Yes. As a bankruptcy attorney in Asheville NC, I primarily recommend two ways to protect your tax refund in a Chapter 7 case.
With careful planning, tax refunds can be protected.
First, we can use the bankruptcy exemptions you are entitled to.When exempted properly, Chapter 7 trustees are not allowed to intercept tax refunds.The vast majority of North Carolina bankruptcy filers use part of their $5,000 ‘wildcard’ exemption ($10,000 for married couple filing jointly) to keep their refunds outside the reach of their Chapter 7 trustee.
Second, if you are expecting a large refund beyond the exemption limits, you can wait to file your case until after you have received the refund.You can then spend down your tax refund prior to filing your bankruptcy case on non-luxury items.You can get new tires for the car, the dental care you’ve been putting off, or pay for your bankruptcy case with it.
In the Western District of North Carolina, our standing Chapter 13 trustee allows filers to keep their tax refund as it is already calculated into their monthly payments.
With careful planning, clients are able to protect their tax refunds. If you are ready to simplify your finances, contact me for a free, initial bankruptcy consultation.
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