Tax Refund and Bankruptcy – A Well-Balanced Study
All assets are included in the bankruptcy property by filing for Chapter 7. A third party controls the bankruptcy trustee. This covers assets like money, automobiles, houses, boats and even jewelry. A tax refund is also property and can be asked about it by the trustee during a creditor meeting.
Presently, the law permits for the exemption of any property of a filer of $1,250 plus $11,850 for a homeowner. For married couples, this amount is twice as high. Not many filers hold equity in their homes, so a personal property exemption or a large tax refund exemption can also be made. However, you must fulfill certain conditions to maintain the refund.
Time Consideration for Tax Refund
The second case shall be presented in Chapter 7 bankruptcy. It also takes the money owed but not yet paid out into account. In this year, the tax refund from last year shall be considered owing. Whether or not it was paid. It does not matter. If Chapter 7 was filed before the money could be received and spent, it could be withdrawn unless an exemption covers it.
Not everyone who files bankruptcies in Chapter 7 is eligible for reimbursement. You may not be able to use federal exemptions if you have spent less than two years in Oklahoma. You may have to use the state exemptions in which you lived before. Such exemptions may affect how much you can keep. An experienced bankruptcy lawyer can clarify this during consultations.
Preparation for Bankruptcy Filing
You can protect your tax refund if you're quite sure you're going to file for bankruptcy within the next year. Also, you should know how to file for bankruptcy in Oklahoma. For example, by adjusting the tax on each paycheck, you can completely avoid the refund problem. That way, every paycheck will give you more money. If reimbursement is entitled to you at the end of the year, the trustee may deem it too small to keep.
If you are facing financial difficulties and don’t know how to file bankruptcy in Oklahoma, get assistance now. Chris Mudd and Associates is a professional and dedicated bankruptcy law firm.