Income Tax Refunds and Bankruptcy

The income tax season is here and a bankruptcy debtor's tax refund is considered a non-exempt asset. This means when bankruptcy is filed, the trustee will take the income tax refund to disburse to creditors. If you're planning on filing an Arizona bankruptcy in the near future, it may be advisable to spend your tax refund on necessary living expenses or attorneys fees prior to your bankruptcy filing. However, bear in mind the living expenses that the refund is spent on must be reasonable and necessary to avoid a trustee objection. Daultlaw is a Phoenix bankruptcy attorney that provides bankruptcy representation across Arizona.