An Experienced Bankruptcy Attorney Can Help You Retain More of Your Refund
There is a lot of confusion over bankruptcy and tax refunds. Many people assume that tax refunds are simply theirs to keep, but this is not always true. Others may receive a tax refund prior to filing bankruptcy and spend it on a luxury item or another ill-advised purchase.
If you have questions about your tax refund and bankruptcy, speaking with a bankruptcy attorney is a good idea. At Redman Ludwig, P.C., we can answer your questions and advise you on whether you may be entitled to keep most of your refund, as well as what may be permissible expenses according to the bankruptcy trustee.
Tax Refunds and Bankruptcy in Indiana
Indiana individuals are allowed to keep up to $350 of their tax refund; married couples may keep $700. You also get to keep any earned income credit (EIC) from your refund.
In Indiana, you lose the percentage of next year's refund that equals the percentage of the year that has gone by when you filed Chapter 7 bankruptcy. For example, if you file Chapter 7 bankruptcy in January, you only lose one month of next year's tax refund. Depending on the details of your finances, this may not be enough money for the Chapter 7 trustee to consider taking from you. It is best to speak with a bankruptcy lawyer to find out if this filing strategy will work for you, however.
Under Chapter 13 bankruptcy, the laws are different. In this case, you may have to give up half of each tax refund during your three- or five-year repayment plan period. The amount may vary depending on the filer's finances and debts.
Contact Our Indianapolis Office
For a free telephone consultation, please call 317-489-5832 or toll free at 866-793-5226, or contact us online.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
