Can I use my tax refund to pay for bankruptcy?

Yes, oh please yes.

I actually get asked this question a lot, and there is no problem using your tax refund to pay for bankruptcy.

I have already posted about good and bad uses for a tax refund, but it bears repeating:  if you are getting a large tax refund, wait to file bankruptcy until after you have received and spent the refund.  You can spend it on your attorney’s fees and court costs (like the filing fee).  You can spend it on food storage and clothing.  Just remember that there are two bad things you can do with it:

1.  no Mom and Dad, and

2.  no toys.

Don’t use the money to pay back a loan to a friend or family member. This is a preferential transfer which the trustee can avoid, and Mom ends up getting sued by the trustee for $5,000.

Don’t buy a new boat or dirt bike or atv.  I can’t protect (exempt) it in bankruptcy, and the trustee will take it, sell it, and you will lose it.

This is not legal advice.  If you need legal help, go to

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