With tax season in full swing, you may be wondering how filing your taxes can affect a bankruptcy filing. Whether you have already filed for Chapter 7 bankruptcy protection or are considering it, you should learn more about how filing income taxes can affect your overall bankruptcy proceedings. In most cases, a refund from the Internal Revenue Service will be considered as an asset. As such, your bankruptcy trustee can collect your refund to pay off your debts. However, you may be able to use the “wildcard exemption” if you qualify. In this case, you may be able to keep your refund if you have already filed for Chapter 7 bankruptcy. When you file for bankruptcy, you will be given the option to choose federal or state exemptions. If you had chosen federal exemptions then you will be allowed to use the wildcard option.
There are advantages to filing for bankruptcy before paying your taxes and after. To learn how each could affect you, contact the Malaise Law Firm today to enlist the help and guidance of a San Antonio bankruptcy lawyer from our team. We will take the time to meet with you one-on-one to explain the tax consequences surrounding Chapter 7 as well as how the bankruptcy process works in the state of Texas. Don’t wait – schedule your case evaluation now!