If you expect a big tax refund and need to file bankruptcy gear up for the big money grab. Unfortunately it is not for you and I. It is for the assigned chapter 7 panel trustee and by extension your creditors. I try to preserve as much of the refund for you and your family as I can, but I am limited by Ohio exemption laws.
Tell me. Why do clients insist on not listening when I counsel on how to preserve the tax refund?
Tax Refund Planning
Unless there is a pending garnishment that requires filing to keep your family above water, or a scheduled sheriff foreclosure sale, most of my clients have a good bit of time between consultation and filing. I will examine the last filed tax return to see if the refund is too high. If so, I suggest immediately reducing your payroll tax deduction to put money in you pocket NOW. That way you have more money today, and you can likely have a low enough tax refund that your trustee will not bother with it.
Afraid to Owe your Government
Fast forward to today. Right now I have 3 clients this year who are each receiving a large tax refund. The average amount of refund they will be losing to the bankruptcy trustee is over $5,000. I advised each couple to reduce their withholding. They didn’t. I always ask why. The only reply I get over and over is they don’t want to owe the government. Is the risk of owing the government anything worth five grand money give away? Apparently.
It is sad comedy that when looking for a lawyer, prospective clients are so concerned with price that to save a few bucks they hire an incompetent clown. When a capable lawyer comes along they ignore sound advice, and drop thousands in tax refund dollars to the trustee, and to their bankruptcy creditors. They act like the only real money is what they pay to the lawyer.
You Control Your Tax Refund
Your tax refund is something over which you have total control. For just one time you can claim more exemptions and have less withheld to minimize your refund. If you have a continuing need to make an interest free loan to your government, then drop them down, to zero if you like, the year after you file bankruptcy. My job is to get you through bankruptcy while preserving your assets. Let me do what you are paying for.
Other lawyers playing the bankruptcy alphabet game:
- Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell claims T is for Transfers.
- Bankruptcy Lawyer Jay S. Fleischman says T is for Trustee.
- Kauai Bankruptcy Attorney, Stuart T. Ing writes T is for Taxes.
- San Mateo County Bankruptcy Lawyer Cathy Moran blogs that T is for Tension.
- Did Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein run short on ideas when he wrote T is for Thirteen?