Proper planning and consultation with a bankruptcy law firm in Miami, as well as the use of personal property exemptions, it is possible to protect your tax refund.Filing for bankruptcy can be a tough decision to make, but it can also be a needed step when your financial challenges become overwhelming. One of the concerns people often have when filing for bankruptcy is the possibility of losing their tax refunds.
Personal property exemptions are a type of protection provided under the Bankruptcy Code that allows you to keep certain types of property even if you file for bankruptcy. The specific types of exempted property vary depending on state laws.
For example, if you are able to use Florida’s exemption laws and you own a home, you have the right to exempt $1,000 of whatever personal property you desire to protect. If you do not own a home, you can exempt $5,000 of personal property. This exemption can be used to protect all or a portion of your tax refund. You can also exempt any portion of the tax refund that is attributable to the earned income tax credit, and if you are married and it is a joint tax refund and you have no joint unsecured debts with your spouse, the entire tax refund is exempt.
To be sure you can exempt your tax refund using these exemptions, you need to do some things before filing for bankruptcy. Here are some tips to help you protect your tax refund.
Tips for Keeping Tax Refunds When Filing for Bankruptcy
Know which state’s exemption laws apply to your bankruptcy
As mentioned above, the specific types of property that can be exempted vary from state to state, and just because you live in Florida now does not mean you are entitled to the benefits of Florida’s exemption laws. It’s important to know which state’s exemption laws will apply to your bankruptcy and research them to determine which of your property will be exempt from bankruptcy and which will not.
Plan your tax refund timing
If possible, try to time your bankruptcy filing so that you receive and spend your tax refund before filing. This way, the refund will not be considered an asset in your bankruptcy case, and you will not have to worry about losing it. However, some expenditures are acceptable and some are not. If you spend the money on the wrong thing, it can complicate your bankruptcy case greatly.
Work with a bankruptcy lawyer
Working with a bankruptcy lawyer can help ensure that you are taking all the necessary steps to protect your assets, including your tax refund, without causing other problems. An experienced bankruptcy attorney can also provide you with guidance on other bankruptcy-related issues, such as which type of bankruptcy to file and how to deal with creditors.
Consult with a Bankruptcy Law Firm in Miami About Your Tax Refunds
Keeping your tax refund when filing for bankruptcy using personal property exemptions needs careful planning and knowledge of the state’s exemption laws that will apply in your case. When you follow the tips outlined above and work with a bankruptcy lawyer, you can increase your chances of keeping your tax refund and other assets protected during the bankruptcy process.
Filing for bankruptcy is a complicated process, and the laws surrounding personal property and other exemptions can be confusing. The best way to protect yourself and your tax refund is hiring the expertise of a reputable bankruptcy law firm, such as The Bankruptcy Law Offices of James Schwitalla, P.A.
Mr. Schwitalla helped thousands of clients go through the bankruptcy process and obtain debt relief over the years. With your case, we’re confident that we can get you the protection you need as well.
Schedule a consultation with us today.