You plan on filing a Delavan bankruptcy case in 2015; however, you never thought about the timing… until now. It’s tax season. Tax season makes you wonder whether you should file your income taxes before or after you file bankruptcy. Let’s take a look at the best scenarios.
Should You File a Delavan Chapter 7 Bankruptcy Before or After Filing Income Taxes?
If you are eligible and plan on filing a Delavan Chapter 7 bankruptcy, then you most likely want to file your income taxes before you file bankruptcy. Any tax refund you are expecting back from the IRS will become property of the bankruptcy estate. Unless your income tax refund is exempt, the bankruptcy trustee can confiscate your income tax refund monies and distribute them among your creditors. Speak with your Delavan bankruptcy attorney to obtain more information regarding exemptions.
You will be able to keep your income tax refund if you file your income tax return, receive your income tax refund, spend the refund on necessities, then file a Delavan bankruptcy. If you receive your income tax refund first, and spend it on necessities, then you saved your refund from being distributed to creditors. Spending on necessities means that you spent the refund money on food, medical items, and other necessities of life. If you use your income tax refund to repay personal loans or buy luxury items, you may have to repay the amount to the bankruptcy trustee.
You can also spend your income tax refund money on your attorney fees without having to repay the money to the trustee. This is why tax season is an excellent time to file a Delavan bankruptcy. Many people who need to file for bankruptcy cannot afford to pay attorney fees and their bankruptcy filing is delayed while their debt is increasing. Using your income tax refund money to fund your bankruptcy fees is the perfect solution.
Should You File a Delavan Chapter 13 Bankruptcy Before or After Filing Income Taxes?
If you are filing a Delavan Chapter 13 bankruptcy, all tax returns for the past four years must be filed before your meeting of creditors. In this scenario, you must file your income taxes before you file your Delavan Chapter 13 bankruptcy.
Whether filing a Delavan Chapter 7 or Chapter 13 bankruptcy, the bankruptcy trustee will make sure all required tax returns have been filed, past and present. Any unfiled tax returns will yield a red flag to the trustee. The bankruptcy trustee may think you are hiding financial information.
Schedule a Free Consultation with our Delavan Bankruptcy Office
Our best recommendation is to file your income tax return before filing your Delavan bankruptcy. Spend your income tax refund money on your upfront attorney fees and any other life necessities. Remember, no frivolous items! Speak with our Delavan bankruptcy attorney to find out which items qualify as life necessities. Our Delavan bankruptcy office offers a free initial consultation. Call Wynn at Law, LLC at 262-725-0175 or send us a message via our bankruptcy website’s contact page. Wynn at Law has offices in Delavan, Salem and Lake Geneva, Wisconsin.
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*The content and material on this web page is for informational purposes only and does not constitute legal advice.