Tax refunds are part of the bankruptcy estate, and a bankruptcy trustee can require you to hand over your refund for distribution to your creditors.
However, any earned income tax credit that the debtor may be entitled to has generally been held to belong to the debtor.
Whether or not the trustee will ask for your tax refund, has a lot to do with the timing of your case. If you file near the end of the year or the beginning of the year and are expecting a refund, the trustee will probably ask for it. One way to avoid this, of course, is to wait to file until after you have gotten your refund and used it for certain expenses, such as rent, food, and other necessities.
To learn more about what you can and cannot keep when you file bankruptcy, we hope you’ll come in for a free consultation with an experienced Colorado bankruptcy attorney. You can schedule an appointment by clicking here.
