Tax Refund and Chapter 7 Bankruptcy
As 2011 draws to an end, many people will be thinking about filing Chapter 7 bankruptcy in Maryland in 2012. One very common question, almost always asked at the beginning of the year, is: IF I FILE CHAPTER 7 BANKRUPTCY IN MARYLAND, WILL I STLIL BE ABLE TO KEEP MY TAX REFUND? The answer is………….yes, in just about every case, you will be able to keep your tax refund. When you file Chapter 7 bankruptcy in Maryland, you are permitted to keep roughly $12,000 worth of “liquid” assets. That does not include your house. That includes, for most people personal belongings such as household goods and furnishings, automobiles that are fully paid off, money in savings and checking accounts, and certain other assets. One asset that people often forget is there tax refund. A tax refund, or an expected tax refund, is nothing more than money in a savings account held by the government that will be given to you after you file your taxes and show that you have overpaid your taxes, which most of us usually do. That expected refund MUST be included in your paperwork as an asset, however, like I said above, you are permitted to keep $12,000 worth of property. So, if your tax refund is expected to be, for example, $5,000, and the remainder of your “liquid” assets are less than $7,000, you will be okay.
The other commonly asked question is “CAN I USE MY TAX REFUND TO PAY MY ATTORNEY TO FILE BANKRUPTCY FOR ME?” The answer is………………..YES. That is precisely why bankruptcy filings are at there yearly high in the months of February, March and April of each year. Most people live paycheck to paycheck and it is very difficult to save money to pay the attorney fees and the filing fees. However, most people also received tax refunds that are more than enough to pay those costs. It is entirely acceptable to pay your Maryland bankruptcy attorney with your tax refund proceeds, and, depending on how much the refund is, you can even save the rest. What you DO NOT want to do with your tax refund is pay a significant amount to your creditors right before you file bankruptcy. If you speak with one of our Maryland bankruptcy attorneys on the phone or in person, we will explain all of the rules to you and advise you as to what to do with your tax refund when you receive it.
We are Maryland Bankruptcy attorneys who file Chapter 7 and Chapter 13 bankruptcy for client’s living in Baltimore, Glen Burnie, Columbia, Owings Mills, Essex, Dundalk, Rosedale, Brooklyn, Pasadena, Catonsville, Pikesville, Arbutus, Randallstown, Laurel, Elkridge, Ellicott City and all other areas of Maryland. Call today and speak with an attorney bankruptcy in Maryland for free, and we will answer all of your questions. Our telephone number is (410) 766-4044.
David L. Ruben, Esquire