Bankruptcy Attorney Indiana

This being tax season, it's no surprise that, as an Indiana lawyer for bankruptcy, I get a lot of questions about tax refunds. "Do I get to keep my refund if I file bankruptcy in Indiana?" (At least ten blog readers asked that very question, so I decided to devote today's blog post to how the new bankruptcy laws in Indiana relate to tax refunds.

There are two possible scenarios here: 

You file bankruptcy, already having received your refund.
(This  is an area where it's important to seek proper bankruptcy information in Indiana!)

a)   If you still have the cash from the refund, it becomes part of your assets, and must be listed in the bankruptcy paperwork.  You're entitled to keep a certain amount of cash, so it would depend on how much you have in total assets whether you got to keep the refund or whether it needs to go towards repaying creditors.

b)  You received the refund money before filing, and you've already spent the money. If the bankruptcy court finds you spent the money on luxuries and now are asking to have debts forgiven, the court will not look favorably on granting you a bankruptcy at all!   If you spent the money "properly", meaning on necessities such as making a mortgage payment, catching up on bills, or having medical or dental work performed, that will not count against you.


You've filed bankruptcy and expect the refund to come in soon.

At the Creditors' Meeting, the trustee usually asks debtors whether they're expecting any money to come in.  That's because the court wants to see if there are resources that can be used towards satisfying the debts.  It's possible that (beyond the exemptions, meaning cash and assets you're allowed to keep), the tax refund would be lost by becoming part of the bankruptcy estate (used to pay creditors).

One of the Columbus bankruptcy lawyers in the Mark Zuckerberg bankruptcy law offices there was asked a question about property tax debt.  First, property taxes aren't dischargeable in bankruptcy unless they became due more than a year ago.  But, even if property tax were to be discharged by the bankruptcy court, the property could not be sold until the lien was paid off (because there wouldn't be a clear title). The attorney is now discussing with this Columbus taxpayer whether or not filing bankruptcy might help stop foreclosure.

You know the old saying, "Timing is everything?"  That's something that comes to mind when it comes to tax refunds and bankruptcy.  You may have read this idea in my earlier blog posts, but it bears repeating: The timing of tax refunds and individual bankruptcy in Indiana is not a do-it-yourself decision!