Will I lose my tax refund if I file bankruptcy?

Yes, unless you time it correctly.

When you file a chapter 7 bankruptcy, the trustee can demand a portion of the next tax refund you receive.  If you file bankruptcy now (January, March, April) before you receive the refund, then the trustee can demand that you turn over the entire tax refund.

If you file your taxes, get the refund, spend it, and then go bankrupt, he cannot demand turn over, because the refund is gone.

That being said, let’s say you file in March of this year, after you’ve spent your refund, then he can demand 3/12 of next year’s refund (March is month 3 out of 12 months in the year), but 3/12 or 1/4 of your next years

 

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