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Legal Eagle
Legal Eagle, Lawyer
Category: Legal
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Experience:  Licensed to practice before state and federal court
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I have a question about bankruptcy and filing income taxes

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I have a question about bankruptcy and filing income taxes and getting a refund while preparing to file BK. I would like to have someone with bankruptcy experience and familiar with Texas Law?
JA: What state is this in? And just to clarify, when was the purchase made?
Customer: I made no purchase. You have the wrong person. My question is about Bankruptcy in Texas
JA: Has anything been filed or reported?
Customer: No.
JA: Anything else you want the lawyer to know before I connect you?
Customer: I'm in Texas.

Hello! My name is ***** ***** I am an attorney with Just Answer. I'll be here to help today! Do you mind if I take a moment to review your question?

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Ok, I have an answer to your question if you have applied for Chapter 7 bankruptcy. Generally, when a debtor files for Ch. 7, the trustee will control the assets of your estate. A tax refund is an asset that the trustee can use to pay unsecured creditors. It is very likely that the trustee will ask about a tax refund at your meeting of creditors.

In Chapter 7 bankruptcy, the trustee can use the assets you have when you file for bankruptcy to pay off your creditors. You can keep any assets you receive after filing for bankruptcy, however. A tax refund can be tricky because it often involves a process that begins before the bankruptcy filing date and continues afterwards.

If you get a tax return in the year you file for bankruptcy, a tax refund based on income you earned before you file for bankruptcy goes to the estate. However, you can keep part of the refund to the extent that the refund is based on income earned after the filing date.

If the refund is from the year before filig bankruptcy, unspent tax refunds go to the estate because the refund is the debtor’s money that was unnecessarily paid to the IRS. It is treated like cash or money in a bank account.

The money after you file is yours.

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Customer: replied 7 months ago.
I going to get legal aid assistants and have been told that it could take 4 months before we can file. I am a single mom with two dependents and need my tax refund to pay my bills and provide for my children. If I file my taxes and receive a refund I might have to give some of that refund to the two creditors I have. No assets except a 2008 auto and $1600. IRA. Will the refund still affect my Bankruptcy ?

Hi, that is a good question. The question is that if you file this year, then it is possible that they may take that amount. I'm sorry. I wish I had better news. However, this will be up to the trustee to make this determination and it is possible that depending on the refund amount, it may not be worth it to do so.

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