely require you to submit all pertinent documentation for whatever you submit). However, this money is part of your bankruptcy estate and after your critical expenses are met it must be used to satisfy your creditors.

It’s important to understand that this is general advice, and your case is not general, to you it’s very specific and there are many miscellaneous laws and exemptions to navigate. Please call us for an appointment today and we’ll be happy to discuss your case with you.

We currently assist bankruptcy clients in the following counties:

  • Los Angeles County
  • San Fernando Valley
  • Orange County
  • San Bernardino County
  • Riverside County
  • Ventura County
  • Santa Barbara County