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I am filing for bankruptcy in Florida. Can they keep my tax refund for this year? Should I wait to file after my taxes?

Miami, FL |

I am afraid that if my case is in court before December 31, 2009 that when I file for taxes in January2010 that I will not be able to get my refund and that the state will keep that. I need to find out what are the risks and if I should wait until 2010 to file for bankruptcy once I have received the tax refund. I don't own a house and my car is a lease. At the same time I don't want to hold the case for very long because I might need to pay more attorney fees and I cannot afford that. The attorney has all the paper work and basically I would have to go to court in December and my case should be closed. I want the best option available without any risks or having to spend more money.

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Attorney answers 3


Since you are filing a Chapter 7 bankruptcy, the attorney fee is capped unless your case is complex enough that the court grants your attorney's motion for more fees.

With that being said, whether the trustee is entitled to seize your tax refund or not really depends on "how much you owe in unsecured debts" versus "how much non-exempt properties" you own. Since you are not a homeowner and since you are a Florida resident, your exemption limits for personal property increase from $1,000 to $4,000. This means that your clothes, furniture, kitchenware, jewelry, tv, electronics and any other personal property including anticipated tax refund are more likely to fall within the exemption limit..... unless the total value of all your personal properties are more than $4,000. So this totally depends on your situation.

Bear in mind that if you have some other property that you are willing to give up, and is worth enough that the trustee is willing to take so he can liquidate it, then the trustee will let you keep your tax refund. But assuming that your personal properties exceed the value of $4,000, and assuming that your tax refund will be about $2,500.... What do you own that could sell for $2,500? Is it a diamond ring or an expensive watch? Would you rather keep that and give up the tax refund? Or would you rather keep the tax refund and give up the watch? You will have to give up something in EXCHANGE for a bankruptcy discharge!!!!

Also, typical Chapter 7 bankruptcy cases last about 3 to 4 months? If you file this month and have the 341 meeting by December, you might get your discharge by February or March. This is way before you even file your tax returns, so I'm not sure why you are so concerned about timing.


This is a very good question but in order to properly answer it, we need to know your personal situation. For example, a large tax refund will most certainly cause greater issues than a small refund. A small refund may be within your exemptions and therefore not subject to forfeiture. Also, you cannot file for bankrupcty immediately after receiving a large refund, and expect not to have issues. You need to consult an attorney and provide all the specifics of your case.


This is an interesting question. The starting point is that all money and property that you own or in which you have a present or future right, becomes part of the bankruptcy estate. A tax refund (or a portion) to which you are entitled at the time you file your case should be added to the bankruptcy estate.

I understand that some agressive Trustee's are seeking to recover tax refunds in the scenario that you have described. You need to consult an attorney who has recent experience in the Bankruptcy Court in which you intend to file your case. Frankly discuss this issue. A local practicing attorney will know the how the local court and the local trustee's are treating this issue.

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