With tax season is fast approaching. For many of us this means the exciting prospect of tax refunds giving your bank account a healthy boost. Many clients that we will see in the coming months will be forced to weigh their options about when to file bankruptcy and/or what filing bankruptcy will mean for their tax refunds or their tax debts.
If you are currently in an active bankruptcy the question will inevitably arrive: if I am to receive a tax refund this season, will I be able to protect it? Unfortunately, the best answer that I can give is, admittedly, a sort of non-answer. The only way to know for sure whether or not the bankruptcy trustee can seize your tax refund is to consult with your experienced bankruptcy attorney. They will be able to go over your situation and offer advice and recommendations that may be able to protect your tax refunds.
You may find yourself in a situation where you are expected to owe taxes in the upcoming tax season or you currently owe back taxes. What, if anything, can bankruptcy do for you in this situation? Typically, filing for bankruptcy cannot discharge any tax debt (of course the government isn’t going to let you get out of paying the government) but there are protections that bankruptcy can afford those with back taxes.
First, if the IRS is garnishing your wages because of back taxes that will stop once you have filed for bankruptcy. A bankruptcy’s automatic stay stops any and all collections activities from creditors. This includes the IRS. A Chapter 13 bankruptcy can also help you to repay your tax debt over a longer period of time without worrying about interest or other penalties.
All in all, speaking with an experienced bankruptcy attorney at Kain & Scott is the only way to get all of your questions answered about filing bankruptcy and how it will affect your taxes during this upcoming tax season.
Conclusion
We are MN’s LARGEST bankruptcy law firm. Schedule your initial consultation today by calling 800-551-3292 or visiting www.kainscott.com.
