Beware, now is the time that chapter 7 trustees will inquire about tax refunds for 2013. If you file a bankruptcy petition in the fourth quarter of any given year, most trustees will keep your case open to recover a tax refund. Most debtors are not aware that they are in jeopardy of losing a tax refund because they mistakenly believe that if they do not have it, the trustee cannot take it. Tax refunds are an asset of a bankruptcy case even though a debtor may receive it in the future. The amount of a tax refund that belongs to a bankruptcy estate depends upon when a petition is filed. For instance, if a debtor files a case on the 182 day of the year, the bankruptcy estate has a 50% interest in a tax refund. If the debtor receives a tax refund of $5,000.00, $2,500.00 would belong to the bankruptcy estate.
It's tax time, and for a large number of Americans that means a nice refund check. The average tax refund check is around $3,000. Rather than frivolously spending this money, many Floridians are making wise choices with their refunds that can help them avoid future financial challenges. Here are a few options to make your tax refund count:
If you are contemplating filing for bankruptcy relief the last or first quarter of the year, beware. The chapter 7 trustee will be looking to take your tax refund.