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Can I keep my Income Tax Refund in Chapter 7 Bankruptcy?
By Cynthia Podis
Nashville Bankruptcy Attorney

Clients in my office ask this question every day! The answer is it depends on the amount of your refund and other assets. The Bankruptcy Code allows you to keep some personal assets in Chapter 7 by referring to your state law or in some special cases, the Federal Exemptions. The Tennessee Code Annotated, as referred to by 11 USC §522 under the Bankruptcy Code, allows you to keep up to $10,000 in personal property including: furniture, electronics, cars (equity or paid in full), and cash (in the bank or income tax refunds). You must be a Tennessee resident to claim the Tennessee exemptions. This is a complex area of the Bankruptcy Code. I encourage you to hire an experienced Bankruptcy Attorney to guide you through the protection of your assets! It is sad when I see bankruptcy filers lose assets that may have been protected with competent help from their attorney.
To determine whether you can use the Tennessee Exemptions, Federal Exemptions or your prior state of residence, your lawyer will ask you specific questions concerning where have lived over the past 3 years. The Federal exemption allows you to use “…any property, not to exceed in value $800 plus up to $7,500 of any unused amount of the exemption provided under paragraph (1) of this subsection.” You must not be a Tennessee resident to use the Federal Exemptions.
It is important to discuss your prior residences and the values of your personal items to determine if you can keep your tax refund. It is important to hold on to your Income Tax Refund to protect it. The protection of Exemptions apply only when you have possession of the money. The Trustee in your Chapter 7 Bankruptcy can take the money back from individuals or creditors if you spend it before your Trustee waives any interest in it. They will generally allow you to use the money to file your bankruptcy, pay the filing fee to the Bankruptcy Court Clerk, and to pay basic living expenses like rent, electric and water bills. Any extraneous expenses like paying back a family member or other insider can be subject to scrutiny by the Chapter 7 Trustee.
When a Chapter 7 Bankruptcy will not protect all your assets, you may want to consider a Chapter 13 Bankruptcy. Chapter 13 is a repayment plan that protects your assets that may not be completely protected in Chapter 7 by paying unsecured creditors over time the amount of the unprotected asset (this is called the Best Interest of the Creditors Test).
For more information visit or call 615-399-3800 and schedule a free appointment with us! Podis and Podis, 1161 Murfreesboro Pike Suite 300, Nashville TN 37217
This information is not legal advice, it is an advertisement for legal services.
We are a debt relief agency.
We help people file for bankruptcy under the Bankruptcy Code

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Post-recession- 57% of those who had savings before the recession used up some or all of it during the recession or afterward. #recession #savings

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24% of the population has some kind of education debt. The average amount of debt for one's own education is $25,750; for their spouse or partner's education, $24,593; and for their children's education, $14,923 #debt   #education

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Are you constantly transferring credit card balances to avoid the inevitable crash?
Do you use your credit cards for cash advances?
Are you tapping into your savings to pay off high interest debts?

When finances get out of control, it can feel like a high-wire act just to get through each month. Credit card companies, payday lenders, and car lenders can charge you whopping levels of interest on what seemed like a small loan. Add medical bills or a car repair and your balancing act can be impossible to maintain!

Bankruptcy can give you a fresh start with your finances by discharging (getting rid of) most or all of the debt you owe. A few debts- like student loans, taxes, and child support- do not usually go away in a bankruptcy, but most debt- like credit cards and medical bills- are wiped away. You can use the opportunity of a fresh start to take firm control over your new financial life by budgeting, saving for emergencies, living below your means, and rebuilding your credit. #bankruptcy  #credit

Are your credit cards currently near or over the limit?
Do you find yourself paying only the required or minimum payments?
Do you notice your credit card balance never seems to go down?

 Credit card debt can be crushing – high interest rates and minimum payments can make it impossible to pay off a credit card balance. If you answered “yes” to even one of the questions above, you should be considering how a bankruptcy could help you get out from under credit card debt.

A Chapter 7 bankruptcy can get rid of most, or even all, of your credit card debt! A Chapter 13 bankruptcy, also called a “repayment” bankruptcy, allows you to pay back some or all of your debt through a repayment plan that is usually between 3-5 years. A discharge from your Chapter 7 or Chapter 13 bankruptcy wipes the slate clean and allows you a fresh start. You need to talk to a bankruptcy lawyer to determine whether a Chapter 7 or Chapter 13 can help you get a fresh start from the endless cycle of credit cards, medical bills, and many other kinds of debt. #bankruptcy #debt #Chapter7 #Chapter13 #credit

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