The DO’s and DON’Ts of Protecting a Tax Refund in Bankruptcy
For many people, a tax refund is a good way to pay for things, like Bankruptcy legal fees, that are often so difficult to save for during the year. Receiving large tax refunds right before a Bankruptcy is filed can create problems for some people, though, if they are not careful about how they spend their money. To help you have the best chance of keeping your tax refund & having a successful Bankruptcy, read the following “Dos and Don’ts” for protecting a tax refund in Bankruptcy.
- DO tell your Bankruptcy Attorney about your tax refund so he or she can help your protect it.
- DO keep up with how you spend your tax refund. Try to keep receipts and notes on the purchases you make.
- DO save as much as you can to help you make ends meet during the year.
- DON’T pay back family, friends or business partners without first talking to your Attorney.
- DON’T feel like you must spend all of your tax refund before filing Bankruptcy or that you have to hide your tax refund. The best way to maximize your chances of keeping your tax refund is to disclose it to your Attorney and on your Bankruptcy papers.
- DON’T give your tax refund as a gift to anyone and don’t put it in someone else’s bank account.
- DON’T pay any large debts with your tax refund without first talking to your Bankruptcy Attorney about it.
The bottom line? Make sure you discuss these issues with your Attorney!
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