Tolleson, AZ asked in Bankruptcy for Arizona

Q: How does bankruptcy affect tax refunds?

I filed 2018 tax return and is expected February 27th, 2019. I’m not filing bankruptcy till Mid March. I was told that I need to spend all my refund on bills and nothing personal (vacation, furniture, clothes, etc.) Am I correct with this? Or am I still able to use my refund for other things than bills?

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3 Lawyer Answers
Timothy Denison
Timothy Denison
Answered
  • Bankruptcy Lawyer
  • Louisville, KY

A: You should consult your bankruptcy lawyer regarding how to handle the refunds but if you do spend them, you probably should use them to pay your ongoing monthly bills rather than on items that look like entertainment or waste.

Diane L. Drain
Diane L. Drain
Answered
  • Bankruptcy Lawyer
  • Phoenix, AZ
  • Licensed in Arizona

A: I realize this is a challenging time & you have lots of questions. It is okay to be anxious & overwhelmed. You are on the right track to educate yourself about how to deal with your financial situation. As a lawyer & retired law professor I am committed to education as a foundation for anyone considering bankruptcy.

Your current financial issues, including possible bankruptcy planning, are often like a Rubic's cube where many competing issues must be solved simultaneously. Such as: protecting basic necessities, using credit cards, estate planning, tax issues, foreclosure & survival after bankruptcy.

Please go to www.DianeDrain.com - click "free bankruptcy consultation" button. Watch 9 short Bankruptcy Court videos which will explain basic bankruptcy issues. Then completely fill out an on-line questionnaire form & press “submit”. It will take 30-45 minutes, but is very important in order for me to guide you as to options. Then I will call to schedule a free 30 minute phone call

Stuart Nachbar
PREMIUM
Stuart Nachbar
Answered
  • Bankruptcy Lawyer
  • Livingston, NJ

A: I wod tell you seek out professional counsel on this because of the exemptions which you can use to shelter certain items. I do not know of you are in a federal exemptions state or a state based exemption state. That will be and make the difference

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