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Will a Bankruptcy Have any Effect on My Tax Return?

Every little bit of money counts when an individual is in a serious financial situation and is going to file for bankruptcy. If this sounds like you, then you may be expecting a tax return, but you don't know how this is going to affect your bankruptcy. 

Returns Are Income

First you need to look at the timing. If you have not filed for your bankruptcy as yet, and if you are able to hold off until you receive your tax return this may be the best thing to do. You can then take your return and put the money towards some pressing needs. This may go towards paying your rent or mortgage or perhaps some medical care that you need. It could also be used to help pay for your bankruptcy fees including the services of your Louisville bankruptcy attorney. What you do not want to do with the money is spend it foolishly. You will have to declare on your bankruptcy filings that you received this money. If your bankruptcy trustee feels that the money was spent unwisely he could demand that it be returned into your listed assets.

If you have filed for your return and also filed for your bankruptcy, then this money that is going to be received from your tax return will have to be included in your listed assets on your bankruptcy filing. It will then be determined by the trustee based on the amount and your specific situation as to what will happen with this money.

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