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Tax refunds can be a liferaft in a sea of debt. It can help you pay rent, keep the lights on, and get something to eat before the bills catch up with you again.
If you’re thinking about filing for Chapter 7 or Chapter 13 bankruptcy in Raleigh, you may be wondering if you can keep your tax refunds. The honest answer is, it depends, but Weik Law Office can help you protect your tax returns during the bankruptcy process.
Tax Refunds are Considered Assets in Bankruptcy
It doesn’t matter if you already got it or will get it after filing – tax refunds are classified as assets under Chapter 7 and Chapter 13.
Just like any asset, you can protect your tax refunds by using a bankruptcy exemption. In general, however, it can be challenging to exempt tax returns. It depends on:
- How much your tax refund is
- The bankruptcy exemptions applicable to your state
- When you filed for bankruptcy
- What kind of bankruptcy you filed for
Under North Carolina bankruptcy laws, there’s something we call a wildcard exemption. This will allow the debtor to select any asset they want to keep. You can reallocate up to $5 000 of your unused homestead or burial exemption as a wildcard amount. North Carolina also offers $500 as an additional wildcard exemption amount
Now, whether you qualify for a wildcard exemption again depends on the specifics of your case. Our bankruptcy lawyers Raleigh NC will be happy to go over the details with you during our discussion.
Tax Refunds Under Chapter 7 and Chapter 13 Bankruptcy
Another essential thing to note is that the bankruptcy trustee will ask you to provide your tax return documentation early on during your filing. How far back depends on the chapter you’re filing for:
- Chapter 13 – You’ll need to provide about four years’ worth of tax refunds. This shows the bankruptcy trustee that you’ve taken steps to pay overdue taxes, which is considered under Chapter 13.
- Chapter 7 – You’ll only need to provide the most recent tax year. However, this will also include the tax returns you file during your Chapter 7 bankruptcy case.
Keep in mind that incomplete tax return documents can get your petition rejected. To ensure you have everything ready, talk to our bankruptcy attorneys at Weik Law Office for advice on gathering paperwork.
Get Rid of Your Debts with Weik Law Office
Dealing with tax returns is just one of the many things that makes bankruptcy so complicated. As your bankruptcy lawyers in Raleigh, NC, we will make the process stress-free and straightforward for you.
Weik Law Office already has 10 000+ successful bankruptcy filings under our belt. With our resources and expertise, you can get started with your debt-free journey right now.
Call Weik Law Office today at 919-845-7877 for a free consultation, and set up a time to speak with one of our friendly professionals.