Tax Return & The Importance Of Timely Filing – Bankruptcy

In order to file for Chapter 7 bankruptcy, you must provide a copy of your most recent Federal tax return.  If you are going to be receiving a sizable refund, then you want to time your bankruptcy filing so that you do not have the refund forthcoming after your filing date.  This way, you are able to protect your refund from the long arm of the Chapter 7 trustee.  This video talks about the importance of timing as it relates to tax refunds.

 Jesse Barrientes: Right now we are in the end of January here.  So taxes are kind of going to be fresh, a lot of people have kind of filed because they want to get their money if they are getting a refund and if you have to pay, then people wait till that time.  So what if we are like in this kind of window period of time?  Do I have to provide 2012 or do I have to provide 2013 as well or just the last one I filed?

David Siegel: Well, as far as tax returns, you have to provide the most recent filing.  So right now, the old taxes, the old tax return is what’s due because we haven’t crossed the April 15 deadline yet.  So if we file early, you can provide your most recent return that you just filed or the one that is currently due.

But I want to bring up a point.  You mentioned about the time of filing.  When people are receiving their tax refund, that’s when they have disposable income.  That’s when they can finally pay off their bankruptcy attorney.  You want to be careful if you are going to be filing that you don’t file with a heavy return forthcoming because the trustee can intercept that return.  You want to make sure that you receive your return, pay your bills, pay your attorney and spend it on living expenses before you file.  You want that liquidated.  You don’t want that to be arriving after the filing because it will be intercepted by a savvy trustee.

 

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