If I file bankruptcy in January, do I lose my tax refund?
CAnewleaf20261 month ago
Tax refund coming. Considering filing Ch 7 around the same time. Will the trustee take the refund?
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✓ Verified answer from a licensed attorney — shown first
Timing matters a lot. A tax refund attributable to income earned BEFORE the filing date is property of the estate — the trustee can claim it unless it's covered by an exemption. A common strategy: receive and spend the refund on necessities (rent arrears, medical, food, car repair) BEFORE filing, so it doesn't exist on filing day. Don't pay back relatives or favored creditors with it (that creates a preference issue). Don't hide it (that's fraud). Just spend on documented necessities. Your attorney will time the petition to maximize this. EITC and Additional Child Tax Credit are protected by separate exemption in many states.
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