St. Louis Bankruptcy Center


St Louis Bankruptcy and Taxes: Can the Court Seize My Tax Refund?

Taxes, Uncategorized

With the year coming to a close, most Missourians that are considering bankruptcy are concerned about how a St. Louis bankruptcy filing would affect their potential tax refund.  Tax refunds are an asset of your estate and therefore the court can act upon the refund depending on what type of refund you receive and what chapter you file.

Recently Missouri passed a new state exemption bill, see New Exemption Law Passed that directly impacts tax refunds.  Under the new bill, all government benefits are now exempted from your bankruptcy estate.  Although it hasn’t been fully settled, the prevailing opinion is that any earned income credit or child credit will now be exempted.  Any refund due from wages or interest paid will still be actionable by the Court.

Depending on which St Louis bankruptcy you file also can impact your tax return.  In Missouri, specifically the Eastern District, if you file a Chapter 7 bankruptcy, your refund is a potential asset only once and generally will depend on your filing date.  In a Chapter 13, your refund is an asset every year you are in your Chapter 13 and you are only allowed to retain a specific portion of the refund.  The rest is turned over to the Trustee and used as additional payments in your Chapter 13.

If you are considering filing St. Louis bankruptcy in the near future you should contact an experienced bankruptcy attorney that can advise you on potential tax return issues.  Not only can our office advise you on how to protect your current refund, but how to avoid tax issues in the future.

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