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April 19, 2021

2020 Tax Refunds and Personal Bankruptcy

5 Do’s and 5 Don’ts

If you are considering filing for personal bankruptcy relief, be sure to read these helpful tips before spending your 2020 income tax refunds.

DO:

  1. Keep receipts of any purchases made over $250.00
  2. OK to spend money on current necessities, such as important car repairs.
  3. OK to save and protect a certain amount, up to $1,825.00 (ask about exemptions)
  4. OK to catch up on mortgages and car payments
  5. OK to pay mounting tax debt

DON’T:

  1. Vacations on the eve of personal bankruptcy are considered unfair to creditors.
  2. Avoid purchasing unnecessary luxury items, such as expensive jewelry or electronics
  3. Avoid loan repayments to family and friends (insiders)
  4. Avoid paying ahead on monthly installments such as rent and car
  5. Hide the money. Be honest and transparent about your income tax refund.