This is a possibility, but it is dependent upon the timing of when you filed your case, and which type of bankruptcy you filed.
There are two main types of consumer bankruptcies that an individual (or married couple) may file. And I will discuss each, and describe how a potential tax refund is affected by them. The first kind is the most common, which is a St. Louis Chapter 7 bankruptcy. In a Missouri Chapter 7, the court requires that you disclose all of your assets. And when the court requires you make it aware of all of your assets, it truly means that you disclose everything. This means all of your pots, pans, vehicles, furniture, bank accounts, stocks and bonds, retirement plans… literally everything.
Included in this list would be any anticipated funds or unliquidated funds that you might receive in the future. This would include things like money from a workman’s compensation claim, personal injury suit, medical malpractice suit, or an FDPCA claim. But it would also entail things like a potential tax refund.
If in fact you are due a tax refund for the current year in which you are filing your case, then it is proper that you disclose that fact to the Bankruptcy Trustee. If you are due to receive a significant amount, then it is likely that the Trustee will demand that you turn that money over. A significant amount would probably be in the neighborhood of $1,500 or more. But if you have already received and spent your refund, and then file a Chapter 7, you will most likely be in the clear (because the funds will no longer be in your possession).
The other type of situation would a St. Louis Chapter 13 bankruptcy. This type of bankruptcy is described as a repayment plan over the course of three to five years during which certain debts are paid back to your creditors. In a Missouri Chapter 13, the Trustee demands that you turn over certain amounts of your tax refund to him in each of the years that you are in the repayment plan. These funds are then dispersed to your creditors based on provisions of your plan.
Either way, it is very important to understand what the implications of filing a bankruptcy will be on your potential tax refund. As such, it is a very good idea to hire the right law firm to handle your case. The affordable St. Louis bankruptcy attorneys at The Bankruptcy Company have been helping deal with their debt-related issues for over ten (10) years.
We have one location by appointment only: 4625 Lindell Blvd St. Louis, MO 63108. We offer a free initial consultation to discuss your legal matters. So contact us today to learn more!!