What is the effect of filing Chapter 13 Bankruptcy on my tax refunds?
When you file for Chapter 13 Bankruptcy in Washington State, the effect on your tax refunds will depend on the terms of the repayment plan you select. Generally, if you are able to complete the repayment plan, taxes refunded after the filing will be part of the plan and will need to be paid back to the Trustee to satisfy the plan. However, if you are unable to complete the repayment plan, your tax refund may be used to satisfy some of your debts under the plan. In a Chapter 13 Bankruptcy, it is usually beneficial to receive a tax refund because it can help you complete the repayment plan faster. If you choose to do this, the Trustee will usually require that the entire amount of the refund be paid to the Trustee and then the Trustee will distribute the money to the creditors. This way, the money that you would have used to repay your creditors can instead be used to pay taxes and other expenses. Because of the way chapter 13 Bankruptcy works, it is important to understand the effect it will have on your tax refunds. Ultimately, it is best to speak with a qualified bankruptcy attorney or financial advisor to determine the best course of action for your particular situation.
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