Can I keep my tax refund if I file a chapter 13 bankruptcy?

Kind of, but not all of it.

If you file a chapter 7 case before you receive your tax refund for that year, the bankruptcy trustee can demand that you turnover those monies.

If you file a chapter 13 before you receive your refund, at least in Utah, the Chapter 13 Plan provides that you get to keep the first $1,000 of the tax refund.  The Plan also provides that you get to keep another $1,000 (up to a total of $2,000) if you can attribute that extra $1,000 to the EIC or ATC (Earned Income Credit or Additional Child Tax Credit).

So if you file a chapter 13 to stop a garnishment, foreclosure, or repossession, you will get to keep at least $1,000 of your tax refund.  It’s not all of it, but it’s better than losing the entire refund.

Leave a Reply