Andrew B ClawsonDuring tax season, one of the issues that I discuss with all of my clients in my Salt Lake City bankruptcy practice is what to do with tax refunds. Under bankruptcy law, when a person files for bankruptcy, a bankruptcy estate is created, and income tax refunds that come from work done before filing the Utah bankruptcy case become property of the bankruptcy estate.
Now that we are in 2011, all tax refunds refunds from 2010 will be property of the bankruptcy estate for any bankruptcy case that is filed. And, as a result, any person who files a Utah chapter 7 bankruptcy case in 2011 will have to give up their entire 2010 tax refund in their bankruptcy case, unless they spent their tax refund on reasonable, necessary, and legitimate expenses before filing their bankruptcy case.
Waiting to get your tax refund before filing your Utah bankruptcy case will give you the benefit of giving you a source of money to pay your rent, stock your pantry with food, and pay for your bankruptcy case.
Anyone considering filing for bankruptcy in Utah should should talk with Utah bankruptcy attorney about the timing of your bankruptcy case and the acceptable and unacceptable ways to spend your tax refund before you file your Utah bankruptcy case.
Call me at 801-337-3907 for a free Utah bankruptcy consultation.
